AUBURN HILLS, Mich. – With handshakes and smiles, negotiators from Chrysler Group and the United Auto Workers formally began contract talks on Friday that many consider to be crucial to the survival of Detroit’s three automakers.

UAW President Ron Gettelfinger shook hands with Chrysler Chief Executive Tom LaSorda, and the top negotiators for both sides, UAW Vice President General Holiefield and Chrysler Senior Vice President John Franciosi also exchanged cordial handshakes.

In reality, talks between the UAW, Chrysler, Ford Motor Co. and General Motors Corp. have been under way for months because there are so many issues to address.

Similar events involving Ford and GM will take place on Monday. The national contract between the UAW and the automakers expires Sept. 14.

At a news conference after the ceremony, Gettelfinger said the union already has done a lot to help the companies, including health care concessions at Ford and GM and approval of buyouts and early retirement plans to help all three companies downsize.

He said the union has a list of demands that came from the local level. A recent deal with auto supplier Dana Corp. in which the union would get $780 million in cash and stock to form a trust and take on $1 billion in health care liabilities has nothing to do with the three automakers, mainly since Dana is in Chapter 11 bankruptcy, Gettelfinger said.

“The settlement at Dana is not a precursor for any other set of negotiations,” he said.

All three Detroit automakers are interested in setting up a similar trust with the UAW in an effort to reduce or eliminate their combined $90.5 billion unfunded liability for long-term retiree health care.

LaSorda said the negotiations are an opportunity for true change.

“Negotiations are difficult. This one will be no exception. The challenges we are facing are clear,” he said.

He and Franciosi also said health care costs must be resolved at a national level, and Franciosi said the three Detroit automakers would begin a more aggressive grassroots lobbying campaign to address them in Washington.

Franciosi also said that while they would like to get labor costs closer to their Asian competitors, that doesn’t necessarily mean concessions for the union.

“We can get very creative. Creativity and innovation by definition are not necessarily concessionary,” he said.

Officials of all three automakers have said they need labor cost parity with their Japanese rivals, mainly Toyota Motor Corp. and Honda Motor Co. Studies have shown the Detroit automakers make around $2,000 less per vehicle than their competition, with much of that due to labor costs.

The UAW, in a fact book given to reporters Friday, said labor costs represent only 10 percent of the cost of a new vehicle.

All three companies have said they would like to cut or eliminate what they say is a $25 to $30 per hour labor cost disparity they have with their Japanese rivals.

Ford, according to its annual report, paid an average of $70.51 per hour in wages, pension and health care costs for hourly workers last year. GM’s annual report says its labor costs average $73.26 per hour, while the Chrysler Group’s costs average $75.86.

All three will seek to reduce costs to around $48 per hour, about the average hourly cost incurred by Toyota, Honda and Nissan Motor Co., company officials have said.

The Detroit automakers lost a combined $15 billion last year, and while GM has started to make money again, it’s still losing cash in North America, its sales stronghold.

On the Net:

Chrysler: http://www.chrysler.com

United Auto Workers: http://www.uaw.org

A service of the Associated Press(AP)