UAW, Chrysler extend labor pact a 2nd time, continue talks
David Phillips
Automotive News -- September 21, 2011 - 6:39 pm ET
UPDATED: 9/21/11 7:15 p.m. ET
DETROIT – The UAW and Chrysler Group LLC agreed to extend an existing labor agreement for a second time and continue negotiations on a new wage and benefit pact covering about 23,000 workers, the union said.
The UAW's current contract extension with Chrysler was set to expire at 11:59 p.m. ET today, following a one-week extension from Sept. 14. The union, in a statement, declined to comment further on the negotiations.
Chrysler could not immediately be reached for comment.
The Detroit News, citing a source close to the talks, said the current contract would be extended for four weeks but that both sides hoped to reach a deal before the new deadline.
Talks between Chrysler and the UAW broke off after 6:30 p.m. ET Wednesday, and are scheduled to resume at 8 a.m. ET Thursday, the paper said.
After reaching an agreement with General Motors on Friday, the union was widely expected to focus next on Chrysler.
The UAW's labor agreements cover 113,000 workers at GM, Ford and Chrysler and expired on Sept. 14. In addition to Chrysler, the union's contract with Ford has been extended to allow both sides to continue negotiating.
Under its agreement, GM agreed to add or retain 6,400 jobs, enhance profit-sharing, reopen an assembly plant and boost starting wages for new workers to $15.78, from $14, and to a maximum of about $19.28, up from about $16, in the previous contract.
While GM workers will not receive a wage increase, eligible employees will collect a $5,000 signing bonus upon ratification of the deal, and $1,000 "inflation protection" payments in the final three years of the contract.
Chrysler officials have indicated in recent days the GM deal is too expensive for Detroit's smallest automaker, though they support many of the economic provisions that tie more compensation to profits and lump sum payments.
The talks at Chrysler pose a delicate balancing act because the UAW holds a 41 percent stake in the automaker through an independent health care trust for retired auto workers.
Chrysler is insisting on a contract that won't increase its overall labor costs and rates – already the lowest among Detroit's 3 automakers – and place it at a competitive disadvantage with rivals.
The average U.S. hourly labor cost -- wages and benefits – is $49 at Chrysler, compared to $58 at Ford and $56 at GM, according to The Center for Automotive Research in Ann Arbor, Mich.
At Toyota's U.S. plants, the hourly compensation averages $55 and at Hyundai it is $44, CAR says.
The union -- reeling from the industry's downturn -- has made job retention and creation a centerpiece of its bargaining strategy during talks with Detroit's 3 automakers.
Chrysler's UAW hourly employment has dropped from 40,000 in 2007 to 22,500 today.
At Chrysler, about 12 percent of the hourly workforce – or about 3,000 employees -- earn entry-level wages that start at $14 an hour.
Since it emerged from bankruptcy protection in 2009, Chrysler has invested about $3.2 billion in its U.S. plants. It has added at least 2,000 jobs by expanding production and adding shifts at factories in Michigan.
Still, Chrysler hasn't turned an annual profit since its 2009 bankruptcy and pushed for a smaller signing bonus than the $5,000 payout negotiated by GM with the union.
Chrysler posted a net loss of $652 million last year. It expects to generate a profit of $200 million to $500 million this year, excluding certain expenses.
GM, in contrast, earned $6.17 billion in profits last year and $5.7 billion in profits during the first half of this year. GM is also sitting on roughly $34 billion in cash, while Chrysler has $10.2 billion in cash.
With the auto industry's recovery well underway, the union has used the 2011 negotiations to try to recoup some of the estimated $7,000 to $30,000 in concessions each worker has given up since 2005.
The union said this week the GM settlement will provide at least $12,000 in economic gains from profit-sharing, a signing bonus, and lump sum payments. The figure could climb based on GM's future profits in North America and if certain quality targets are achieved.
http://www.autonews.com/apps/pbcs.dll/article?AID=/20110921/OEM01/110929964/1249
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