UAW Sets Chrysler Strike Deadline
Pressure Mounts For New Contract On Wages, Benefits

By Sholnn Freeman
Washington Post Staff Writer
Tuesday, October 9, 2007

The United Auto Workers turned up the pressure on Chrysler yesterday to wrap up a contract in the next two days.

The union set a deadline of 11 a.m. tomorrow for a strike against the smallest of the three Detroit automakers if the two sides have not reached a new labor contract for the company's 45,000 workers represented by the union. The UAW sent a notice to local union officials yesterday saying Chrysler has so far failed to make an offer that "adequately addresses" wages, benefits and other issues.

Chrysler spokeswoman Michele Tinson said, however, that the deadline does not mean a strike is imminent. She said the UAW could still decide to extend talks past the deadline.

The UAW's leadership could not be reached for comment.

Negotiations resumed yesterday after lengthy sessions over the weekend.

UAW officials stepped up talks with Chrysler late last week, several days after reaching a landmark deal with General Motors. The GM agreement, reached after a two-day strike by autoworkers, was expected to serve as a template for the UAW negotiations with Chrysler and Ford.

Chrysler had been seen as a wild card in this year's negotiations. The company was sold by Germany's Daimler AG this year to a U.S. private-equity group led by Cerberus Capital Management. Cerberus leaders have said they want to restore Chrysler as an American business icon, but labor leaders and autoworkers are wary.

"There probably is a political and psychological subtext to the Chrysler negotiations," said David L. Gregory, a labor law professor at St. John's University. "Workers are understandably apprehensive about who is running the show and do they have a long-term commitment to running the company."

Gregory added: "Or will Cerberus do what most private-equity groups do -- look to maximize profit by identifying and selling off the most profitable parts of the enterprise?"

The last UAW strike at Chrysler occurred in 1985; it lasted eight days and cost the company nearly $100 million. Chrysler workers won improved wages and benefits, and job-security guarantees.

Analysts said it was not clear what a strike would mean for Chrysler now. The company already plans to shut down five plants in coming weeks because of weak demand.

At a union office in Belvidere, Ill., where Chrysler has a plant that produces the Dodge Caliber and the Jeep Compass and Patriot, workers were preparing unemployment paperwork and making plans for a possible strike.

"If they don't have it hammered out by 11 o'clock Wednesday morning, I expect we'll go," said Bill Campbell, financial secretary at UAW Local 1268 in Belvidere. "Everybody's got questions. Unfortunately, we don't have a great deal of answers."

The big subject on the Chrysler bargaining table is the cost of health care for union workers. In its deal with the union, GM won an agreement to unload $50 billion in health-care obligations by creating a $35 billion, union-run trust fund. Officials at Ford and Chrysler said they want to create similar trusts, but it was not clear how the Chrysler and Ford funds would be financed.

Chrysler is still trying to win an earlier set of health-care concessions that the union gave to GM and Ford in 2005. Company officials estimate the savings from those concessions would have saved Chrysler $340 million annually. At the time, union workers balked at the deal, which included wage cuts for workers and added health-care costs for retirees, because the company was making money as a unit of Daimler Chrysler.

Slowing sales for trucks and sport-utility vehicles soon soured Chrysler's financial condition. Worker resistance to the health-care demand was cited as key factor by Daimler Chrysler shareholders who wanted the Chrysler branch divested.

Last month's GM strike ended after the automaker gave the UAW promises that new products would flow into GM plants in the United States instead of being built overseas. The UAW was growing alarmed as Detroit automakers continue to build plants in low-wage countries abroad while closing auto factories at home.

Chrysler chief executive Robert L. Nardelli has identified international growth as a key focus of what he has called the "New Chrysler." Last year, Chrysler entered an agreement with a Chinese automaker to import Chinese-built cars to the United States and Europe.

Like GM and Ford, Chrysler is also seeking more leverage in outsourcing more union jobs and giving incoming union workers lower pay scales and less generous benefit packages. Assembly workers at Chrysler make about $28.75 an hour, a wage that would balloon after UAW health-care and other benefits are added.

Chrysler is reportedly looking to shed non-core assets, such as parts-distribution warehouses. Chrysler has 22 warehouse facilities across the country with about 2,700 workers.