Detroit Free Press (Michigan), October 11, 2007, Thursday
Copyright 2007 Detroit Free Press
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METRO FINAL Edition
SHORT STRIKE: 6 1/2-HOUR WALKOUT PUTS DRAMA IN FINISH BIG RELIEF: COMPANY, UNION SAY PACT WORKS FOR BOTH
BODY:
Chrysler LLC and the UAW, after a 6- 1/2 hour strike involving 34,000 workers, reached a tentative agreement on a new labor contract Wednesday, dramatically easing tensions throughout a
Details of the tentative deal were not immediately made public, as is tradition with UAW negotiations, though it was described as sticking with the pattern set by the landmark agreement reached Sept. 26 between the union and General Motors Corp. That deal, officially ratified Wednesday by rank-and-file members, ended a two-day strike against GM.
The Chrysler deal represents a second major step toward a dramatic transformation of the American auto industry as it tries to become more competitive with Japanese-based rivals.
The two deals shift retiree health care costs to the UAW - a significant new role for the union. As with GM's deal, the Chrysler-UAW agreement includes creation of a retiree health care trust that will free the Auburn Hills automaker of billions of dollars' worth of obligations in exchange for making some sort of up-front payment at a significant discount.
"This agreement was made possible because UAW workers made it clear to Chrysler that we needed an agreement that rewards the contributions they have made to the success of this company," UAW President Ron Gettelfinger said in a statement issued shortly before 5:30 p.m.
People briefed on the plan said it protects Chrysler's transport division and certain Mopar parts operations from sale or closure, after a tense exchange in the final hours of negotiations.
The tentative contract adds more wind to the sail of the automaker's new owner, private-equity firm Cerberus Capital Management, which took majority control of Chrysler in August and set off a frenzy of speculation over how the change would affect the UAW negotiations.
"I was nervous about these negotiations to begin with because you don't have a long relationship," said Arthur Wheaton, a labor expert at
The union is making plans to call its national Chrysler council to
The deal brought to an end another dramatic day for
A local leader briefed on the talks said Chrysler made an unacceptable offer at 10:55, and the UAW walked out.
At 4, Chrysler came back with an offer to spare Mopar and Chrysler Transport. Then the deal was done.
According to people briefed on the plan, the deal includes:
*Protection for Mopar and Chrysler Transport.
*A $3,000 signing bonus and 3% or 4% lump-sum bonuses in the final three years of the contract.
*The creation of a two-tier pay system for noncore jobs, with starting hourly pay of about $14 an hour.
In addition, a person briefed on the plan said it would eliminate - probably through buyouts - an estimated 160 union-represented salaried positions, likely payroll jobs.
A spokesman for Chrysler declined to comment on the details and a spokesman for the UAW did not respond to questions.
Unlike the two-day GM strike that began Sept. 24, Gettelfinger did not immediately hold a news conference to talk about the reasons for the strike at Chrysler.
Chrysler President and Vice Chairman Tom LaSorda said in a statement that the agreement "is consistent with the economic pattern, and balances the needs of our employees and company by providing a framework to improve our long-term manufacturing competitiveness."
David Cole, chairman of the Center for Automotive Research in
Workers feel the drama unfold
At 11 a.m., workers flooded out of plants around the country. Picket lines formed even outside Chrysler headquarters in Auburn Hills, where hundreds of people blocked traffic in the streets.
At the Warren Stamping Plant, Tamika Harrison, who has worked 13 years at the plant, said the strike was important. "We've got to fight for what's right," she said. "They want to cut everything."
Not everyone was convinced. The quick nature of the strike helped fuel conspiracy theories. It had been 10 years since the UAW struck a Chrysler facility and more than 20 since a widespread UAW strike against the company.
"I think it was purely, purely show," said Dave Rodriguez, 42, an assembly worker at the Chrysler minivan plant in the
"It's a crap contract," he said, based on reports about the GM deal. "I am just sick and tired of the union thinking that we're stupid people on the lines that can't read."
But others supported Gettelfinger's decision to strike.
"I think we did the right thing," said Kevin Kline, 48, of
Kline, a toolmaker at the Mack Engine I plant who has been on layoff for about three months, said he has faith that union leaders reached a fair contract.
"They are not going to do us wrong," he said.
UAW says deal protects jobs
UAW Vice President General Holiefield said in a statement that the deal provides job security and protects wages, pensions and health care for active and retired members.
During the talks with GM, Gettelfinger indicated a major issue for the union was job security, which led to the apparent promise by GM of specific product opportunities at 16 of 17 UAW facilities.
Some had questioned whether Chrysler, undergoing dramatic changes, could make such a commitment.
