UAW Sets Strike Deadline for Negotiations With Chrysler

Negotiators from Chrysler LLC and the United Auto Workers were set to resume contract talks Monday after the union set a deadline for wrapping up negotiations this week.

The struggling No. 3 U.S. automaker has been given a 72-hour strike notice by the UAW as they negotiate a new labor agreement, a person familiar with the talks said on Monday.

It was not immediately clear whether that deadline would expire Tuesday or Wednesday.

A Chrysler spokeswoman declined comment on the talks. The UAW could not be immediately reached for comment.

Talks were set to resume Monday morning at the automaker's Auburn Hills, Michigan, headquarters after high-level negotiations intensified over the weekend, said another person familiar with the negotiations,

who asked not to be named because of the private nature of the talks.

Negotiations between the two sides had been at a standstill for three weeks after the UAW agreed to extend Chrysler's four-year contract on wages and benefits to focus on larger rival General Motors Corp (GM).

The union reached a tentative deal with GM late last month.

By shifting to Chrysler as his next target, UAW President Ron Gettelfinger is betting that the union, which represents some 180,000 workers at the Detroit-based automakers, will be able to find common ground with Chrysler's new owner, Cerberus Capital Management, at a time when sales have sputtered.

Chrysler is moving to idle production at six assembly plants this week to manage inventory levels. That includes a planned two-week shutdown at three UAW-represented factories, the company said.

Gettelfinger supported Cerberus' $7.4 billion acquisition of Chrysler from Daimler AG, which retains a nearly 20 percent stake in the automaker.

GM and the UAW agreed on the terms of a cost-saving contract on Sept. 28 that would give the largest U.S. automaker the ability to hire almost 17,000 lower-wage workers as higher-cost existing workers take early retirement packages still being hammered out by the two sides.

In a significant departure, the GM deal would shift the obligation for paying for retiree health care to a new trust fund aligned with the union, a concession expected to save GM almost $3 billion annually once it becomes effective.

Although the groundbreaking GM deal was expected to provide a blueprint for the union's talks with both Chrysler and Ford Motor Co, both of those automakers have expressed concerns about some aspects of the agreement.

One concern is that the health-care trust considered the centerpiece of the GM deal would not begin to produce cash savings for the automaker until 2010.

Under Cerberus, Chrysler has shifted its focus to improving cash flow and has been reviewing a list of assets that could be spun off.

In addition, Chrysler was never granted the same 2005 concessions on retiree health care that the union gave Ford (F) and GM by agreeing to shift some costs to its work force. That issue has now been pulled into the UAW negotiations, people familiar with Chrysler's negotiating position have said.

Before talks began, Chrysler made clear that absent concessions to close a wage gap estimated at about $30 per hour between it and Japanese automakers operating in the United States, it would need to shift production out of the country.