The United Auto Workers and DaimlerChrysler AG agreed today to a new four-year contract that could lay the foundation for long-term labor peace in the U.S. auto industry.
The tentative agreement, which replaces a three-year contract that expired Sept. 14, affects 75,000 hourly and salaried DaimlerChrysler employees.
The proposed four-year term, if approved by UAW members in a ratification vote next week, would mark the first time since 1950 that the union and an automaker have accepted a contract lasting longer than three years.
"This means UAW leaders feel that the proposed agreement is good enough for them to want to lock in its benefits long term," said Harley Shaiken, a former UAW leader who is now a professor of labor studies at the University of California at Berkeley.
The agreement also provides DaimlerChrysler with labor stability, which the company will need as it embarks upon an ambitious, $48 billion program to develop and produce 64 new cars and trucks by 2004.
Union officials now will attempt to get General Motors Corp. and Ford Motor Co., where more than 300,000 UAW members are employed, to accept a similar contract. In the interim, covered GM and Ford employees will continue working under an "indefinite extension" of the old agreement.
Analysts predict relatively easy going at GM, ironically because of a UAW strike that shut down virtually all of GM's U.S. operations last summer, costing GM $2 billion. Neither side appears prepared to repeat the experience, especially at a time when the U.S. auto industry is rolling in record profits and sales, analysts say.
But talks at Ford could be ticklish, largely because Ford is the only major car company strapped with a huge, vertically integrated parts-manufacturing division, Visteon.
Both GM and DaimlerChrysler already have spun off their parts operations. And formidable foreign rivals such as Toyota Motor Corp. long have perfected a cost-saving system of procuring components from a variety of outside sources.
Ford, as a result, is under pressure from Wall Street to divest its holdings in Visteon and allow that division to seek cost efficiencies through open-market competition.
"The last thing in the world I want to do is sell Visteon, but with things the way they are, I don't really have much of a choice," Ford President Jacques Nasser said in a recent interview.
But UAW President Stephen P. Yokich opposes a Visteon spinoff on grounds that such a move could endanger the jobs of UAW members who work there. In an attempt to send a message to Ford, Yokich and his lieutenants asked for and received an anti-spinoff clause in their new agreement with DaimlerChrysler, sources familiar with the talks said today.
That clause means little to DaimlerChrysler because it is the least vertically integrated of the Big Three car companies doing business in the United States. And such a clause also wouldn't concern GM, because that company already has given the giant Delphi Automotive operation its independence. But it would mean trouble for Ford.
Ford and GM officials today declined to comment on the tentative DaimlerChrysler contract, saying they have not had a chance to read the fine print. But GM officials in Detroit and Ford executives in nearby Dearborn seemed not surprised by what was reported as the bold type of the proposed DaimlerChrysler contract.
The contract signals a desire for peace on both sides, and Shaiken said it probably will be accepted by GM and Ford, with some modifications to suit their individual circumstances.
"Things are going well, now," Shaiken said. "The companies are making money. Car sales are high, and the U.S car companies have come from under a big cloud. They are no longer afraid of foreign competition."
DETAILS OF THE DEAL
Among the provisions in the four-year agreement between the United Auto Workers union and DaimlerChrysler, according to sources familiar with the negotiations:
* Three percent annual pay increase over four years, essentially a continuation of the so-called 3 percent annual improvement factor in the old contract. (The average hourly wage is now $20.11.)
* A one-term signing bonus of $1,350 for each covered employee.
* Improved retirement and pension benefits (no details provided).
* No language on lifetime job guarantees, which had been sought by the UAW. Under the current contract, if sales volume goes up or remains high, jobs are protected; if sales volume nosedives, covered employees could be laid off "for periods not to exceed 36 weeks over the term of the agreement."
* A consensus agreement in which DaimlerChrysler officials will adopt a "neutral stance" to the UAW's organizing attempts at the Mercedes-Benz sport-utility assembly plant in Vance, Ala., and at the company's freight-liner heavy-truck assembly facilities.
* Language aimed at limiting any DaimlerChrysler moves to spin off any of its facilities in the United States where UAW-covered employees work.