No deal yet with Chrysler, UAW chief tells disappointed local leaders

2011 LABOR TALKS
No deal yet with Chrysler, UAW chief tells disappointed local leaders
King says he hopes for an agreement by Wednesday
David Barkholz
Automotive News | October 10, 2011 – 12:01 am EST
UPDATED: 10/10/11 1:16 pm ET

DETROIT — UAW President Bob King told local union leaders today that the UAW and Chrysler Group are still apart on a new labor agreement, a source familiar with negotiations said.

King’s meeting with local leaders from around the country lasted just 20 minutes and deflated the local leaders who had come to Detroit expecting to hear that a deal was done, the source said.

“It didn’t happen,” the source said, adding that another meeting for local leaders has been scheduled for Wednesday at a regional union office in Warren, Mich.

King told the group he hoped an agreement could be reached by Wednesday, another source told Reuters.

A UAW spokeswoman could not be immediately reached for comment, but the UAW’s Chrysler bargaining team, on their Facebook page, said contract talks are continuing.

“We are asking for a show of solidarity, as our negotiators continue to work diligently on a tentative agreement,” the posting said.

Chrysler and the UAW are apart on several economic issues.

Chrysler wants to be able to hire an unlimited number of entry-level workers through 2019 as the carmaker brings new products to U.S. factories, two sources have told Automotive News. The UAW has extended that ability to hire unlimited Tier 2 workers at General Motors and Ford Motor Co. through 2015.

Entry-level or Tier 2 workers earn about half the $28 an hour paid traditional workers. Chrysler has about 5,000 Tier 2 workers, the most of any of the Detroit 3. That’s out of a total hourly work force of 23,000.

Chrysler CEO Sergio Marchionne has said in recent days that the recent GM and Ford deals are too rich for Chrysler, which had to pay about $2 billion in debt service over the past two years for its government bailout loans. Ford’s 41,000 hourly workers have begun voting on ratification.

If a deal cannot be reached at Chrysler, UAW negotiations will be subject to binding arbitration. That’s a risky prospect for the UAW because compensation at the transplant automakers, which tend to pay their workers less than the Detroit 3, would have to be considered in any arbitration decision.

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

King and other union officials have stepped up bargaining efforts at Chrysler after reaching the tentative pact at Ford Motor Co. last Tuesday. Ford’s local unions are holding ratification votes this week.

“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.

David Phillips contributed to this report?????.

Chrysler hopes to keep a lid on its U.S. hourly labor costs under an agreement with the UAW. Annual labor costs at GM and Ford are expected to rise by 1 percent or less under their new deals with the UAW.

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