Chrysler Leads Off UAW Talks

By Michelle Krebs July 25, 2011

Chrysler UAW opening kick off photo.JPG

Negotiators for Chrysler and the United Auto Workers union kicked off contract talks Monday with the traditional ceremonial handshake (above). UAW negotiators will go through the same drill later this week with their counterparts at General Motors and Ford. This year’s talks, however, are anything but traditional. The union, the Big Three and the entire U.S. automotive and economic landscape have been through the wringer since the last round of negotiations in 2007, a situation not lost on Chrysler’s chief negotiator at Monday’s ceremony.

“As we shook hands in 2007, the U.S. was on the brink of the most severe economic crisis since the Great Depression,” noted Al Iacobelli, Chrysler Group vice president for employee relations. “That crisis ultimately revealed the structural flaws of the domestic automotive industry, including an unsustainable cost structure. In order to revive the automotive industry, a complete and painful restructuring was needed.”

Indeed, for Chrysler – and GM – that restructuring was forced via a federally-funded drive through Chapter 11 bankruptcy; for Chrysler, it meant the takeover by Italy’s Fiat, without which Chrysler likely would not exist today. It is against this unprecedented backdrop that the 2011 negotiations on the national UAW contract with the Big Three begin, with the four-year national contract covering some 113,000 American workers scheduled to expire at midnight on Sept. 14. The top priority of the Big Three is to hold the line on costs -- costs they have vastly pared as they closed plants, laid off workers and generally downsized.

Labor costs represent a hefty chunk of those costs, and automakers are determined not to let them rise to the point that they find themselves in the pre-bankruptcy era boat. As Iacobelli noted: “This year…with these negotiations, we have the unique opportunity to protect and secure Chrysler Group’s future competitiveness. This includes growing jobs intelligently by keeping labor costs competitive. While the industry and Chrysler have demonstrated some improvements to date, those gains have been modest and it is imperative that we not return to an uncompetitive state.”

Still, the UAW wants to some make up on the concessions they granted automakers during the recession and bankruptcies. The union claims thee concessions that helped the automakers survive have ranged from $7,000 to $30,000 a worker since 2005 by workers not receiving raises, bonuses and cost-of-living adjustments. The UAW also believes workers are entitled to a share of the automakers’ newly minted profits. In theory, that makes a richer profit-sharing formula the answer for both parties; the wrangling will be over how rich. This year, Chrysler paid $750 to each work in profit sharing; Ford $5,000; GM $4,300. As always, the UAW also wants commitments from Chrysler and the others to create more jobs – and thus boost UAW membership that has been in steep decline for three decades – by re-opening closed plants or adding shifts at others. The union will fight to have vehicles built in the U.S. rather than in Canada and Mexico.

Another unusual feature of this round of talks is the ban on a strike by Chrysler and GM workers, a mandate of the federal bailout. If the union and automakers reach an impasse, they are forced into binding arbitration, something both parties would like to sidestep. That leaves Ford as the only possible strike target, and UAW officials reiterated that it does not intend to disadvantage Ford or any automaker against each other. Those factors combined with a fragile economic and auto sales recovery that could be devastated by a strike means the likelihood of one is low. The last one was against GM in September 2007; it lasted only two days.

But that doesn’t mean there will be a shortage of theatrics, with UAW President Bob King playing the leading schizophrenic role. On one side of the stage, he’ll have to play the conciliatory role as the negotiator that he is who knows the fragile state of affairs in terms of the economy and cars sales. But on the other side of the stage, he’ll have to show his membership he’s a tough guy standing up to the auto companies. It’ll be an interesting play to watch, hopefully with an ending that is satisfying to both parties.

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