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Chrysler, UAW Leaders Reach Deal

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The Associated Press

Published: October 16, 2007

DETROIT - There was some dissent and a lot of questions, but in the end, local United Auto Workers leaders voted to recommend approval of a new four-year contract with Chrysler LLC that is similar to one ratified last week with General Motors Corp.
UAW President Ron Gettelfinger said the deal was approved overwhelmingly by voice vote among several hundred local union presidents and bargaining committee chairs. The vote clears the way for the union to present the pact to about 45,000 Chrysler workers covered by the contract. Balloting is expected to get under way in the next day or two.

The deal will cut what Chrysler says is about a $28-per-hour labor cost disparity with its Japanese competitors, though it was unclear how big a cut it would make.

In the bargaining, UAW negotiators were able to fend off the company's demand for $1.01 per hour in wage cuts and cost-of-living adjustment delays, according to a booklet summarizing the deal. They also saved about 1,500 jobs at the Toledo, Ohio, machining plant that was slated to close.

But 14 of 21 factories listed in the booklet have no future products to make after the current product life cycle or the life of the new contract.

The deal also includes a lower-tier wage scale for newly hired 'noncore' employees who do not build vehicles or manufacture parts.

Like the GM deal, the union won a moratorium on plant closing and outsourcing. The outsourcing ban on noncore work will keep 8,000 jobs, the booklet said.

'It was not unanimous, but it was a big vote for it,' said Ross Rushing, a shop committeeman from Local 72 in Kenosha, Wis., who said he was satisfied with the deal. 'Our bargaining committee did the best they could.'

Chrysler workers would see gains of $10,235 over the life of the agreement, according to the booklet. Chrysler also would contribute $10.3 billion toward retiree health care, including $8.8 billion to create a union-run trust for retiree health care and $1.5 billion in retiree health care costs until the trust takes effect. Chrysler has an $18 billion retiree health care obligation.

Health benefits also will be protected for active workers, and retiree health care will be funded starting in 2010 by the trust, called a Voluntary Employees Beneficiary Association. The VEBA must gain court approval.

Chrysler also will fund the VEBA with a financial instrument called a warrant with a potential equity value of $605 million. And retirees will get a raise of $66.70 in their pension checks per month, of which $51.67 will go toward the VEBA.

'Chrysler had an agenda that was nothing but cutbacks, but our membership turned the company around,' UAW Vice President General Holiefield said in the booklet.

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