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.

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.

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.