Ends 6-Hour Strike at Chrysler
Automaker Says Union Trust to Run Retiree Health Care
By Sholnn Freeman, Staff Writer
Thursday, October 11, 2007
United Auto Workers announced yesterday that it reached a
tentative contract agreement with
Chrysler after a six-hour strike against the automaker.
Chrysler said the agreement includes a provision that places
responsibility for retiree health care with a union-managed
trust fund. Analysts have said that Chrysler owes as much as $19
billion for retiree health care.
Such health-care trusts have been a top priority for the three
Detroit automakers in their talks with the UAW this year.
General Motors and the union last month agreed on a contract
that contained a similar provision to enable GM to turn over $50
billion in retiree health-care obligations to a union-run fund.
UAW members employed by GM ratified the contract, with 65
percent voting in favor of the deal, the union announced
Chrysler was bought this year by a group of private investors
Cerberus Capital Management. Like GM and Ford, Cerberus is
determined to restructure wages and benefits in the context of
an increasingly competitive global auto market.
Assembly workers at Chrysler make about $28.75 an hour, a rate
that rises to $75.86 after UAW health-care and other benefits
are added, the company said. By comparison, Japanese plants in
this country pay about $46 an hour in wages and benefits,
Chrysler said. Thomas W. LaSorda, Chrysler's vice chairman and
president, said in a written statement that the contract would
improve Chrysler's long-term manufacturing competitiveness.
Ronald A. Gettelfinger said the 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."
The agreement capped a day of turmoil at the automaker's
corporate headquarters and at Chrysler plants around the
country. The UAW had set 11 a.m. yesterday as a strike deadline,
and when the hour passed without an agreement between the
company and the union, workers began leaving their posts.
In contrast to the low-key, two-day walkout that preceded last
month's GM deal, hundreds of Chrysler plant workers surrounded
company headquarters in
Mich., blocking intersections and waving picket signs. State
police closed nearby highway ramps.
The UAW yesterday withheld key details of the Chrysler agreement
pending ratification votes by members. If the deal would give
Chrysler workers less than their counterparts at GM, it could be
tough to sell to members.
The agreement reached between GM and the union created the
health-care fund and set up a two-tier wage scale to pay new and
"non-core" workers less than veteran assembly-line workers. In
return, GM guaranteed to keep jobs in the United States and
focus new production here.
Pushing a deal that breaks the pattern set by the GM contract
could test union solidarity by further eroding the tradition of
pattern bargaining that kept workers at each of the three
Detroit automakers on roughly the same pay and benefit scales.
Gary Chaison, a industrial-relations professor at Clark
Worcester, Mass., said the current negotiations have no
precedent in the auto industry.
"The old tradition of pattern bargaining has broken down," he
said. "The UAW not only has to deal with companies that are
right on the edge, it has to deal with a private-equity firm. It
has to deal with negotiating major concessions of the type its
never dealt with before."
Chaison said the UAW last granted major concessions to auto
companies in 1980s, when Japanese competitors began taking
larger shares of the U.S. market. Union and management worked
under the assumption that concessions in wages and benefits
would be offset by job security guarantees.
"Gettelfinger has to fight for what used to be assumed," Chaison
Cerberus has argued that its deep pockets and broad business
expertise put it in a strong position to reorganize Chrysler.
"The private-equity industry strongly believes that their model
of governing and managing a firm is superior to the
public-company model," said Colin C. Blaydon, director of the
Center for Private Equity and Entrepreneurship at
Dartmouth College. "Chrysler is clearly going to be an
iconic test of that proposition."