General Motors, Chrysler extend UAW contracts after talks slow

Contract extension follows similar agreement with Ford and Chrysler
By Deepa Seetharaman and Kevin Krolicki
||Last Updated: 09/16/2011

DETROIT (Reuters) — General Motors (GM) Co. and Chrysler Group LLC are agreeing to extend labour contracts with the United Auto Workers (UAW) on as the union's negotiations failed to produce the expected breakthrough on pay for 113,000 American autoworkers.

The contract extensions followed a similar agreement at Ford Motor Co. on Tuesday. The UAW's contracts with all three automakers expired just before midnight on Sept. 14, 2011.

The talks between the UAW and the Detroit automakers have been watched as an indicator of how much the industry has changed since its near collapse two years ago.

Expectations lingered that the UAW would have reached a tentative deal with at least one of the three U.S. automakers by the expiration of the current, four-year pacts.

"It always seems to go down to the wire. It's a game," said Roy Fetzer, 52, a production worker at GM's truck plant in Flint, Michigan, USA.

The UAW has made GM its priority. GM executives have made it clear that they would not accept a deal that made the automaker's hourly labor costs more expensive relative to the likes of Toyota Motor Co. and Honda Motor Co.

The automakers have said they want to link pay with company performance targets including profits and vehicle quality.

For that reason, the focus of pay-related discussions has been on the amount of one-time signing bonuses and profit sharing proceeds that would be paid to GM's 49,000 UAW-represented workers, people with knowledge of the talks have said.

The union has sought wage increases for entry-level workers who are hired at between $14 and $16 per hour, about half the level of veteran factory workers.

Negotiations between the UAW and GM broke off early on Sept. 15, 2011 and were scheduled to resume later in the morning.


Separately, Chrysler's talks with the union broke down late Sept. 14, 2011, with the automaker's chief executive chiding the union for falling short of its commitments to the company, taxpayers and workers.

In a letter to UAW President Bob King, CEO Sergio Marchionne said the union had strained the partnership between the two sides that began when Fiat SpA was given management control of Chrysler during its 2009 bankruptcy.

"We did not accomplish what leaders who have been tasked with the turning of a new page for this industry should have done," Marchionne said in the letter to King.

Marchionne flew back to Detroit from the Frankfurt auto show late Tuesday and had expected to meet King on Wednesday for a final push toward a new contract. But King remained focused on the final round of talks at GM.

"I know that we are the smallest of the three automakers here in Detroit, but that does not make us less relevant," Marchionne wrote in the letter obtained by Reuters. "Our people are no less relevant."

Chrysler confirmed that a letter had been sent by the CEO but declined to comment on its content. A UAW spokeswoman could not be immediately reached for comment.

The letter was the first sign of obvious tension in the contract talks that began in late July. The UAW owns just over 40 per cent of Chrysler through a trust fund charged with paying for retiree health care. Fiat has about 53 per cent.

In his letter to King, Marchionne said he was leaving the United States on business and would not return until early next week. He said he was disappointed with the lack of a deal.

"Until now, there have been encouraging signs of a new paradigm governing the relationship between us," he said.

Ford Motor Co. and the UAW earlier agreed to extend the contract in place at the No.2 U.S. automaker, the only one of the Detroit Three to have avoided a bailout.

The talks are playing out at a time of heightened uncertainty over the outlook for U.S. auto sales for the remainder of the year and 2012, and the risk of a renewed recession.

"We're treading water," said Kenneth Moore, 32, who works at GM and said the union could only hope to win limited gains. "Right now, the middle class is taking a pay cut, period."

The UAW gave up the right to strike at GM and Chrysler as part of the Obama administration's bailout of those companies.

Ford workers have voted to authorize a strike. Analysts have said the union could have a harder time winning support for any new deal from the 41,000 UAW-represented workers.

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