Chrysler Corp. and the United Auto Workers union yesterday reached a tentative agreement to end their eight-day nationwide strike by giving Chrysler's car builders the same wages, benefits and job-security guarantees as General Motors Corp. and Ford Motor Co.
The preliminary settlement, reached after a grueling 42-hour bargaining session in Detroit, meets the union's primary goal of restoring parity with Chrysler's two biggest competitors, industry analysts said.
But they said the new contract should not be unduly costly to Chrysler because its profits are increasing and UAW labor now produces less than 40 percent of Chrysler's components.
Chrysler's 70,000 unionized employes, who earn an average of $13.23 hourly, would receive pay raises ranging from 2.25 percent to 3 percent a year for each of the next three years, plus cost-of-living adjustments and pension improvements, and also would collect $2,120 bonuses this year and profit-sharing payments starting at the end of next year.
The UAW, as expected, failed to win any commitment from Chrysler to reduce its use of parts produced by foreign plants and nonunion suppliers in the United States. Instead, Chrysler matched the GM-Ford job guarantee that any worker with at least one year of service will not be laid off because of automation or use of outside suppliers. If job cuts are necessary, UAW members would be guaranteed another Chrysler job or retraining, funded by a $187 million "bank" that would run approximately six years.
The proposed three-year contract will be voted on this weekend by the 70,000 striking UAW workers in 15 states and, if approved as expected, could return 45 idle U.S. Chrysler plants to normal operations by Monday. The separate Canadian UAW union returned to work earlier this week at six plants in Ontario.
Hitting the No. 3 auto maker at a time of booming sales, the strike has cost Chrysler an estimated $10 million to $15 million a day in lost sales. The settlement would cost the company more than $200 million in immediate bonuses and more than $1 billion in wage and benefit increases over the three years, Chrysler officials said. The company made a record $2.4 billion profit last year and earned more than $1 billion in the first six months of this year.
"Our goal in these talks was to match the full auto pattern set last year at GM and Ford," said UAW President Owen F. Bieber, "We have done that and we have gone even further" in negotiating the bonuses. Those payments -- $2,120 per worker and $1,200 for retirees -- are intended as partial compensation for the $1.1 billion in concessions that Chrysler workers made during the company's scrape with bankruptcy between 1979 and 1982. Those concessions averaged about $10,000 per employe over a period of several years.
Chrysler's chief negotiator, Vice President Thomas W. Miner, declined to discuss details of the settlement, but said, "We're pleased to have a settlement. . . . We lost a lot of money in a short time, and in a short time, we would have lost a lot more."
Miner also said the company was disappointed that the agreement does not include productivity improvements it sought through the reduction of job classifications. Chrysler has more than 500 different job titles and asked to reduce these to less than 10, which the UAW strongly resisted. The issue will be negotiated in the future on a plant-by-plant basis, officials said.
"This is an expensive agreement, but Chrysler can afford it. . . . It is not inflationary and it's good for customers because [Chrysler] should not have to increase car prices because of it," said Arvid Jouppi, a longtime Detroit auto analyst.
Chrysler employes, who were adamant about recovering part of their past sacrifices, will receive "quite a windfall," Jouppi said. In addition to the bonuses, they are also eligible to cash in an average of $6,900 each in company stock, which they obtained under an employe stock-ownership plan set up during the lean years of Chrysler's government bailout. Thanks to Chrysler's dramatic recovery, that stock has grown in value from a low of about $3 a share to about $38.
"It sounds like a pretty decent boost for the UAW, but it hurts Chrysler a lot less than one might expect," said Martin Anderson, former director of the Massachusetts Institute of Technology's automotive studies project. Because Chrysler uses non-UAW sources for 60 to 70 percent of its parts, and also is planning to purchase and sell as many as 250,000 Japanese-made Mitsubishi vehicles a year, "UAW costs are a lot easier to absorb" than in the past, he said.
"It was clear Chrysler was going to have to agree to parity with GM and Ford" because of its record-high profits, said David Cole, director of the University of Michigan's automotive studies program, "but what the company gets out of this agreement is a little less clear."
The company did succeed in meeting its goal of the stability of a three-year contract, he said, while the union pushed for a 23-month term that would have returned Chrysler to the same bargaining schedule as Ford and GM.
The UAW wanted the shorter contract so it could return to the pre-1979 practice of "pattern" bargaining in which all three major auto contracts expired simultaneously. Pattern agreements give unions a stronger hand by allowing them to negotiate an agreement with one firm and then threaten strikes against others unless they follow the pattern. But that practice has broken down in steel, trucking, cement and other basic industries.