Chrysler and UAW Begin Negotiations : Union Seeks Parity; Auto Maker Wants a Saturn-Type Deal

As the United Auto Workers and Chrysler open their 1985 contract talks here this morning, each side may keep repeating one simple word, mantra-like, to sum up its bargaining position. For the union, the word is parity; for the company, the word is Saturn.

In the context of the Chrysler negotiations, parity means more money for the workers; Saturn means lower costs for the company. The gap between the two words is wide, and so long as both remain in use during the Chrysler talks, the negotiations are likely to prove difficult.

If a settlement is to be reached covering the union’s 70,000 Chrysler members in the United States before the old contract expires Oct. 15, the two sides will have to find some words they can use in common. “One guy shouts parity, another guy shouts Saturn, and then you have to sit down and actually start talking,” notes Bennett E. Bidwell, a Chrysler executive vice president.

Economic Demands

But behind each side’s rhetoric are some important economic demands. For the UAW, the central issue of parity reflects its fierce determination to bring wages, benefits and other key contractual items at Chrysler, which has had a labor cost advantage over its larger domestic competitors since the start of its financial crisis nearly six years ago, back into line with those paid by General Motors and Ford whose labor contracts don’t expire for two years.

Parity has been a union rallying cry ever since Chrysler began its remarkable recovery two years ago, and union leaders now seem bent on making it a non-negotiable demand. “I wouldn’t come out (of the talks) with any less than parity with GM and Ford,” says James M. Davis, a member of the UAW’s national bargaining committee. “If there is no parity, there definitely will be a strike.”

And, since Chrysler Chairman Lee A. Iacocca recently bragged that his company now has the highest per-unit profit margin of any of the Big Three auto makers (in part because of labor concessions granted during its brush with bankruptcy), union negotiators seem to have the ammunition to back up their claims that Chrysler can afford parity.

“I say that the time has come for Chrysler workers to make some monumental advances on the bargaining front,” wrote Marc Stepp, a UAW Vice President and director of its Chrysler Department, in a recent report on the negotiations. “Chrysler profits have skyrocketed . . . Now it’s time for the workers, who made it all possible, to get their rightful share--because the money’s there.”

Currently, the average assembler at Chrysler makes $12.79 per hour in base wage and cost of living allowance, 39 cents below the GM average of $13.18 per hour. (However, that gap will narrow in September, before the contract deadline, when a 32 cents-per-hour cost-of-living allowance goes into effect at Chrysler.)

Beyond Wages

But the union says the parity issue goes beyond wages to encompass such things as demands for pension improvements, job security, retraining, and the sticky issue of the company’s foreign purchases of parts and fully assembled cars. In all of those areas, the union has had less bargaining success with Chrysler than with GM and Ford.

The UAW wants to use the contracts it hammered out with GM and Ford in 1984--which included major union advances in many non-wage areas--to set a pattern for its talks with the No. 3 U.S. auto maker.

But Thomas W. Miner, Chrysler’s vice president for industrial relations and its chief negotiator, says the company plans to remind the union that this year’s relaxation of import quotas on Japanese cars makes it even more important for Chrysler to retain competitive labor costs. “We are going to spend a pot full of money on new products over the next few years, because we are going into a cat-fight with (import) restraints off,” Miner says.

He also indicates that Chrysler will suggest that the union accept a new profit-sharing plan as a partial substitute for wage increases, but insists that Chrysler won’t agree to profit-sharing on top of a big wage hike. (The union now has profit-sharing plans at GM and Ford, and is likely to ask for a similar plan at Chrysler in addition to increases in wages and other benefits.)

“If profit-sharing is just the frosting on the cake, we’re not interested,” Miner says.

But while the union has been demanding parity from Chrysler, the company has watched as the UAW has cut low-cost deals for GM’s new Saturn plant and its California joint venture with Toyota, as well as with Mazda’s new American plant. Now, Chrysler believes that the union give the rest of the industry such special breaks.

Innovative Contract

GM’s new Saturn small car subsidiary and the UAW agreed last month to an innovative contract--calling for relatively low base wages with additional incentive pay tied to profits and productivity--to cover Saturn’s future work force at its planned Tennessee factory. Iacocca immediately said the Saturn agreement would set the pattern for Chrysler’s talks with the union this summer.

UAW President Owen Bieber, (who is the union’s representative on Chrysler’s board), has already warned that he will not allow the Saturn contract to establish a pattern, but that isn’t likely to stop Chrysler from talking about Saturn.

“We’re not going to ask for the (whole) Saturn agreement, because that was fashioned for GM,” Miner says. “But there are pieces of the Saturn agreement that we are interested in.” Miner adds that some of the non-wage clauses in the Saturn agreement, which provide for such things as flexible work rules and fewer job categories, might help Chrysler improve the efficiency of its plants and lower its labor costs.

Bidwell notes that he doesn’t think it makes sense for the union only to give special deals to brand new factories such as Saturn’s, while limiting productivity improvements at existing facilities at Chrysler. “There are a lot of old plants out there that could use a Saturn contract, too,” Bidwell says. Meanwhile, the wild card in the Chrysler talks may come from Canada, where the company’s contract covering 10,000 Canadian UAW workers also expires Oct. 15.

Canadian UAW

Chrysler, which opens talks in Canada on Tuesday, will be the first major auto company to bargain with the Canadian UAW since it decided to break away from its U.S. parent organization last December, a move made at least in part because the Canadian union’s leadership felt the American UAW was becoming too soft on the auto industry. Now, Chrysler is hoping that it isn’t used as a test case by the more militant Canadian union to prove to its members that it can deliver more than the American UAW. “It (the UAW rift in Canada) is a complicating factor,” Miner acknowledges.

But since Chrysler’s only plant assembling its popular minivans is in Canada, the company may not have much choice but to listen to the Canadian union in order to avoid a crippling strike. “We don’t want to shut down our plants in Canada,” Miner says. “But then, we don’t want to have to shut them down in either country.”