The American auto labor force cannot be put to stop with negotiations to the big three of Detroit. As labor talks continued last Monday, the United Auto Workers union threatened Chrysler LLC a strike if the automaker overlooked a negotiation script if there is.
The very sudden deadline maybe the union's ploy to get what they want from the recently privatized company, but Chrysler may not pattern the deal with the UAW and General Motors last week averting from the tradition. According to analysts who had been watchful of the negotiations, what Chrysler needs is not like that of GM. The new deal may require cost cuts in different places.
UAW is setting the strike deadline relative to the progress of their talks with Chrysler. In case the strike will be pursued, it will drive almost 49,000 hourly workers from Chrysler to the picket lines.
"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.
The UAW had already been on strike late in September with General Motors as the target, the two day strike was ended when the two parties have reached a tentative agreement addressing the complains for job security and retiree health care liabilities. UAW is expecting to reach another agreement on Wednesday, now, with Chrysler LLC.
Traditionally, the union with the lead company accomplishes a pact and the other Detroit based automakers will pattern what have been agreed upon. With what's happening now, the tradition may no longer be followed. One of the major differences between GM and Chrysler is the health care givebacks worth $340 million given to GM and also with Ford Motor Co. that Chrysler wasn't able to get in 2005. According to one anonymous source familiar with the negotiations, the two parties are still uncertain if the UAW will give Chrysler the same deal.
Chrysler LLC pays their workers with the highest rate of $75.86 per hour already covering the pension and health care costs. Like the Voluntary Employees Beneficiary Association (VEBA) provision of the GM deal, analysts says that Chrysler may struggle in setting up a run trust that will take over Chrysler's $18 billion retiree health care liabilities. GM responded to the job security demands of the UAW by committing future productions to its 16 U.S facilities, analysts also sees that Chrysler may not do the same as well as that of the hiring out of parts transportation rather than paying full UAW wages for its.
According to David Cole, Chairman of the Center for Automotive Research in Ann Arbor, Chrysler and its new owner, Cerberus Capital Management may not be in good financial health to attend to job security demands as the automaker, under its restructuring program may not make huge investments as it consider cutting some of its models. Cole also said that Chrysler may back off from new factory investments that the company previously announced and just make it a contingent to a new contract.
With what happened to the GM deal, the UAW negotiators exchanged the limited lower pay for new employees for the new commitments to the plants and the VEBA. For Cole, Chrysler LLC like its competitors must outsource its parts transportation for lower costs. "They just can't sustain that, so there will have to be buyouts and things to compensate for that," he said.
For Bragman, Cerberus Capital Management wants to turn Chrysler LLC (makes ) and eventually sell it, making no room for putting too much money on the trust fund. "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.
The Detroit three has a $25-per-hour cost gap with its Japanese rivals that have their U.S. plants; the American automakers are planning to close it.
