UAW shifts talks from Chrysler to Ford
Thursday, September 22, 2011
DETROIT (AP) — The United Auto Workers union shifted the focus of its contract talks to Ford Wednesday night after failing to reach a deal with Chrysler.
The move could mean trouble in the talks with Chrysler, which was close enough to a deal with the union that CEO Sergio Marchionne flew from Europe to the U.S. late Tuesday in case his signature was needed.
But late Wednesday, the union said in a short statement that its attention would now shift to Ford, where little progress has been reported. The UAW gave no reason for the change.
“They obviously hit a pothole of some sort, and they took an alternate route by going to Ford,” said Harley Shaiken, a professor at the University of California at Berkeley who specializes in labor issues.
Earlier Wednesday, the union and Chrysler announced a second contract extension so they could continue negotiations, this one until Oct. 19. But the talks stopped Wednesday evening, and it was unclear when they would restart.
Shaiken said changes from one company to another during the talks are unusual but have occurred in previous negotiations. He’s been following UAW labor talks for four decades.
Neither Chrysler nor the union would comment about the lengthy contract extension.
Ford spokeswoman Marcey Evans said Wednesday night that the company looks forward to negotiating a deal that’s fair to employees and “allows Ford to become more competitive.”
Ford has the highest hourly labor costs in the industry and likely will try to find ways to cut them to match competitors.
The UAW reached an agreement with General Motors late Friday. GM workers are expected to begin voting on that deal soon. It includes a $5,000 bonus if the contract is ratified and a new profit-sharing plan in place of annual raises.
But Chrysler, which is much smaller, may not have the resources to match the bonuses and profit-sharing that GM offered its workers last week. The automaker’s main objective is to hold labor costs steady at $49 per hour, among the lowest in the U.S. auto industry.
Chrysler workers know that they may not get as good of a deal as GM workers, Kristin Dziczek, head of the labor and industry group at the Ann Arbor, Mich.-based Center for Automotive Research, told the Automotive Press Association in Detroit Wednesday.
Chrysler reported a $254 million net loss during the first half of the year, while GM earned $5.4 billion. Chrysler workers also know the company still needs money to retool plants and revamp more of its models, Dziczek said. Chrysler is upgrading its lineup with technology from Fiat, which owns a majority of Chrysler.
“I think the UAW gets that, and they understand what they’re going to have to do to get an agreement at Chrysler,” Dzicek said.
But she also said Marchionne, who also runs Fiat, has been tough on Italian unions.
The talks with Chrysler already have hit some bumps. In a letter sent to UAW President Bob King last week, Marchionne accused King of failing to show up to complete negotiations as scheduled. But Marchionne said Tuesday that he was optimistic they’d reach an agreement soon.
King wouldn’t discuss the letter, but said Tuesday that he has a good relationship with Marchionne.
Complicating the Chrysler talks is the UAW’s indirect ownership of company stock. More than 40 percent of Chrysler is owned by a UAW trust fund that pays retiree health care bills. That puts the union in a difficult position: It must win more money or job guarantees from Chrysler without hurting the company’s ability to turn a profit and boost the stock price when Chrysler eventually goes public again.
Meanwhile, negotiations at Ford Motor Co. had slowed while the union concentrated on the other two companies. Ford may have to offer a sweeter deal than GM because it has made more money and because workers are upset with the company about restoring white-collar merit pay when union workers got no raises.
GM’s deal promises news jobs and car production in the U.S, a top union concern. It also offers buyouts for more expensive, longtime union workers.
Under the deal, GM’s union workers get a $5,000 signing bonus and profit-sharing checks that will likely exceed the $4,300 workers received this year. Longtime workers won’t get a pay raise, helping GM contain costs. But entry-level workers will get raises of up to 24 percent during the contract’s four years.
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