UAW the Big Winner in Chrysler Settlement : Union Getting Most of What It Sought, Negotiators Say
The United Auto Workers appears to have come out the big winner in reaching a $1-billion settlement early Wednesday morning of the union’s weeklong strike against Chrysler.
The No. 3 U.S. auto maker seems to have received little of what it wanted in return for agreeing to most of the union’s key demands, union and company officials indicated.
In fact, UAW President Owen Bieber was so pleased with the settlement that he predicted that rank-and-file Chrysler workers will easily approve the new contract in ratification voting this weekend, and many local union leaders at Chrysler plants agreed.
“The mood here is very happy, jubilant,” said John Prager, financial secretary of UAW Local 1248 in Warren, Mich.
“Our members are quite enthused. I’m sure it will be ratified,” added Sam Weary, financial secretary of UAW Local 212 in Detroit.
Today, local union leaders from Chrysler plants around the country will meet in Detroit to vote on the pact and to decide whether to recommend its ratification by Chrysler workers. Bieber said the striking workers won’t return to their jobs until after the tentative pact is ratified, which means that Chrysler’s plants won’t reopen until next Monday.
42-Hour Bargaining Session
The Chrysler agreement was hammered out in one of the longest marathon bargaining sessions in auto industry history; it began Monday morning and ended 42 hours later. The settlement came almost exactly one week after the Chrysler strike began at midnight Oct. 15, when the company’s American workers and its 10,000 unionized employees in Canada walked off their jobs after bargainers in both countries failed to hammer out new accords before the old ones expired.
A tentative settlement in the strike by the independent Canadian UAW was reached on Sunday, and the Canadians returned to their jobs on Monday after the agreement was quickly ratified that morning.
When the U.S. settlement was finally announced early Wednesday, Chrysler and UAW leaders agreed that the new three-year contract satisfied the union’s central demand that Chrysler workers receive “parity”--wages and benefits equal to those paid by General Motors and Ford. Boosts in base wages and cost-of-living adjustments will immediately bring wages at Chrysler up to the current GM average of $13.29 per hour.
Like the pacts at GM and Ford, the Chrysler agreement provides a 2.25% base wage increase in the first year and a one-time, lump-sum cash payment equal to 2.25% of base wages in the second year. GM and Ford sought and won the lump-sum payment formula last year because the one-time payments do not permanently become part of base wage rates and so are cheaper than percentage wage increases.
The new contract also follows the GM and Ford pattern by providing a $187-million job security fund that protects workers with at least one year of seniority from being laid off due to Chrysler’s purchase of parts from outside suppliers or from the company’s increased use of automation.
Similar funds--scaled to match their larger size--were hammered out last year at GM and Ford. The GM fund provides $1 billion to protect workers from layoffs, while the Ford fund totals $280 million.
While such funds don’t limit the ability of the auto companies to buy more parts or fully built cars overseas, they put a higher cost on such moves by forcing the firms to pay for the retraining and income protection of the American workers affected by the imports.
But the Chrysler contract goes beyond the GM-Ford contract pattern established in negotiations last year to provide $2,000 cash bonuses for Chrysler workers to reimburse them for the $1 billion in concessions that they granted Chrysler between 1979 and 1981 to keep the company afloat. (In addition, $1,000 bonuses will be paid to retirees, and $600 bonuses will go to spouses of deceased Chrysler workers. In December, 1986, the retirees and surviving spouses will get extra bonuses of $200.)
Those bonuses will not cover all of the wages lost by Chrysler workers during the company’s financial crisis--the payments will only cost the company about $170 million in the United States, while similar payments in Canada will cost an additional $14 million, analysts estimated Wednesday.
In addition, the contract goes beyond the GM-Ford pattern to provide for a 3% base wage increase in the third year of the agreement, which will come after the current GM and Ford contracts expire.
“This Chrysler package is parity plus,” Bieber said at an early morning press conference announcing the settlement.
“When we entered these negotiations, we said that our goal in these negotiations was to match the full auto pattern set last year at General Motors and Ford,” Bieber added. “We have done that, but we have gone even further and shaped a new pattern for subsequent agreements by winning two (percentage base wage) increases, including a 3% wage increase in the third year of this agreement.”
Thomas Miner, Chrysler’s chief negotiator, said the new agreement will increase the auto maker’s labor costs by more than $1 billion over the three-year life of the contract. He added that the strike had already cost Chrysler another $17 million a day in lost profits, but analysts believe that much of those losses will be recouped if Chrysler schedules overtime production throughout the rest of the year.
Firm Almost Shut Out
Full details of the agreement were not officially released Wednesday, but union and company officials indicated that the only important point on which the company won was on its demand that the agreement last for three years, rather than two as the union wanted. That difference means that Chrysler’s contract will not expire until one year after those at GM and Ford, reducing the pressure on the company to provide another contract that exactly parallels those at its bigger cross-town rivals.
It will also expire nearly one year after the company’s new 23-month contract with its Canadian workers, and Miner said it was important to keep the U.S. and Canadian contract deadlines separate in order to keep interunion rivalry between the newly independent Canadian UAW and the American UAW from upsetting future contract negotiations. There has been widespread speculation, denied by union leaders in both countries, that such rivalries slowed this year’s talks in the United States and Canada.
But even the concession of an extra year cost Chrysler: In return for extending the contract until 1988, Chrysler agreed to return to the auto industry’s traditional practice of granting 3% annual wage hikes, at least for the final year of the pact. And since Bieber indicated that the union will push for similar wage increases in the first year of its GM and Ford contracts when they come up for renewal in 1987, Chrysler’s one-year extension may not save it much money in the end.
