St. Louis Post-Dispatch (Missouri), October 23, 2007 Tuesday
Copyright 2007 St. Louis Post-Dispatch, Inc.
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St. Louis Post-Dispatch (Missouri)
October 23, 2007 Tuesday
THIRD EDITION
SECTION: BUSINESS; Pg. C1
BYLINE: By Christopher Boyce St. Louis Post-Dispatch
A proposed labor contract between Chrysler LLC and the United Auto Workers union may be headed toward national rejection after facing strong opposition recently at UAW local unions here and across the country. If the contract is rejected, experts say the defeat is unlikely to result in a strike or a better contract offer from the automaker.
As of Monday afternoon, UAW locals that rejected the contract represented about 11,160 workers, according to a tally by Bloomberg News; those approving number about 9,210. It had no figure on how many of workers actually voted at these locals.
Chrysler has about 48,000 UAW members. To ratify the contract, it must receive a majority of that national vote.
In their hope to turn the tide, UAW national officials are scrambling to drum up support for the contract, pushing members to approve the deal, according to media reports. Voting is expected to conclude later this week.
"It's going to be close. They're going to work very hard here at the end to pull this together," David Cole, chairman of the Center for Automotive Research in Ann Arbor, told The Associated Press Monday.
The catalyst for the tide of 'no' votes may have started Thursday with vote by workers from Chrysler's Dodge Ram plant in Fenton, according to Arthur Wheaton, a labor relations expert at Cornell University's Industrial and Labor Relations School.
About 80 percent of voters from UAW Local 136, which represents about 2,000 workers at the North Assembly plant, rejected the contract.
"Once the first plant voted no, I think everyone said, 'I guess it's OK to say no,'" Wheaton said.
Two days later, UAW Local 110, which represents more than 3,000 workers at the adjacent minivan plant in Fenton, rejected the contract. About 66 percent of skilled trades workers voted against the proposed contract, and 79 percent of production and other workers opposed it.
Wheaton said these rejections may be as much about workers' displeasure with past changes in the company, including its sale to a foreign owner in 1998, as it is about the contract. More recently, workers were concerned when Chrysler came into the hands of private equity firm Cerberus Capital Management.
"They're all mad, but they've had no place to express that," he said "They have expressed their frustration through the vote."
Workers bucked several items in the proposed contract, including a lack of promises about future products at individual plants and a two-tier wage structure for new workers in "core" and "non-core" positions. Many members fear the two-tier system would disrupt the union's unity by dividing workers into two economic classes.
If the contract is rejected, UAW's national negotiators will return to the bargaining table having lost much of their credibility with Chrysler, Wheaton said.
UAW negotiators likely will have to return to the membership with a deal that will be unchanged for the most part, he said.
"I don't think there's a person on the planet who thinks it's a good deal, but I think the UAW got all they were going to get out of that agreement," Wheaton said."
As for any potential strike, Wheaton said he would be surprised if the UAW tests Cerberus' patience with that tactic. If the Cerberus began losing money on Chrysler, Wheaton believes the company would work fast to cut its losses.
"This is really not a time they want to be out on strike," he said, referring to Chrysler's weak financial state. "I could see (Cerberus) saying 'let's take the property and sell it off.' That has been the tradition of a lot of private equity. If the pieces are worth more than the company, you just sell it off."
The longer negotiations take, the further Chrysler gets from profitability, said Erich Merkle, vice president of forecasting for IRN Inc.
Merkle said Chrysler is unable to make the product promises that General Motors did in its contract because Chrysler's new executives are busy trying to decide which products it will cut instead of new vehicles to invest in.
Beyond launching its redesigned minivans this year and a new Dodge Ram in 2008, the company needs a labor contract soon to court new investors who can provide the cash to accelerate new product development, Merkle said. In August, the automaker launched redesigned Chrysler Town & Country and Dodge Grand Caravan minivans, both produced in Fenton.
Without that, he sees a void of new products after 2009 that could push the company in a different direction, perhaps even to a sale of Chrysler.
In the near term, UAW Local 110 President Joe Shields sounded confident UAW's negotiators can wrap up a new deal.
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