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UAW plans Monday meeting on Chrysler negotiations, Local union officials could hear about ‘the dangers of going to arbitration’

2011 LABOR TALKS
UAW plans Monday meeting on Chrysler negotiations
Local union officials could hear about ‘the dangers of going to arbitration’
From staff, wire reports
Automotive News | October 7, 2011 – 2:31 pm EST
UPDATED: 10/8/11 5:51 pm ET

DETROIT — UAW leaders have called local bargaining units representing Chrysler Group’s plants in the United States for a Monday meeting in Detroit.

Typically, the UAW leadership only summons the bargaining council representing to meet when they have a tentative contract to present to local officials.

But the union’s talks with Chrysler have been the most strained of its contract talks with any of the Detroit automakers in the current round of negotiations, and there was no indication of new progress on Friday or Saturday.

If the UAW fails to reach a new labor accord with Chrysler Group by Monday, local union representatives called to Detroit will hear about “the dangers of going to arbitration,” said a source familiar with negotiations.

The UAW wants to avoid arbitration because the 23,000 hourly workers at Chrysler are likely to get a worse deal in arbitration than a negotiated one, the source said.

That’s because an arbiter hearing the case would have to consider the compensation of transplant workers when deciding whether the offer made by Chrysler is fair to UAW members, the source said.

Transplant workers generally earn less than UAW members today except at some of the largest and oldest plants, such as Toyota’s giant assembly plant in Georgetown, Ky., the source said.

“There’s a real danger in going to arbitration,” the source said.

UAW President Bob King and Chrysler CEO Sergio Marchionne have separately stated in recent days that they want to avoid arbitration and bargain for a deal each side can live with.

Shaky ground

Marchionne has been pushing the UAW for further concessions in the new labor pact because the U.S. automaker remains on shaky financial ground.

The union, looking to rebuild its membership ranks after the industry’s latest downturn, is pushing Detroit automakers to add jobs and commit to building more vehicles in U.S. plants.

Chrysler is eager to keep a lid on its U.S. labor costs under a new settlement. Annual labor costs at GM and Ford are expected to rise by 1 percent or less under their new deal with the UAW.

Chrysler’s contract with the UAW expired on Sept. 14, but both sides extended the deal to Oct. 19.

Chrysler intends to reach a four-year labor contract with the UAW without arbitration, Marchionne said earlier Friday. He warned that the union’s deals with its crosstown rivals may be too costly for the smallest U.S. automaker.

Earlier this week, the UAW and Ford Motor Co. reached a tentative four-year contract that allows veteran workers to receive at least $16,000 in bonuses. Last week, UAW workers at General Motors Co. ratified a slightly less generous labor contract.

How Detroit automakers compare during 2011 labor talks
GM Ford Chrysler

UAW headcount 48,000 41,000 23,000
Avg. hourly labor cost for wages/benefits $56 $58 $49
2010 Revenue $135.6B $129B $42B
2010 Net profit/loss $6.2B $6.6B ($652M)
2010 Hourly profit-sharing payout/bonus * $4,300 $5,000 $750
Automotive cash as of 6/30/11 $34B $22B $10B
2010 Health care costs for hourly workforce $665M $533M $522M
*Ford figure includes $2,000 discretionary payment; Chrysler payout was discretionary performance recognition award
Sources: Companies, Bloomberg, Center for Automotive Reseach

‘Intense negotiations’

Chrysler expects to post net income of $200 million to $500 million this year — its first annual profit since emerging from bankruptcy.

“Some of the deals that we’ve seen being signed between Ford and GM (with the UAW) are probably, given Chrysler’s own predicament… overly generous,” Marchionne said after a speech to the Italian Chamber of Commerce in Montreal.

There will be “intense negotiations” between the union and Chrysler over the next three to four days, Marchionne said.

“The intent is to try and get to a deal without going to arbitration,” Marchionne said. “I think we’re approaching this with the best of intents.”

King and other union officials have stepped up bargaining efforts at Chrysler after reaching the tentative pact at Ford on Tuesday.

“Progress has been made. However, key issues are still being discussed,” General Holiefield, head of the union’s Chrysler department, said in comments on the UAW’s Facebook page on Friday.

“Your negotiators are as anxious as I am to attain a tentative agreement and bring home a contract that delivers the respect and dignity that our membership deserves.”

Remaining issues

On Saturday, the Associated Press, citing a local union official, said the talks are still hung up on the size of profit-sharing checks and the number of entry-level workers the company can hire.

The union official did not want to be identified because the talks are private, the AP said.

Entry-level workers at Detroit’s 3 automakers are paid around $14 per hour, about half the wage of a veteran UAW worker. But under new contracts at GM and Ford, starting wages would increase to nearly $16 an hour over the next four years.

Chrysler, which nearly collapsed two years ago, is still executing its turnaround.

The company emerged from bankruptcy with a debt load that included $7.6 billion in government loans. In May, Chrysler repaid those loans through private refinancing that helped reduce its interest payments.

As part of Chrysler’s bankruptcy restructuring in 2009, workers gave up the right to strike and agreed to binding arbitration if a deal could not be reached.

GM and Ford agreed to signing bonuses of $5,000 to $6,000, and annual lump sum payments of $1,000 to $1,500 to cover inflation. They’ve also agreed to add more than 12,000 hourly factory jobs over the next four years as part of new product programs.

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