UAW pledges to keep Chrysler competitive as contract talks begin
Photo credit: Reuters/Rebecca Cook
DETROIT -- The UAW and Chrysler Group formally opened contract negotiations today pledging to keep the automaker competitive on labor costs.
At a press event at Chrysler's headquarters, UAW President Bob King said he wants jobs and some reasonable improvements in hourly compensation without putting Chrysler at a competitive disadvantage with either General Motors, Ford Motor Co. or the U.S. transplants.
King said no new concessions are called for in light of Detroit 3 profitability. But he took pains to manage member expectations by stating that raises and a restoration of cost-of-living allowances might be hard to come by.
"Everybody in here, if you asked them if they wanted a raise, they'd say 'heck yeah,'" King said. "But can you do it and keep the company viable and successful?"
The UAW is negotiating new four-year agreements with the Detroit 3. The current four-year contracts expire Sept. 14.
No arbitration needed?
The kickoff today featured King and UAW Chrysler Department Vice President General Holiefield. The company was represented by Al Iacobelli, vice president of employee relations, and Scott Garberding, manufacturing senior vice president.
King said today there will be no "target" company for negotiations to set a pattern for the other two. They will all negotiate simultaneously.
He said if the two sides do their jobs, it won't be necessary to take any disputes to binding arbitration. An arbiter has the final say on contract disputes under concessions that the UAW took in 2009 that included a no-strike pledge.
GM workers also cannot strike, but Ford workers, who rejected the clause, can.
He said the UAW would try to keep all the agreements similar so as not to disadvantage any of the Detroit 3 vs. the transplants.
He reiterated his pledge to organize the transplants to provide their workers a democratic voice and to allow autoworkers at all U.S. manufacturing plants to rise in unison.
Notable by his absence was Chrysler CEO Sergio Marchionne, who is preparing for a Fiat-Chrysler earnings report tomorrow. Marchionne also is CEO of Fiat.
Garberding said Chrysler owes it to all of its employees, shareholders and the U.S. government, which bailed out Chrysler financially, to keep its labor costs realistic and continue the progress it has made over the past two years.
Chrysler has 9,755 U.S. salaried employees and 23,000 represented by the UAW.
Behind the friendly countenance of today's event, though, Chrysler has no intention of raising its labor costs whatsoever, said a source familiar with the negotiations.
"We dramatically raise our fixed costs and we're shooting ourselves in the foot," the source said last week.
Chrysler plans to keep its average hourly labor cost at $51 per worker, including wages and benefits, the source said. That's what the transplant automakers typically pay, and Chrysler cannot raise overall costs and fall behind the transplants again, the source said.
Chrysler believes it can save enough money on more flexible factory rules and other innovations to provide its hourly workers with one-time bonuses and profit-sharing to improve their compensation, the source said.
The $51-an-hour cost for the 23,000 UAW-represented employees is about $7 an hour less than that paid by GM and Ford.
The difference is largely a product of Chrysler having more low-cost temporary and entry-level workers than Ford and GM as well as the much-smaller profit-sharing paid in 2010.
Ford paid profit-sharing to hourly employees of $5,000 and GM $4,300, while Chrysler paid $750.
You can reach David Barkholz at email@example.com. -- Follow David on and