As they assembled cars Thursday, workers at Chrysler's
Sterling Heights assembly plant were talking about their new labour
contract, wondering if Wednesday's six-hour strike was enough to get
a good deal from the company. Even as they waited to hear the
details, industry analysts were predicting crosstown rival Ford will
try to get more concessions than Chrysler.
Some workers were skeptical about job security promises, one
``A lot of people are sort of surprised that we only stayed out
that long,'' said Brett Ward, a forklift operator at the Sterling
Heights plant and a member of a group that's often critical of the
union. ``They're thinking that it might have really not gotten us
UAW leaders have yet to brief the rank-and-file on the tentative
deal, which abbreviated the strike when it was reached late
The Chrysler pact mirrors the contract with General Motors Corp.
that UAW members ratified Wednesday. GM shares rose $1.86, or 4.9
per cent, Thursday to close at US$39.99, a 52-week high. Deutsche
Bank analyst Rod Lache said in a note to investors that the UAW
contract agreement can significantly improve the competitiveness of
Ford Motor Co. will go last in the negotiations. Spokeswoman
Marcey Evans said Ford and the union weren't in talks Thursday, but
their negotiations are expected to accelerate soon.
Under Chrysler's tentative agreement, the company would pay $10
billion to $11 billion into a union-run trust that will pick up
Chrysler's $19 billion in future retiree health care expenses,
according to two people who have been briefed on the agreement.
Other major provisions include job security pledges from the
company and a two-tier wage scale, with new hires making around $14
per hour, or half the current starting wage of an assembly line
The lower wage would cover about 11,000 ``noncore'' workers who
do not build cars or parts. People now in those jobs would be
offered buyout and early retirement packages to make room for the
new workers, said the people, who spoke on condition of anonymity
because the contract details have not been presented to union
Also included is a $3,000 signing bonus for all members, plus
lump-sum payments of three per cent of pay in the second year, four
per cent in the third year and three per cent in the final year of
the deal, the people said.
Another person familiar with the pact said the job security
provisions weren't as extensive as those granted by GM, which
promised to build next-generation products at 16 assembly plants and
parts at other facilities. The Chrysler guarantees extend no further
than the life of current products or the length of the four-year
contract, said the person, who also did not want to be identified
because the details haven't been formally released.
Although details have been scant, the deal appears to show that
Chrysler's new owners, Cerberus Capital Management LP, didn't buy
the company just to sell it off, said Richard McDonaugh Jr.,
president of Local 1183 at Chrysler's Newark, Del., assembly plant.
McDonaugh, whose plant is slated for closure, said he is hoping that
the UAW may have preserved its future in the contract.
``It very well could be true that they're in it for the long haul
and they're not going to strip and flip us,'' he said.
It would be difficult for Chrysler to promise job security by
guaranteeing that new vehicles will be built at U.S. plants like GM
did because Chrysler's new executives aren't yet sure what vehicles
will be built and the company still needs to shed factory capacity,
said Greg Gardner, an analyst for Harbour Consulting, a Troy company
that tracks manufacturing productivity.
``GM has gone a lot farther in its restructuring in terms of
reducing capacity than Chrysler has,'' Gardner said.
Data collected for 2006 show that Chrysler used 88 per cent of
its factory capacity, but a company needs to be in the low- to
mid-90-per cent range to maximize profitability, he said.
By contrast, Ford is using about 79 per cent of its plant
capacity, and that's one reason Ford could be seeking more
concessions than Chrysler and GM did, said Erich Merkle,
vice-president of auto industry forecasting for consulting company
IRN Inc. in Grand Rapids. Merkle said Ford needs to match its
production with its falling U.S. market share.
Ford is generally considered the weakest of the Detroit Three in
this round of contract talks. It lost $12.6 billion in 2006 and has
mortgaged its factories to secure a $23.4 billion line of credit to
cover losses and fund its restructuring plan, which calls for
closing 16 facilities by 2012.
Merkle said he's concerned the UAW will try to make Ford follow
the pattern set by Chrysler and GM even though its needs are
different. For example, he said, Ford isn't in the position to
guarantee future jobs at U.S. plants.
``I just don't think they're going to get the things that they
need,'' Merkle said. ``But at the end of the day, the less the UAW
gives up, the more it's going to hurt Ford from a financial position
Ford has at least one advantage in the talks: UAW president Ron
Gettelfinger began his career at Ford as a chassis line repairman,
rose through the union ranks as a Ford bargainer and continues to
have a close relationship to the company. Ahead of this year's
talks, Ford president and CEO Alan Mulally said he ``couldn't be
more pleased'' about his relationship to Gettelfinger and other
Gettelfinger's relationship with Ford and the fact that talks
have been going on for months will diffuse some tension, said Harley
Shaiken, a professor at the University of California at Berkeley who
specializes in labour issues.
``It will be tough bargaining, which is less subject to a
miscalculation than it would have been without the relationship,''
Shaiken said. ``A relationship doesn't make deep differences go
away, but they can be approached in a more effective manner.''
Workers at the automakers must vote on the contracts before they
take effect, so UAW officials will have to convince Ford and
Chrysler workers that they did the best they could. Shaiken is
already predicting that the UAW will have a tough time selling its
tentative agreement to Chrysler workers. He has heard of worker
discontent in the plants, with some already upset about the deal.
``It's going to be a tough vote, where confidence in the
leadership is balanced against anger at the situation. That's a
volatile mix,'' Shaiken said.