UAW Members at Chrysler Likely To Approve Tentative Contract

A United Auto Workers local that represents about 4,000 Chrysler Group manufacturing employees in Belvidere, Ill., on Friday will vote on a tentative contract between the union and the company that would establish a voluntary employees' beneficiary association, and the contract likely will pass unless almost all of the workers vote against the agreement, USA Today reports (Silke Carty, USA Today, 10/26).

Under the contract, Chrysler would contribute $8.8 billion to a VEBA managed by UAW, a move that would shift retiree health care liabilities from the company to the association. Chrysler would pay about $1.5 billion in 2008 and 2009 for retiree health care liabilities before the VEBA assumes them in 2010. The contract also would establish a two-tier wage system similar to the one established at General Motors. Some UAW members at Chrysler reportedly oppose the new wage system and the lack of production guarantees at U.S. manufacturing facilities (Kaiser Daily Health Policy Report, 10/23).

As of Thursday, UAW locals that represent about 90% of members at Chrysler had voted on the contract, and 56% of those members had voted in favor of the agreement, according to individuals familiar with the situation (Higgins, Detroit Free Press, 10/26). In the event that UAW members at Chrysler approve the contract, UAW over the weekend likely will begin final negotiations with Ford Motor on a similar agreement (USA Today, 10/26).

Ford Negotiations
Negotiators for UAW and Ford have not made much progress on the details of a VEBA, according to individuals familiar with the discussions, the Wall Street Journal reports. According to the Journal, actuaries for UAW and Ford disagree about health care cost inflation rates, and, as a result, negotiators have not reached an agreement on the amount of retiree health care liabilities that the company has (Spector/McCracken, Wall Street Journal, 10/26).