Oct. 5 (Bloomberg) -- Ford Motor Co. and Chrysler LLC are balking at contributions as large as General Motors Corp.'s to create a union-run retiree health fund, five people with knowledge of the contract negotiations said.

The two U.S. automakers would benefit less from such a trust and are reluctant to match proportionately GM's $29.9 billion pledge to offload about $50 billion in retiree health- care costs, said the people. The companies also believe they can't afford job guarantees made by GM to the United Auto Workers, said the people, who asked not to be named because the talks are private.

``Ford isn't interested in job guarantees'' as the company shrinks, said Gary Chaison, a labor professor at Clark University in Worcester, Massachusetts. Chrysler's new owner, Cerberus Capital Management LP, ``is going to be calling the shots and they have less of a long-term outlook than General Motors.''

Ford and Chrysler, the second- and third-largest U.S.-based automakers, are waiting for the UAW to pick its next bargaining target after last week's contract agreement with GM. Union President Ron Gettelfinger has said he wants to extend the basic terms of the GM accord to its smaller competitors.

The UAW's 73,000 members at Detroit-based GM began voting this week to ratify the accord, reached Sept. 26 after a two-day strike. At least 13 union locals have reported approval of the contract and two have voted against.

Ford, overtaken this year as No. 2 in U.S. sales by Japan's Toyota Motor Corp., is also under pressure to cut jobs and will discuss additional buyouts in its negotiations, three of the people said.

Diverging Priorities

``We're going to see a pattern that diverges in important ways,'' said analyst Sean McAlinden at the Center for Automotive Research in Ann Arbor, Michigan.

Ford posted a record $12.6 billion loss last year as it failed to stop a slide in U.S. market share that began in 1996. The Dearborn, Michigan-based company still hasn't identified six of 16 plants it plans to close by 2012.

GM agreed to create a trust known as a Voluntary Employee Beneficiary Association, or VEBA, to take about $50 billion of future retiree health-care obligations off the company's books. The trust, which would go into effect in 2010, would make the union responsible for retired members' health care.

In addition to its $29.9 billion contribution toward the fund, GM agreed to pay $5.4 billion for retiree health care until the trust is created in 2010.

Future Work

In exchange for the union taking over the fund, GM assured future work for at least 55 of 82 UAW plants in the U.S. and agreed to stop sending new work to outside suppliers. The automaker in turn will pay less to new employees, meaning labor costs will decline as current factory workers retire.

The company has posted three consecutive quarterly profits; it lost $12.4 billion in 2005 and 2006.

GM may benefit more from such provisions than Ford or Chrysler because it has more workers nearing retirement. At GM, 63.5 percent of UAW members are eligible to retire within five years, compared with 30 percent at Chrysler and 31.2 percent at Ford, according to UAW data. GM's UAW members average almost 23 years of service; Ford's average is 17 and Chrysler's is 16.

``The broad framework is certainly something we can work with,'' Ford Chairman William Clay Ford Jr. told reporters after an Oct. 3 appearance in Chicago. The executive said Ford was still studying the GM accord and would discuss the retiree health-care trust with the union.

Ford spokeswoman Marcey Evans declined to comment. Union spokesman Roger Kerson didn't return a phone message seeking comment.

Chrysler's Focus

Chrysler is focusing on the ``mechanics'' of the health- care fund, including how much the company may have to pay up front, according to two people familiar with the negotiations. Cerberus, which already spent $7.4 billion to purchase an 80.1 percent controlling stake in the automaker two months ago, wants to concentrate its investments on boosting revenue sources. Chrysler lost $680 million last year.

The automaker may also be reluctant to follow GM in providing specific job guarantees as such a pledge may hamper the overhaul of its U.S. operations, the people said. Chrysler, under new Chief Executive Officer Robert Nardelli, is eight months into a three-year plan that includes job cuts.

Michele Tinson, a spokeswoman for Auburn Hills, Michigan- based Chrysler, declined to comment on specifics of the talks.

Beyond VEBA

Chrysler also has an additional health-care issue beyond the VEBA.

In 2005, the UAW agreed to health-care concessions with GM and Ford that diverted pay increases to finance retiree health care and required retirees to pay as much as $752 a year for family coverage.

Only 51 percent of union members at Ford voted in favor of the givebacks. The UAW then decided against negotiating the same concessions with Chrysler.

Ford rose 11 cents to $8.37 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have gained 11 percent this year.

The company's 7.45 percent bond due July 2031 rose 0.75 cent to 81 cents on the dollar, according to Trace, the bond- price reporting system of the NASD. The yield fell to 9.5 percent.

Ford's credit-default swaps rose 8 basis points to 567 basis points in London. A basis point on a credit-default swap contract protecting $10 million of debt for five years is equivalent to $1,000 a year. A rise in price indicates a deterioration in investor perception of credit quality.

To contact the reporters on this story: Bill Koenig in Southfield, Michigan, at wkoenig@bloomberg.net; Jeff Bennett in Southfield, Michigan at jbennett17@bloomberg.net

Last Updated: October 5, 2007 16:24 EDT