Officials of the United Auto Workers and Chrysler Corp. reached a tentative agreement last night that they hope will help save the tottering auto maker from falling into bankruptcy.
Under the temporary pact, which now must be ratified by a majority of Chrysler's 80,000 UAW employes, the union would trim an additional $243 million in wage gains from a contract it accepted last November.
Union officials reached in Detroit last night cautiously predicated that the renegotiated settlement would be approved by the UAW rank and file.
"It's been a very painful process to do what we've done. It's been extremely difficult, and obviously Chrysler workers aren't happy," said chief UAW spokesman Don Stillman.
"But the alternative was to do nothing, to let the company go out of business and to let Chrysler workers lose their jobs. We hope, we believe, the contract will be ratified because the alternatives are so drastic," Stillman said.
A scaled-down contract was required by Congress in order for the company to receive $1.5 billion in federal loan guarantees. The lawmakers approved the rescue loan package last month on condition that the auto maker come up with $2 billion more in assorted concessions by its employes, creditors, dealers and suppliers.
A key element of that package was the renegotiation of the UAW's 1979 Chrysler contract, a three-year pact that already contains $203 million in pay concessions designed to help the company steady itself. Those concessions actually are proportionate salary losses, compared to the higher paying contracts signed last year by General Motors and Ford.
In its legislation, Congress wanted the company's unionized workers to make additional wage sacrifices approaching $260 million.
The UAW, which represents 96.5 percent of Chrysler's unionized employes, came up with the extra $243 million in wage cuts, making its total wage loss over the three-year life of the 1979 contract $446 million.
The remainder of the amount required by Congress is expected to be made up by the rest of the company's unionized employes, who normally take the lead of the UAW in collective bargaining matters.
Basically, the new UAW cut will be funded by giving up 17 of the 20 paid personal holidays the union won in its 1979 agreement. That move is expected to result in a $200 million wage savings to the company. The remainder of the $243 million will come from five-and-a half to-six-month deferrals in scheduled pay increases awarded in last year's pact.
The union managed to keep intact all its newly won cost of living adjustment, pension, and health care benefits. It also received something of a consolation prize.
Under the new agreement Chrysler workers will be able to acquire one-sixth ownership of the company over the next four years. According to union officials, that means that each unionized employe will own $1,600 worth of Chrysler stock at the end of the four-year period.