Chrysler LLC is unable to provide the United Auto Workers union with the type of production guarantees that would secure a collective agreement, an industry analyst claims.
Compared with the pattern-setting, 4-year deal between the UAW and General Motors Corp., Chrysler's tentative agreement contains no long-term promises linking future products to U.S. plants.
Such promises cannot be made at this juncture, says Erich Merkle of IRN Inc. Having been sold to private-equity firm Cerberus Capital Management LP in August by DaimlerChrysler AG, Chrysler still is finding its way under new leadership.
“Daimler (AG) is now out of the picture,” Merkle says. “Cerberus is in. Bob Nardelli's the new CEO. Jim Press gets brought in from Toyota, and (management is) questioning everything from a product-strategy perspective. Because of the intense scrutiny, it's all up in the air.”
But critics of the deal are undeterred. Bill Parker, the lone holdout among the UAW's primary bargaining team members, tells Ward's his members deserve the same guarantees bestowed on their GM counterparts.
“This is a devastating break from the pattern,” Parker writes in a minority report being circulated as a blueprint for union dissidents. And it has been effective.
The tentative deal, reached Oct. 10 following a 6-hour strike, is on the brink of rejection. To pass, the agreement must be approved by a simple majority of the total ballots cast. Balloting is scheduled for today at Parker's home plant in Sterling Heights and at Chrysler's facility in Warren. Both are in Michigan.
Media reports say support at smaller plants is keeping the deal alive, though one of the dissenting assembly plants - Newark, DE - saw the agreement rejected by just 44 votes.
Richard “Mack” McDonough, president of Newark Local 1183, tells Ward's the deal fell victim to a campaign of misinformation.
“Many members have been concerned about the 2-tiered wage structure,” McDonough says in a statement, accusing “dissidents” of spreading fear. “The language states, 'No current seniority worker will be assigned entry-level wages, even if they are classified in non-core jobs.'
“Members with jobs who could be classified as 2-tiered jobs, as is in the GM agreement, are red-circled in the UAW/Chrysler agreement, which means they will be on the fork trucks, handling the material and working in the tool stores until they retire, quit or die,” he says.
“Even then, members from other plants will be eligible to fill in the attritional openings if they are in the jobs bank, and when they are transferred to fill an opening at others plants, they bring their wages and benefits with them.”
Special Report
2007 UAW
Labor Talks
Newark is a key plant in Chrysler's immediate product plans. Workers are building hybrid versions of the Durango and Aspen, Chrysler's first gasoline-electric vehicles, scheduled for sale as '09 models.
The two vehicles are prime examples of the dilemma facing Chrysler if the union returns to the bargaining table seeking more product detail, Merkle warns.
“There's nothing that's set in stone,” he says. “(Chrysler) can't tell you the all-new Durango is going into Jefferson North because they don't know if there's going to be an all-new Durango.”
The fullsize SUV is among the models on the bubble, according to widespread speculation. Others include the Dodge Magnum cross/utility vehicle and Chrysler Pacifica CUV, which appears headed for cancellation as key suppliers have no orders beyond Nov. 23 and dealers have been forewarned.
“The issue with GM is that they've had real stability and consistency in their product development over the last five years, and that really came from a guy by the name of Bob Lutz,” Merkle says, referring to the auto maker's product guru.
“He was brought in to fix the product problems, and what we're seeing today is the result of that - things like the Buick Enclave and Cadillac CTS. Some really attractive-looking products.”
However, the GM deal, ratified Oct. 10 after a 2-day strike, says the guarantees are subject to market demand.
Meanwhile, Chrysler appears to have little left for long-term promises, with the current launch of its redesigned minivans and next year's introduction of a reengineered Dodge Ram pickup - the two are among Chrysler's highest-volume products.
The auto maker is mum on anything related to the ongoing contract talks, but the pattern of investments suggests there are significant plans afoot. Several plant sites, including Sterling Heights, MI, have been upgraded to support production of multiple variations from singular platforms. In addition, Chrysler has earmarked $3 billion to invest in powertrain plants.
Of its 59 manufacturing sites, 55 will benefit from investment through the life of the proposed contract. The total outlay: $15 billion.
But the 2-tier wage proposal remains problematic, says Hal Stack, director of Wayne State University's labor studies center. The cost-saving measure is “contrary to what the UAW has stood for and for a very long time,” he says.
A 2-tier wage structure separating assembly jobs from non-assembly jobs redefines a plant worker's contribution to the industry and upsets expectations that have motivated workers for generations, Stack warns.
“What is the logic for why people get paid what they get paid?” he asks. “Is it based on the pure skill requirements? Should foundry workers, by definition, be getting more pay than workers who are sweepers or crib attendants?
“In the old days, the logic of the system designed by management was that as you got older and built up seniority you could get off the grueling work on the line and get a job as a crib attendant or a sweeper.”
One possible benefit would see the shop-floor climate change sufficiently to promote ongoing skill development, so a worker would acquire more responsibility as he accumulates experience, Stack suggests. But the physical demands of the job would not necessarily increase with the added responsibility.
This is the culture that exists in U.S. plants built by Toyota, he says.
If Chrysler's tentative labor agreement is rejected, it would mark the first time in 25 years that rank-and-file union members sent negotiators back to the bargaining table. The last time was in 1982, when a nearly bankrupt Chrysler Corp. required major concessions from the UAW.
“We anticipated this of course,” says retired UAW President Doug Fraser, who led those tumultuous talks. “There was a lot of pressure on both sides,” he recalls.
Reluctant to call the outcome of this year's voting, Fraser says: “I don't know if it's going to be rejected. But I think there's still enough (votes) out there to turn it around.”
Voting is expected to wrap up Friday, with key results from Chrysler's Belvidere, IL, plant, which employs a large number of temporary workers hired to assist with the production ramp-up of the Jeep Compass and Patriot small CUVs.
While GM's deal changed the status of its temporary workers to fulltime, the Chrysler agreement does not.
“There's never been a contract like this before,” Stack says. “It's a real break with the past.”
