With the deadline just three days away, contract negotiations between Chrysler Corp. and the United Auto Workers are logjammed and may be headed for a "confrontation," according to union officials.
Restive union members, after three years of wage and benefit concessions that saved the company an estimated $1.7 billion, are pressing their leaders hard to catch back up with workers at Ford and General Motors, who earn at least $2 an hour more. They want Chrysler to come up with "new money."
But the company is determined to hold the line on its labor costs. If the workers want more money in their paychecks, Chrysler bargainers argue, they must take it out of items such as health or retirement.
The company's spectacular and well-publicized financial comeback from its "bailout" crisis is a mixed blessing at the bargaining table, because it has heightened workers' expectations. Yet industry analysts say the company can not give much ground without jeopardizing its fragile recovery.
UAW President Douglas A. Fraser, who entered the negotiations for the final, critical phase which began on Thursday, has said repeatedly that, with a little creative thinking, he expects a new agreement can be reached before the contract expires.
But he is surprised and worried, he has said, about the company's unexpectedly "hardnosed" stance on issues such as health benefits and pension costs. "If they press me on it, I'm gonna get mad."
If the company tries to stall by "hiding behind the status quo," Fraser has vowed that the union will retaliate. Aware that a full strike would only cripple the company again, Fraser threatens to use "guerilla warfare," striking various Chrysler plants for a day at a time.
Chrysler chairman Lee Iacocca on Thursday expressed concern about the bargaining's snail pace. "We could run out of time here and get in a mess by mistake. So we've got to get going . . . We'd like to get it settled by D-Day, Sept. 14."
Regarding the health benefits issues, Iacocca said, "We're not taking a hard line. We're taking a sensible line as to what we can afford."
The contract covers some 83,000 Chrysler workers, 40,000 of them laid off.
Looking over the bargainers' shoulders is the federal government's Chrysler Loan Guarantee Board, which must approve any settlement.
Among the union's demands are a pay increase and the restoration of cost-of-living protections that workers sacrificed earlier. The UAW has also proposed a two-tier contract, with the wage arrangements effective for one year and a longer commitment on other issues.
Of the unusually short wage term, Fraser said, "I don't think it's wise for us to lock ourselves in in an atmosphere of widespread downturn and economic hardship."
Fraser has sought to keep the workers' expectations in check, but he said the company's "posturing" over its profits and progress have not helped. "I understand the reasons for the posturing, but it has made it difficult for us when we try to explain the basic economics to the members." He has assured workers repeatedly that there will be "no more concessions."
The key sticking point so far is the company's demand that workers share the rising cost of health benefits.
Fraser has vowed that he will not agree to make workers pay part of their medical costs. If the company does not withdraw from that demand, he said, "There will be a confrontation."
But he agrees health costs are a problem and has indicated there might be acceptable ways for the union to work with Chrysler in making "some economies" in that area, such as cutting down on unnecessary hospitalization or offering inducements to workers to join less costly group health programs.
Company officials estimate that employee health costs add $435 to the price of a new car.
The issue of pension costs, traditionally a volatile one, is particularly acute for Chrysler. The company has reduced its workforce to the point that the ratio of actiVe workers to retirees is about one to one, according to officials.
The union also has asked for job and income security measures similar to what Ford and General Motors workers won. These include a moratorium on plant closings, a prohibition against the transfer of union work to nonunion plants (called "out-sourcing"), and income protection for laid-off workers.