10 October 2007Yahoo! NewsPoornima Gupta and Kevin Krolicki
Chrysler LLC and the United Auto Workers union reached a tentative labor agreement on Wednesday, ending a strike against the No. 3 U.S. automaker just over six hours after it began.
The UAW said in a statement it was calling off the strike by some 37,000 workers at 20 of 25 Chrysler plants in the United States, effective immediately. The union said the tentative agreement would protect wages, pensions and health care for UAW-represented Chrysler workers and retirees.
Both sides said the tentative agreement included establishing a trust fund that would take over responsibility for retiree health care.
That follows the pattern of a ground-breaking deal between the union and General Motors Corp (GM.N) reached last month after a two-day national strike, and leaves Ford Motor Co (F.N) as the last of the Detroit Big Three yet to negotiate a deal.
Details of the deal, which now faces ratification by Chrysler's almost 49,000 UAW-represented workers, were not immediately available.
Picketers outside Chrysler factories began to disband as word went out from local union branches about the settlement.
"Everyone is just relieved. No one wanted this to go on too long," said Michael Yanoulakis, a Chrysler electrician who was leaving a picket line in Sterling Heights, Michigan. "Now the membership will speak at ratification."
The UAW and Chrysler conducted their whirlwind negotiations under tight wraps and many workers said they were concerned about what concessions the union had offered up.
"It's good that the strike is over, but now I'm apprehensive," said James Mosley, 55, a Chrysler veteran of 35 years in Kenosha, Wisconsin. "What I want to know is what we got and what we had to give up."
Chrysler said in a brief statement that it expected the deal to improve its manufacturing competitiveness. It also said the deal was subject to review by the U.S. Securities and Exchange Commission.
The contract settlement includes a health-care trust known as a Voluntary Employees Beneficiary Association, or VEBA, that vice chairman Jim Press said "helps level the playing field with other automakers."
"Anything we can do to remove costs that aren't finding their way to the customer, we need to do, and health-care costs is one of them," said Press, a Toyota veteran hired away by Chrysler in August, who was speaking at an event in Las Vegas.
In 2006, Chrysler's total average labor cost was the highest among the U.S.-based automakers at nearly $76 per hour, while Toyota Motor Corp's (7203.T) was less than $48.
SHORT STRIKE CAPS SHOWDOWN
The surprise settlement capped a dramatic showdown between the union and newly private Chrysler under the ownership of Cerberus Capital Management.
The UAW called a strike at 11 a.m. EDT when a marathon bargaining session failed to produce an agreement by a deadline the union had set earlier.
Some analysts had expected the gap between the two sides on key issues such as health care and job security to lead to a relatively long strike that would have also helped Chrysler run down some unsold inventory.
Instead, the Chrysler settlement came faster than the labor deal the UAW concluded with GM last month after a two-day strike.
"This agreement was made possible because UAW workers made it clear to Chrysler that we needed an agreement that rewards the contributions they have made to the success of this company," said UAW President Ron Gettelfiger.
David Cole, chairman of Center for Automotive Research in Ann Arbor, Michigan, said the short strike may have helped spark the quick settlement.
"Sometimes it is necessary to raise the focus a little bit, as getting this kind of contract ratified is very difficult," he said.
IRN Inc analyst Erich Merkle also said the speed of the strike settlement suggested that it would fall in line with the agreement the UAW reached with GM. If so, the agreement probably falls short of what Chrysler needs to turn around, he said.
"The UAW couldn't give in to plant closings and other details (for Chrysler) or GM would scream bloody murder and Ford would want the same deal," Merkle said.
GM DEAL RATIFIED
Separately, the UAW said on Wednesday evening that 66 percent of GM workers had ratified the union's new four-year contract with the No. 1 U.S. automaker.
The focus now shifts to Ford, which faces still-pending contract talks with the UAW and has indicated that it needs to clinch a deal that will sharply cut its own operating costs.
The short-lived UAW strike against Chrysler had shut down 20 of the automaker's plants. The union purposely excluded five plants that were in temporary shut-down due to excess inventory -- an attempt by the UAW to increase the financial cost of the strike for the automaker.
Chrysler was taken private by Cerberus Capital Management in August in a $7.4 billion deal. Former parent Daimler AG retains a stake of about 20 percent.
Chrysler's U.S. sales have slipped 3 percent through September, in line with a slump in the broad market. The company ranks behind GM, Toyota and Ford in U.S. sales.
The last UAW strike against Chrysler was in 1997.
(Reporting by Jui Chakravorty in Las Vegas, Nick Carey in Kenosha, Wisconsin and David Bailey in Detroit)
