Tuesday, October 9, 2007

Chrysler to cut deeper

UAW strike deadline looms: As 11 a.m. Wednesday nears, trims may be tactic to help seal labor deal



United Auto Workers President Ron Gettelfinge

Chrysler LLC, deep into labor contract negotiations with the UAW, also is making changes to its nonunion workforce -- cutting hundreds of salaried and contract jobs.

The Auburn Hills automaker announced plans in February to eliminate 13,000 jobs over three years, including 2,000 salaried jobs. Now it intends to reduce even more white-collar positions by cutting the nonunion salaried workforce by 5% and cutting the contract workforce at Auburn Hills by 37%, said people who had been briefed on the plan but were not authorized to speak publicly about it.

The move comes as the UAW has given Chrysler an 11 a.m. Wednesday deadline to reach a new labor agreement or face a nationwide strike, according to a memo sent Monday by UAW President Ron Gettelfinger and UAW Vice President General Holiefield to UAW local leaders.

Although Gettelfinger told local leaders that Chrysler had "thus far failed to make an offer that adequately addresses the needs of our membership," several industry observers said the new deadline could indicate the two sides are near a deal.

"It is meant to put the negotiations into their endgame," said Harley Shaiken, a labor expert from the University of California, Berkeley.

"A deadline like that indicates two things that are a bit contradictory: first that a deal is near. Second that there is some trouble closing it."

Chrysler, which is undergoing historic evolution as the first privately held major American automaker in more than 50 years, is racing along at breakneck speed in an effort to make changes at all levels -- from the chief executive's suite to the assembly line.

In August, Cerberus Capital Management acquired majority control of Chrysler, putting Bob Nardelli in control as CEO and keeping former CEO Tom LaSorda around as president and vice chairman.

Last week, minority owner Daimler AG confirmed that LaSorda, who is leading the UAW negotiations for Chrysler, was paid a bonus related to the sale of Chrysler to Cerberus. A German union leader called the bonus "unreasonably high."

What new reductions could mean

Before the ownership change, Chrysler, which lost $2 billion in the first three months of the year, implemented a turnaround plan that shed about 1,000 white-collar jobs this year and another 1,000 next year.

Under the new plan, an additional 5% reduction of nonunion salaried workers could mean the loss of 535 white-collar jobs.

The automaker also has 3,000 contract workers in Auburn Hills. A 37% reduction could mean the loss of 1,110 jobs.

Chrysler declined to comment for this report. In August, LaSorda seemed to indicate that more cuts were on the horizon when he refused to rule out that the turnaround plan would go deeper than initially announced, noting that the economy was hitting the auto business hard. The automaker's U.S. sales are down 3% this year compared with 2006.

Shaiken said it was not surprising that Chrysler would be making cuts to its white-collar ranks while negotiating a UAW contract.

"White-collar folks at the Detroit automakers are in the unfortunate position of any time a company wants to make a point to the union, they demonstrate it on the white-collar folks, either to set the example or to show that they mean business or both," Shaiken said.

UAW memo authorizes strike

Leaders of UAW locals at Chrysler plants were prepared for a Sept. 14 strike, when the 2003 contract was set to expire, but work continued around the nation under an indefinite extension at Chrysler and Ford Motor Co. while the UAW worked to get a deal with General Motors Corp. first.

Talks with GM went nearly two weeks past the Sept. 14 deadline and included a two-day strike at GM facilities before a tentative agreement was reached Sept. 26.

Although GM's tentative deal serves as the template for a Chrysler agreement, the companies are in different situations, with GM much farther along in restructuring its North American operations.

Talks between the UAW and Chrysler intensified during the weekend. Negotiators met late into the evening Sunday and were expected to go late Monday, people familiar with the talks said.

"Your bargaining committee worked long hours this weekend in an attempt to reach a tentative agreement," Gettelfinger and Holiefield said in their memo. "Many difficult issues have been discussed involving the wages and benefits of the UAW-represented members."

During the weekend, the UAW delivered the 72-hour notice required to end the indefinite contract extension with Chrysler, which the two sides had agreed to Sept. 13. The Gettelfinger memo said the contract extension officially ends at 11:59 tonight, apparently giving the two sides an hour-by-hour extension to reach a deal by 11 a.m. Wednesday.

If no deal is reached by that time, Gettelfinger warned, "we will be left with no choice but to commence a strike at all UAW Chrysler facilities. ... Unless you receive notice otherwise, a strike is authorized at all locations at that time."

Experts said a strike against Chrysler could be devastating for the automaker.

"Everybody hopes that it does not come to pass," said David Gregory, professor of labor law at St. John's University. "Chrysler's really not in the position to take any significant, protracted strike. It could be the end of the company."

No comments: