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GM, Ford Burn Rubber

Given the weakness in its business and its position as the last of Detroit's Big Three automakers at the negotiating table, Ford is expected to be the UAW's toughest bargaining partner.

E.K. Riley Investments analyst Robert Toomey says he is "vastly more optimistic" on GM and Ford now that labor negotiations are winding down.

"We're seeing that labor understands the seriousness of the problem for these companies," says Toomey, who discloses that he owns shares of GM. "Their long-term prospects are improved significantly by getting out from under the retiree health care liabilties."

Warnsman, whose firm has recently had a banking relationship with GM and Ford, is more skeptical.

"These negotiations are not a huge win for these companies," he says. "In a turnaround, you need cash, and these labor agreements promise to squeeze a lot of cash out of GM and Ford. You're essentially taking unfunded liabilities and forcing them to fund them, and that reduces their flexibility.

"They're moving in the right direction, but they're not moving fast enough, and if we're heading towards an economic downturn with this mess in the housing market, that could be very tough for these automakers," he adds.
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