UAW, Chrysler Reach Contract Agreement

The UAW has reached an agreement with Chrysler to extend its current labor contract with the company for a second time. The agreement was reached with just a few hours left before its expiration. Now the UAW says that it will turn its attention toward contract negotiations with Ford, but would add no further comment.

The new contract deadline for Chrysler is October 19, and talks are ongoing. The UAW states that they will “continue negotiating toward a tentative agreement.” Just last week the contract was extended for a week after the UAW’s president, Bob King, missed a negotiation meeting. He was criticized in a letter written by Chrysler and Fiat CEO Marchionne. Despite the misstep, both say the relationship is intact.

Marchionne spoke to reporters in Turin, Italy saying that Chrysler wishes to “get this issue behind us.”  Director of the Center for Automotive Research in Ann Arbor, Kristin Dziczek, is of the opinion that talks with Chrysler should be wrapped up before the UAW deals with Ford, but no one knows what will happen next.  During a speech at the Automotive Press Asoociation, she said, “Early on, I felt that Ford almost certainly had to go last, but I did not factor in the letter.”  Dziczek mentioned that Marchionne drives a hard bargain with unions (in Italy and Canada, for example), and that binding arbitration has not been ruled out if it is deemed necessary.

Two years ago, the UAW agreed that wage/benefit issues that could not be successfully negotiated would be sent to binding arbitration.  Such action would be detrimental to the UAW’s public image, she added. Also, Chrysler could be negatively impacted by binding arbitration if the company’s goals are delayed. For example, an initial public offering which might allow the UAW’s retiree trust fund to sell their shares could easily be delayed by binding arbitration.

The financial market has mixed feelings regarding the negotiations. Moody’s Investors Service downgraded Fiat on Monday, but JP Morgan upgraded Chrysler. JP Morgan analyst Eric Selle said, “We expect Chrysler to successfully negotiate a UAW contract without an increase in fixed costs or its breakeven volume level. We also expect the company to post solid third quarter results.”

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