By DEE-ANN DURBIN and TOM KRISHER 10.10.07, 1:49 AM ETDETROIT -
The United Auto Workers union and Chrysler remained locked in negotiations early Wednesday as workers prepared for the picket lines.
The UAW set a deadline of 11 a.m. EDT to reach a tentative agreement with Chrysler LLC or have thousands of workers walk off the job. The union represents about 49,000 workers at 24 U.S. manufacturing facilities and other sites.
In a memo to local union leaders, the UAW said it would stop extending its contract with Chrysler by midnight Tuesday, but that deadline passed with no announcement. The contract was supposed to expire Sept. 14 but has been extended since then.
"The company has thus far failed to make an offer that adequately addresses the needs of our membership," UAW President Ron Gettelfinger and the UAW's chief Chrysler negotiator, General Holiefield, said in the memo sent Monday.
UAW spokesman Roger Kerson declined to comment early Wednesday. Chrysler spokeswoman Michele Tinson said talks were continuing through the night.
Chrysler's deadline comes as UAW members at General Motors Corp. wrap up voting on their own tentative contract. The UAW was expected to announce Wednesday whether a majority of GM's union members approved the agreement, which was reached Sept. 26 after a two-day strike. Contracts can't go into effect until workers approve them.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, said Tuesday that it appeared the GM contract would be ratified with about 60 percent of the vote despite protests from some members. The historic agreement establishes lower pay for some workers and puts GM's retiree debt into a UAW-run trust in exchange for promises of future work at U.S. plants.
Typically, the union crafts an agreement with one Detroit automaker and then persuades the other two to match its terms. But it was unclear how much of GM's contract Chrysler would want to adopt. The UAW is expected to bargain with Ford Motor Co. last.
Chrysler entered the talks seeking health care cost concessions that the UAW already granted to GM and Ford in 2005. Bargaining also has centered on how much Chrysler would pay into a company-funded, union-run trust that would take over its unfunded retiree health care costs, estimated at $18 billion.
The union agreed to the creation of such a trust last month in GM's contract, but GM needed the trust more than Chrysler because it has 340,000 retirees and surviving spouses - compared with 78,000 at Chrysler - and billions more in retiree debt.
Also at issue are the union's desire for job security pledges at U.S. factories and Chrysler's wish to contract out work now done by higher-wage union members, according to a person briefed on the talks. The person requested anonymity because the talks are private.
At factories and union halls across the Detroit area Tuesday, workers filled out paperwork for strike pay and signed up for picket duty.
Some workers said they didn't know what to expect from the talks because Chrysler recently became a private company. Daimler AG finalized the sale of a majority share in Chrysler to the private equity firm Cerberus Capital Management LP in August, shortly after the contract talks began.
Melvin Thompson, president of a UAW local at a Chrysler truck plant in Warren, near Detroit, said there is uncertainty in having a new bargaining partner.
"There is a difference," he said. "We don't know what that difference is yet."
It would be to Cerberus' advantage to settle some of Chrysler's labor cost issues in the new contract without a lengthy strike, said Standard & Poor's credit analyst Gregg Lemos-Stein.
"One would have to imagine if their return on investment would be superior if they were to achieve a contract that would address some of these very serious legacy cost issues," he said.
Analysts agreed that a short-term strike would have little effect on Chrysler and might even help the company reduce inventory. Chrysler had a 71-day supply of cars and trucks on dealer lots at the end of August, according to according to Ward's AutoInfoBank. An ideal supply is around 60 days.
But a walkout that lasts longer than a month would start to cut into sales, said Paul Taylor, chief economist with the National Automobile Dealers Association. Taylor said a strike could hurt sales of hot-sellers like the Chrysler Aspen sport utility vehicle and Jeep Wrangler four-door. Chrysler also is in the middle of the critical launch of its new minivans.
Chrysler said it already planned to idle five assembly plants and some parts making factories for short stretches during the next two weeks in an effort to adjust its inventory to a slowing U.S. automotive market.