"I don't think the new ownership wants any kind of shackles in terms of who they can sell and what they can get rid of. That's what hedge funds and private equity are all about - breaking them up and getting rid of the pieces that you don't need to make more money off them," Cornell's Wheaton said.
Gettelfinger had warned his members Monday that a strike could happen Wednesday if a deal was not reached by 11 a.m. - 26 days after the 2003 labor agreement was slated to expire.
Talks heated up during the weekend, when the UAW gave a deadline for a new contract. On Tuesday, the two sides began meeting at 8 a.m. and did not stop, running through the night and Wednesday morning, until the strike.
Unlike the strike called against GM, the walkout did not apply to all Chrysler facilities. Five assembly plants covered under the national agreement, including three in the
Two in the
That overcapacity - better than 100 days' supply in some cases - was expected to help soften the blow of a strike for Chrysler in the short term. Experts had warned that a long strike could have been devastating to the company, which lost $2 billion in the first three months of the year.
The previous UAW-Chrysler contract, which was agreed to in 2003, was set to expire Sept. 14 but was indefinitely extended while the union first worked with GM to reach a tentative labor agreement. That deal was reached Sept. 26, after the first national strike against GM in 37 years.
GM vs. Chrysler on health trust
The UAW walkout against GM resulted in a labor agreement that freed the automaker of $50 billion in retiree health care obligations at a $20-billion discount and created a two-tier wage and benefit system for noncore jobs. Both were keys to the company's efforts to narrow an estimated $20- to $30-an-hour gap in compensation when compared with
Chrysler, with nearly $18 billion in long-term UAW health care obligations, had shown interest in the retiree health care deal but was known to be pushing for other issues, too, including health care concessions similar to those that the UAW granted in 2005 to GM and Ford Motor Co., but not to Chrysler.
The lack of the 2005 health care deal complicated efforts to create the retiree health care trust, people familiar with the talks said, because the GM trust builds on the 2005 deal.
The economics of GM's desire for a retiree health care trust are different from Chrysler's. GM provides health benefits to more than four retirees and surviving spouses for every one active worker; Chrysler's ratio is about 1-to-1.
"Their costs in retiree health care aren't nearly as significant as the percent of the total as GM's are; therefore they have less appetite for making a big cash investment" in a retiree health care trust, said Fred Hubacker, executive director of turnaround firm Conway MacKenzie & Dunleavy.
LaSorda said that once the contract is ratified, the memorandum of understanding establishing the retiree health care trust is subject to approval by the courts and review of accounting treatment by the Securities and Exchange Commission.
A little perspective
Harley Shaiken, a labor expert from the
"When you have a strike that lasts in hours rather than days, it essentially reflects pushing as hard as you can and perhaps pushing a little too hard to see how hard you can push. I think that's what Cerberus did," he said.
"GM tested the waters. Cerberus waded into the same waters and stepped out quickly."
"I think we did the right thing. We sent a message that we'll stick together as a union."
Kevin Kline, 48, of
"The national agreement is consistent with the economic pattern, and balances the needs of our employees and company."Tom LaSorda, Chrysler president and vice chairman
(SIDEBAR)
What's in the UAW-Chrysler deal
Chrysler LLC's tentative agreement is fundamentally similar to the UAW-GM pact.
VEBA
A GM-like retiree health care trust - known as a voluntary employee beneficiary association, or VEBA - that is to wipe billions off Chrysler's private balance sheet.
Job security
People familiar with the deal say that the UAW was able to keep Chrysler from selling certain Mopar operations and Chrysler Transport. Wages and benefits
UAW Vice President General Holiefield said the contract also protects wages, pensions and health care for active and retired members. This would include $3,000 signing bonuses, 3% and 4% lump sum bonuses in later years. Noncore jobs would have wages starting at $14 an hour with 401(k)-style retirement packages, said a person briefed on the deal.
Contact TIM HIGGINS at 313-222-8784 or thiggins@freepress.com Business writers Jewel Gopwani and Sarah A. Webster contributed to this report.
ILLUSTRATION: Photo
GRAPHIC: KATHLEEN GALLIGAN /
Lincoln Milan, 30, of
PATRICIA BECK /
Keith Weitala, 53, of
CAPTIONWRITER: KATHLEEN GALLIGAN /
MEMO: SIDEBAR ATTACHED;SEE ALSO METRO EDITION PAGE 1A
DISCLAIMER: THIS ELECTRONIC VERSION MAY DIFFER SLIGHTLY FROM THE PRINTED ARTICLE
At Chrysler's truck assembly plant in Warren, second-shift union steward T.J. James, 41, of
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