Chrysler Corp. lost at least $100 million as the result of the eight-day strike against its operations in the United States and Canada.
The total bill for the United Auto Workers union walkout might be as high as $150 million by the time 80,400 hourly employes return to their jobs Monday, company officials and some domestic auto industry analysts said yesterday.
UAW and Chrysler officials tentatively agreed to a settlement Wednesday.
One analyst, Arvid Jouppi of Detroit-based Arvid Jouppi and Associates, predicted that the strike and the initial costs of the labor agreement that ended the walkout will reduce Chrysler's fourth-quarter earnings by $250 million.
"That means Chrysler will lose $25 million more than it will earn in the third quarter of this year," said Jouppi, who estimated that Chrysler's July-through-September profits will amount to $225 million.
Chrysler officials said yesterday that they will report their third-quarter earnings Monday.
Industry analysts generally agreed yesterday that the estimated $1 billion Chrysler-UAW settlement will further aggravate Chrysler's ability to bring its production costs in line with those of its Japanese competitors, who have about a $2,000-production-cost advantage over their U.S. rivals.
That means Chrysler probably will be forced to buy more of its automotive components from non-UAW suppliers, according to Jouppi and David Healy of New York-based Drexel Burnham Lambert Inc.
"In the long run, Chrysler can't afford to have as much labor involvment in its production," Healy said.
Chrysler is regarded as being more vulnerable to the Japanese because the company relies mostly on small-car sales for its income. The Japanese are aiming most of their products at the small-car segment of the market in the United States.
Industry analysts said that, in the past, Chrysler has been able to do well in that competition, largely because it buys 70 percent of its parts and supplies from non-UAW suppliers. By comparison, General Motors Corp. buys about 50 percent of its parts from non-UAW suppliers, and Ford gets 58 percent of its supplies from such sources.
Chrysler's heavy reliance on so-called "outsourcing," coupled with earlier labor agreements that paid workers at rates lower than those in place at GM and Ford, made Chrysler the lowest-cost producer in the Big Three, analysts said.
"But Chrysler is now back to paying the same wages and benefits as GM and Ford," Healy said. As a result, Chrysler probably will expand its use of outsourcing to relieve itself of some of the costs of the new contract, he said.
The tentative agreement does not limit Chrysler's use of outsourcing.
Most of the dollar drain directly related to the strike was caused by lost car and truck production, analysts said.
The walkout wiped out production of 69,300 cars and trucks, including an estimated 9,000 minivans -- the popular Dodge Caravan and Plymouth Voyager models -- whose numbers cannot be made up with overtime, according to a Chrysler spokesman.
"We'll never be able to make up the lost minivan production because we were already up to capacity" with those models," said John E. Guiniven, Chrysler's director of public relations. "We were already working all of the overtime we could work" at the minivan plant in Windsor, Ontario, Guiniven said. "We just can't squeeze out anymore."
Buyers who had placed minivan orders before the strike will still get those machines. "But they will have to wait longer," Guiniven said.
The strike and its expensive outcome perhaps were inevitable, Jouppi said.
"Chrysler had no choice, in view of temperament of its rank-and-file UAW workers," said Jouppi, referring to the contract. "There was a lot of sincere anger on the part of the Chrysler workers," who had given up billions of dollars in concessions and benefits to keep the company alive during the dark days of 1979-1981, when the firm almost went bankrupt, Jouppi said.