Chrysler, union begin contract discussions – health care main issue

Ford and GM launch talks later this week
||Last Updated: 07/25/2011

The United Auto Workers (UAW) union and Chrysler expect to reach a new collective agreement without resorting to arbitration, officials for the company and union said today, upon formally beginning contract discussions. The current four-year contract between the UAW and Chrysler expires on September 14.

UAW’s contracts with Ford and General Motors expire on the same day. Both companies are also expected to launch talks later this week.

In the four years since the two sides last negotiated a contract, the “Detroit Three” automakers were pushed into crisis by collapsing vehicle demand and the financial crisis of 2008. Both GM and Chrysler were bailed out by the Obama administration. As a result, an agreement was made removing workers’ ability to strike over wages and benefits during this year’s contract talks. Ford didn’t seek a U.S. bailout and UAW members at the company rejected the strike ban and arbitration.

Chrysler and the union would prefer to avoid arbitration as that process would increase the chance for an imposed settlement that neither side finds palatable. UAW President Bob King said the UAW does not want an outsider who lacks industry knowledge deciding the outcome.

"If arbitration happens, if anything like that happens, then I'd say we haven't done our job," said King, whose union represents about 112,000 U.S. production autoworkers, of which about 22,800 are at Chrysler.

Health care costs

One big target for the three U.S. automakers will be the US$1.54 ($1.46) billion collectively spent by the companies last year on health care for union members and their families.

Active UAW members at Chrysler pay 7 to 8 per cent of overall health-care costs, compared with about 31 per cent for the average American worker.

The automakers want relief from carrying the majority of the costs. Last year GM spent US$665 ($628) million, Ford about US$533 ($504) million and Chrysler about US$339 (320) million for their UAW-represented workers and families.

For UAW members – who for many years paid nothing out-of-pocket for their health care and still pay only modest amounts – an increase in their share of the costs would be a bitter reminder of the union's decline in power.

King opened Monday's news conference with a pledge to find further savings on health care for Chrysler, without further cost to UAW members. He also reiterated his stance that he hopes to negotiate agreements with all three Detroit automakers simultaneously rather than to pick a "target" company to single out, as has been the practice in years past.

— with files from Reuters

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