DETROIT – As a strike deadline loomed, bargainers for the United Auto Workers and Chrysler LLC were back at the table early Tuesday morning trying to settle on a tentative contract.
The 11 a.m. Wednesday deadline set by the UAW may be a tactic to get Chrysler to give a little more. It also makes one thing abundantly clear: Chrysler isn't going to just agree to the same contract terms as General Motors Corp (GM).
Several industry analysts said Monday night that Chrysler's needs are different than GM's, so it requires a different deal with cost cuts in different places.
The union may have set the strike deadline for its 49,000 hourly workers because of how far Chrysler bargainers want to go in demanding cost cuts.
"We think that they may be holding out for something more than GM got," said Aaron Bragman, an industry analyst for the consulting firm Global Insight.
Chrysler is likely to make another round of buyout or early retirement offers to salaried employees and cut contract workers in an effort to reduce its white-collar work force by about 1,500 more people, a person briefed on the plan said Monday.
The person, who requested anonymity because the plan has not been made public, said the reduction will be made because the company needed to modify its recovery plan announced in February.
Most of the white-collar reductions will occur at Chrysler's Auburn Hills headquarters, said the person, who did not know when the company expects to complete the cuts.
Chrysler announced in February that it would eliminate 13,000 positions, including 11,000 production jobs and 2,000 white-collar posts in an effort to return to profitability in 2008.
The UAW went on strike for nearly two days last month before coming to a tentative agreement with GM on Sept. 26. Workers with the nation's largest automaker are expected to wrap up voting on the agreement by Wednesday.
The union normally settles with one U.S. automaker and then uses that deal as a pattern for an agreement with the other two.
Among the differences this time, analysts say, are health care givebacks granted to GM and Ford Motor Co. in 2005 that Chrysler didn't get, worth approximately $340 million a year.
Another person briefed on the negotiations said the two sides have not agreed on giving the same deal to Chrysler. The person also requested anonymity because the talks are private.
Higher health care costs are one big reason why Chrysler pays its workers an average of $75.86 per hour in wages, pension and health care costs, the highest among the Detroit automakers.
Several analysts also said the company and union likely are apart on setting up a Chrysler-funded union-run trust that would take on the company's roughly $18 billion in retiree health care costs. Unlike GM, Chrysler also may be against giving specific job security promises by guaranteeing new cars and trucks will be built at U.S. factories, and it wants to hire out parts transportation rather than pay full UAW wages for it, the analysts said.
Job security could be a tough issue because Chrysler and its new owner, Cerberus Capital Management LP, would be reluctant to commit to huge investments when the company is looking at potentially cutting some models, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.
As a bargaining chip, Chrysler could back off from new factory investments that it has announced and make them contingent on a new agreement, Cole said.
UAW President Ron Gettelfinger traded job security to GM for taking on the retiree health care costs and for a limited lower pay scale for new hires.
Chrysler has to be able to outsource its parts transportation because its competitors do for much lower costs, Cole said.
"They just can't sustain that, so there will have to be buyouts and things to compensate for that," he said.
Cerberus, a private equity firm, probably doesn't want to put too much cash into the trust fund because it wants to turn Chrysler around and sell it, Bragman said.
"They don't necessarily want to contribute a large amount of money to a long-term solution when Cerberus is more than likely a short-term owner," Bragman said.
Chrysler spokeswoman Michele Tinson would not comment on specifics of the talks other than to say that they are progressing. UAW spokesman Roger Kerson also would not comment.
All three U.S.-based automakers have said they want to significantly close or eliminate a roughly $25-per-hour cost gap with Japanese automakers that have U.S. factories.
Cole said the strike talk could be drama to help get the pact ratified later by the membership. If there is a strike, he expected it to be short.
The UAW's contracts with Chrysler, Ford and GM were originally set to expire Sept. 14.
Besides the 49,000 active workers, Chrysler also has about 78,000 hourly retirees and surviving spouses.