The UAW says that troubles in the car industry are not its fault. According to the union, it was not a series of bad decisions by management either.

"This industry is in a crisis situation not of its own making," Ron Gettelfinger said in an interview Saturday afternoon with The Wall Street Journal (subscription required).

The statement is worth a bit of examination.

Gas prices have been historically low, well under $2 a gallon. The real spike is only a year old and the price per gallon is now back to $2 in many regions of the country. So, did a price pop which lasted three quarters of a year bring down The Big Three?

The other culprit Gettelfinger points to is the problems in the credit markets. Most consumers did not have trouble getting car loans as recent as this summer. Auto companies were offering zero percent financing and thousands of dollars in cash back Buying a car on credit was as easy as getting a subprime loan was three years ago.

The UAW did not ask for exorbitant wages and benefits over the last four decades. Management at the car companies did not rely on SUVs and pick-ups for profits even though they had seen the tremendous damage that the Arab Oil Embargo did to their finances in the 1970s.

In other words, no one involved in the car industry is to blame.

Douglas A. McIntyre is an editor at 24/7 Wall St.

This is part of a weekly series about the car business. The auto industry plays an important role in the global economy, and record-high oil prices and a global slowdown have contributed to a crisis in the sector. This column will highlight some of the interesting stories that emerge as that crisis plays out.

Last week, I suggested that the auto industry was ripe for consolidation (Car Biz: Look out below!). The very next day the potential merger between General Motors (NYSE: GM) and Chrysler hit the news.

I can't claim that I'm clairvoyant. I just read the news like everybody else. And overcapacity is old news in the car business. Even in good times, there are too many factories producing too many cars and trucks for too few consumers who can afford them. Some estimates put overcapacity in the industry in the tens of millions of vehicles per year. The burgeoning recession just makes this basic fact impossible to ignore any longer.

Now Chrysler CEO Bob Nardelli is joining the chorus. He recently said that the rapid and dramatic decline of sales in the American auto market "certainly creates an environment for consolidation." He also spoke about "synergies of productivity" but of course he has to say that. CEOs involved in merger talks always talk about 'synergies' even though they are rarely generated in practice.

The deal Ford (NYSE: F) cut with the UAW in the hours before dawn today looks very much like the ones the union has with General Motors (NYSE: GM) and Chrysler. But Ford needed it more. Its sales in the US have fallen twelve months in a row.

The new contract calls for the car company to pay for a health-care fund that will be run by the UAW. That could cost Ford $20 billion in a one-time payment. Ford will also be allowed to pay "non-core" workers less than most of the union rank-and-file. That will probably only matter to the non-core workers, but the deal will hurt them.

"Our bargaining committee came through for our active and retired members," said UAW President Ron Gettelfinger, in a statement picked up by The Wall Street Journal. Gettelfinger, who may be retired by the next set of negotiations in four years, will have as his legacy these 2007 contracts.

How will be be remembered? His moves helped save the North American operations of the Big Three. The contracts pave the way for lower labor costs and lower benefit costs. If the US car companies can stabilize their market shares, they may be able to make money in North America again.

But if Detroit does return to a period of prosperity, Gettelfinger may be viewed at the man who gave too much and got too little. Many union jobs will be gone and the money will be rolling in again in the Motor City.

Douglas A. McIntyre is an editor at 247wallst.com.

Though the United Autoworkers Union's threat to strike Chrysler LLC tomorrow got the headlines today, the union's biggest challenge ahead lies with Ford Motor Co. (NYSE:F).

As Daniel Howes of the Detroit News points out, Ford is hoping to get a better deal than the agreement the UAW recently reached with General Motors Co. (NYSE: GM) because of the automaker's "more dire financial circumstances." UAW head Ron Gettelfinger has spent most of his career representing Ford workers and is close with Ford Executive Chairman Bill Ford Jr., with whom he's been speaking with almost daily for the past month, according to Howes.

Ford Chief Executive Alan Mulally is well-regarded on Wall Street but he certainly has his work cut out for him. Earlier this year, the Dearborn, Mich. automaker unveiled a major restructuring which included the elimination of 25,000 to 30,000 jobs. Pundits including Howes say more job cuts and plant closings are possible. Last year, Ford posted a record deficit of $12.6 billion.

Whether the close ties between Gettelfinger and Bill Ford will help avoid labor trouble remains to be seen. For now, the UAW is focusing its attention on Chrysler.

A Chrysler spokeswoman told the AP that the automaker remained optimistic about a settlement. The timing of the UAW's ultimatum was interesting considering that five U.S. Chrysler plants were going to be shut down anyway for about two weeks starting today because of lower demand for Chrysler products.

General Motors (NYSE: GM) and the United Auto Workers today resumed bargaining talks hours after the union called its first strike at the automaker in nearly 40 years.

Though a labor agreement may not come today or tomorrow, odds are good that it will come fairly soon because the only winner in a protracted work stoppage would be Toyota Motor Corp. (NYSE: TM) which continues to take away market share from GM, Ford Motor Co. (NYSE: F) and Chrysler. But even if the strike is short-lived, it will still cost GM billions of dollars, according to MarketWatch.

Both sides are already on the same page on the key issue of transferring the $50 billion in future retiree health care costs to a union-administered fund. Whether the union can do a better job at controlling health care costs than the company or anybody else for that matter is an open question GM also wants new union members to have 401 (k) plans instead of pensions, according to Bloomberg News. That's a concession that the UAW will have difficulty fighting since many large companies are trying to phase-out their plans or get the federal government to take them over.

By calling a strike, UAW President Ron Gettelfinger wanted to show that the union can still flex its muscles. With that point being made, he now has to show that he can negotiate a deal that serves his members and keeps GM competitive in today's fiercely competitive auto market.

In negotiations with General Motors Corp. (NYSE: GM), Ford Motor Co. (NYSE: F), and Chrysler, the head of the United Auto Workers has said that the union would be open to a fund created to handle future health liabilities. The Big Three would have to provide the money for the fund, perhaps a much as $60 billion. The union would administer the pool.

The announcement made front page news because very little has been said by the UAW during the current round of negotiations, which has a deadline of September 14. But, according to The Wall Street Journal, UAW President Ron Gettelfinger has said that he is "willing to agree in principle to the creation of a multibillion-dollar, union-controlled health-care trust fund." GM, Ford, and Chrysler carry about $95 billion in health and pension liabilities on their balance sheets. A new fund operated by the union would transfer those obligations off their books.

The largest single hurdle to a deal is defining what the level of funding would need to be. It depends on complex calculations of how much would have to be paid out to workers each year and how much the fund could yield in returns on its invested capital.

The UAW is faced with a near-term problem of its own. A number of its rank and file members are more interested in keeping their jobs than in who holds the liability for their benefits. While UAW management may support a health care fund, if it has to trade job reductions as part of the bargain, it may not get the support of its members.

Douglas A. McIntyre is a partner at 24/7 Wall St.