Fiat/Chrysler CEO Sergio Marchionne may push contract talks with the UAW into arbitration.
With negotiations at Ford wrapped up, the United Auto Workers Union is turning its attention to what is potentially its most difficult target — Chrysler – but after faltering shortly before the original September 14 deadline there are growing concerns that the two sides may be deadlocked, forcing them to turn to binding arbitration as required by Chrysler’s 2009 federal bailout.
Hoping to push past the current impasse, UAW president Bob King has finally joined the negotiations, which are underway at Chrysler headquarters in the Detroit suburb of Auburn Hills, setting the stage for several days of intense bargaining.
Chrysler has been threatening the union with arbitration – which was set as a requirement since the bailout barred a strike over economic issues.
The union, however, tried to defuse the threat by going to Ford for the second contract after setting a tentative pattern agreement at General Motors, last month.
Complicating matters, the company and union have yet to agree on an arbitrator. Arbitration ultimately could take several months to resolve, postponing a final settlement until sometime next year.
“The UAW is working toward an agreement, and arbitration is a last resort. That being said, if the negotiations are put before an arbitrator, then that arbitrator would only look at the issues not previously agreed upon by both sides,” according to a post on the UAW’s Chrysler Facebook page.
A settlement with Chrysler seemed close at hand in the hours before the September expiration of the maker’s old union contract. But King unexpectedly skipped a meeting with Chrysler CEO Sergio Marchionne to focus on getting the GM deal done, triggering an angry letter by Marchionne that quickly leaked out.
Talks between Chrysler and the union continued, albeit at a slow pace, while the UAW worked to settle its agreement with Ford. Autoworkers bargaining were ultimately able to win some additional bonus money at Ford and the union has been hoping to use that agreement as a pattern for a Chrysler settlement.
But the smallest of the American makers and the union have scrapped for weeks over the terms and conditions of the contracts of the GM and Ford contracts.
Marchionne has said he doesn’t think Chrysler could afford a signing bonus such as those promised GM and Ford workers. GM’s workers received $5,000 signing bonus, while Ford workers will collect $6,000 if their tentative agreement is ratified.
A well-placed insider says Chrysler is sticking to its original position that it has a fixed pool of cash and increasing pay or benefits in one area will require cuts elsewhere.
If anything, Chrysler negotiators have been pressing the union for changes to its health care plans. Soaring premiums have been a major factor in driving up the automaker’s fixed costs, Chrysler officials have complained.
The union, however, was able to fight GM and Ford’s bargainers to a draw on health care and King has insisted that all three companies should sign similar, if not identical contracts. The GM and Ford contracts do offer some relief on pension costs by essentially freezing stipends for retirees at 2007 levels and eliminating the annual Christmas bonus.
The union, meanwhile, can point to the fact that outside analysts have hailed the Ford and GM settlements as fair and acceptable, with the union accepting steps that could lead to significant improvements in productivity to offset any added costs.
That helped GM earn a ratings upgrade shortly after its contract with ratified by workers. Meanwhile, there are signs Ford could get a similar bump.
“Our initial assessment of the proposed UAW contract is that it should enable Ford to maintain its operating flexibility, fixed cost position, breakeven point, and liquidity position near current levels. If our final review of the of the contract’s provisions is consistent with this initial assessment, and if the contract is ratified, Ford’s credit metrics and business position would be supportive of a higher rating,” said a statement from Moody’s Investor Services.
Moody’s and other ratings agencies are waiting to see if the UAW also ratifies the Ford contract before taking action.
Paul A. Eisenstein contributed to this report.
Since I’m a GM guy I probably shouldn’t comment, but Sergio strikes me as an arrogant type, and he certainly rubs me the wrong way. I realize Fiat may be Chrysler’s savior, and that Chrysler is in a weak position relative to Ford and GM. But somehow I hope King finds a way to slow down this arrogant Italian. I was reading another article today that stated that Sergio shouldn’t have much trouble dealing with the UAW because he has to deal with the European unions and the Italian Communist Party all the time. I usually don’t get into the nationalistic thing, but this is one time that I hope that an American union doesn’t let a foreigner come into our country and insolently roll it. I know the Chrysler workers can’t strike, but I wonder if King could muster enough unionized suppliers to slow the flow of parts to Chrysler, if Sergio keeps throwing hissy-fits. Probably not, and probably Sergio gets his way. I usually try to stake out a reasonable position, but Sergio just makes me very unreasonable!
Paul, did I read that right about the Christmas bonus? The retirees have lost the Christmas bonus?
Sadly, it seems, you are absolutely right. The bonus is gone, says our Joe Szczesny.
Paul E.
I really hate that. Really depended on that money every Christmas. I’ve heard that we are getting a little improvement in our dental and eye care but I’m betting that it will equal out, money wise, to be about the same amount that the bonus was. In other words, they just moved money around but we really didn’t gain anything. I would have rather kept the bonus.
The makers have been arguing for a zero-sum game, that any increase in one column had to be matched by reductions elsewhere (though some of that seems to have come — for GM and Ford, so far — in approved productivity increases).
Paul E.
Zero-sum game = No gain.
Yes, though King would argue more jobs IS a gain, and at least it’s not more across-the-board concessions.
Paul E.
I was talking No Gains for us retirees Paul. Just shifting money around to make it look like we got something but I understand why it was done.