Rubric : Why Chrysler seeks to keep lid on UAW pay through 2019
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Why Chrysler seeks to keep lid on UAW pay through 2019
DETROIT -- Chrysler Group wants specific assurances in this round of UAW talks that the union will not try to resuscitate pay raises, cost-of-living allowances and other fixed costs after the expected 2015 expiration of the agreement, a source familiar with negotiations said.
Chrysler has committed $4 billion in U.S. investment since coming under the control of Fiat S.p.A. in 2009. And CEO Sergio Marchionne is insisting on long-term labor cost stability that goes beyond the next four years, the source said.
"This change of culture, from the old ways of doing business, must apply beyond 2015," the source said.
The assurances could come in the form of new contract language that would bind the UAW from seeking wage and benefit changes that would increase Chrysler's overall fixed costs, including a new Jobs Bank program, through 2019, the source said.
The Jobs Bank program -- discontinued in 2009 -- guaranteed workers pay and benefits while laid off.
Chrysler spokeswoman Jodi Tinson declined to comment. UAW spokeswoman Michele Martin said the union would have no comment.
There's precedent in recent UAW accords for provisions that run beyond a contract expiration. For instance, the no-strike clauses negotiated at GM and Chrysler in 2009 remain in place through 2015.
Marchionne said yesterday Chrysler cannot afford the same contract just negotiated by General Motors because Chrysler paid almost $2 billion in debt service over the past two years on government bailout loans.
GM wasn't hampered by that financial burden because the U.S. government received equity for the $50 billion it lent the automaker.
Chrysler posted a net loss of $652 million last year and expects to generate an annual profit of $200 million to $500 million this year, excluding certain expenses.
GM, in contrast, posted net profits of $5.7 billion during the first half of 2011.
Marchionne is expected to return to the United States from Europe today to renew UAW talks that broke off abruptly Sept. 14, when UAW President Bob King didn't show up to a meeting that Marchionne said was scheduled. King reportedly was tied up in bargaining at GM.
While briefing journalists on the GM settlement today, King wouldn't say whether the union would turn next to Chrysler or Ford Motor Co.King today said he has talked with Marchionne a number of times since their dust-up and he didn't expect the matter to affect negotiations.
The source said the UAW and Chrysler would need to agree to another contract extension if a new tentative agreement can't be reached under the existing one-week extension that expires at 11:59 p.m. ET on Wednesday.
The details of the tentative agreement with GM were shared with UAW local officials today. King said he expected the 48,000 UAW members at GM to ratify the contract by Sept. 28.
Chrysler is looking to provide many of the same provisions of the GM agreement, but at a discount, the source said. For example, Chrysler is offering a $3,500 signing bonus for its 23,000 hourly workers vs. the $5,000 one negotiated by GM, the source said.
The general direction of the four-year GM contract, however, is appealing to Chrysler.
Economic gains are concentrated in the signing bonus, three lump-sum $1,000 payments for inflation protection and a slightly enhanced profit-sharing plan. At the end of the contract, GM hourly workers will not have had a wage increase in 12 years.
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