UAW Officials Send Memorandum Urging Approval of Tentative Contract

Seven United Auto Workers officials who helped negotiate a tentative contract with Chrysler Group on Monday by e-mail sent a memorandum to union members encouraging approval of the deal, saying that it preserves pay levels, health care coverage and retiree benefits, the Wall Street Journal reports (Valcourt et al., Wall Street Journal, 10/23). At least eight locals representing about 10,300 workers have accepted the agreement, and six locals representing about 11,000 workers have rejected it, the Detroit Free Press reports (Higgins, Detroit Free Press, 10/23).

People close to the ratification voting process said that at least two of the remaining three large Chrysler plants must approve the contract for it to be ratified (Vlasic et al., Detroit News, 10/23). Under the contract, Chrysler would contribute $8.8 billion to a voluntary employees' beneficiary association that would be managed by the union, shifting retiree health care liabilities away from the automaker. Chrysler would pay about $1.5 billion in 2008 and 2009 for retiree health care liabilities before the VEBA assumes them in 2010.

The deal also would create a two-tier wage system similar to the one created at General Motors. Chrysler workers reportedly are unhappy with the new wage system and the lack of production guarantees at U.S. plants (Kaiser Daily Health Policy Report, 10/22).

If the contract fails to receive enough votes but the margin is close, Chrysler likely will ask UAW to take a revote, according to people with knowledge of the negotiations. "Those at Chrysler apparently see a defeat as the 'union's problem' that must be resolved by the union," the News reports (Detroit News, 10/23). If the deal is rejected and Chrysler and UAW return to the bargaining table, it is unclear how much the automaker would yield, according to the Milwaukee Journal Sentinel.

David Cole, director of the Center for Automotive Research, said, "The wild card in this is that they're owned now by private equity, and this is not the Society for Sweetness and Kindness," adding, "Things could turn into a little hardball pretty quickly." Cerberus Capital Management recently purchased the automaker (Content, Milwaukee Journal Sentinel, 10/22).

Ford, UAW Making Progress
Meanwhile, Ford Motor and UAW have been making progress in their negotiations, people close to the matter said. The negotiators reportedly met during the weekend and on Monday. The talks have yet to go into all-night marathon sessions, according to one of the sources. The negotiators have built up a structure for creating a VEBA that would transfer Ford's retiree health care liabilities to UAW, sources said.

UAW President Ron Gettelfinger reportedly has not been present at the meetings because of dealings with the Chrysler contract's ratification. One of the sources said that Ford and UAW could wrap up negotiations a few days after the Chrysler contract is finalized. However, if Chrysler rank-and-file members reject that contract, some of the details already agreed upon in the Ford negotiations might need to be rethought, according to the Journal (Wall Street Journal, 10/23).