UAW, Chrysler Reach Tentative Labor Deal

The United Auto Workers union reached a tentative labor agreement with Chrysler that includes a health care trust, ending a strike against the automaker on the same day it began.

The UAW said in a statement it was calling off the strike against Chrysler effective immediately.


UAW President Ron Gettelfinger said in a statement that the tentative agreement would protect wages, pensions and health care for UAW-represented Chrysler workers and retirees.

The question of whether Chrysler could emerge from the UAW talks with a deal was seen as crucial to the success of the unprecedented bid by its new private equity owner, Cerberus Capital Management, to turn around the automaker at a time of slack sales and intense competition.

The deal could also have immediate implications for Ford Motor, which faces its own round of contract talks with the UAW once the union has finished with Chrysler.

On a combined basis, the three Detroit-based automakers lost some $15 billion last year and have argued they need deep concessions from the UAW in order to return to profitability
and to keep significant production in the United States.

Short Strike

Thousands of Chrysler autoworkers started to walk off the job earlier Wednesday after the automaker and the United Auto Workers union failed to settle on a tentative contract agreement before a union-imposed deadline.

Though brief, it was the first UAW strike against Chrysler since 1997, when one plant was shut down for a month, and the first strike against Chrysler during contract talks since 1985.

The UAW, which must reach new four-year agreements with all three Detroit automakers, struck General Motors for two days before agreeing on a tentative pact with the automaker on Set. 26. The union hasn't yet settled with Ford Motor.

Chrysler has 24 U.S. manufacturing facilities, including 10 assembly plants, but not all were affected by the strike. The automaker had already planned to idle five assembly plants and some factories that make parts for short stretches during the next two weeks in an effort to adjust its inventory to a slowing U.S. automotive market.

The short strike likely had very little effect on the automaker, which had a 71-day supply of cars and trucks on dealer lots at the end of August, according to Ward's AutoInfoBank.

The UAW had warned it would go out on strike at 11 am New York time if the two sides failed to agree on a new deal on wages and benefits for 49,000 U.S. factory workers and more than 77,000 families of Chrysler retirees.

Chrysler's larger rival General Motors reached its own cost-cutting deal on wages and benefits that ended a two-day strike on Sept. 26.

That contract, which the UAW has said would be a framework for the Chrysler negotiations, is expected to be ratified by rank-and-file GM workers, possibly this week.

White-Collar Cuts

In a move intended to show that salaried workers are also making sacrifices, Chrysler told the union this week that it planned to cut about 1,500 more white-collar jobs than initially planned, a person briefed on the plan said.

That would nearly double the nonunion job-cuts that Chrysler announced in February as part of a restructuring plan aimed at returning the company to profitability by 2009.

Chrysler has the highest total wages and benefits -- more than $75 per hour for the average worker, compared with $70 for Ford and $48 for Toyota Motor's U.S. unit, according to company data.

Chrysler's U.S. sales have slipped 3 percent through September, in line with a decline in the broad market. The company ranks behind GM, Toyota and Ford in sales.

Chrysler was acquired by Cerberus in a $7.4 billion deal that closed in August. Former owner Daimler AG retains a nearly 20 percent stake in the automaker.