Workers Jittery over New Chrysler deal
by GLADY REIGN
Thursday of last week, after Chrysler LLC and United Auto Workers agreed on a new contract some workers at Chrysler��s Sterling Heights assembly plant were showed signs of dissatisfaction over new pact. The employees wondered if the six-hour picket was good enough for both the company and the union to produce a good and fair deal. According to an analyst closely watching negotiation details, Ford as the next target will find ways to get more concessions than the recently privatized automaker.
One worker thinks that the job security issues are not properly addressed. "A lot of people are sort of surprised that we only stayed out that long," said Brett Ward, a forklift operator at the Sterling Heights plant and a member of a group that's often critical of the union. "They're thinking that it might have really not gotten us that much."
The Chrysler deal patterns some of the provisions contained in the union��s deal with General Motors ratified on October 10, the same day the Chrysler tentative contract was reached. After the ratification of the contract, GM��s market share rose by $1.86 or 4.9 percent closing to $39.99 last Thursday maintaining a 52-week high. According to Rod Lache, an analyst at Deutsche Bank, market shares representing the competitiveness of U.S automakers against its rivals can be significantly improved by the big three��s contract with the UAW.
Completing the Detroit three, Ford Motors is the next in line in the bargaining table with the union. According to Marcey Evans, spokeswoman for Ford, the automaker is expecting their compromise with the union to accelerate soon.
One of the major features of the Chrysler pact is like GM��s Voluntary Employees Benefits Association. Chrysler LLC will fund a union controlled trust with $10 to $11 billion to cover up the $19 billion retiree health care liability of the automaker. The job security demands of the union is responded by Chrysler via the product commitments and a second tier wage scale for new employees rated $14 per hour, half the current salary of a regular assembly worker.
Those workers to receive the lower salary rate are those considered as ��non core��, or those who are not directly into building cars and parts. While those presently building cars and car parts will be offered early retirements and buy outs giving way for new hires, according to anonymous sources.
The new contract also entails $3,000 bonuses for all UAW represented Chrysler workers plus lump-sum payments of three percent during the second year, four percent on the third year, and another three percent on the contract��s fourth year.
Although most of the major provisions of the new Chrysler contract are almost similar to that of GM, the job security commitments made by Chrysler LLC were not as extensive. GM promised 16 of its facilities new generation of products to be produced, Chrysler guarantees no further products except that of in current production until the contract expires after four years.
The next bargaining target is Ford Motors, because the automaker is using only 79 percent of its plant capacity, Ford is expected to seek more concessions than the two previous companies, said Erich Merkle, vice-president of auto industry forecasting for consulting company IRN Inc. in Grand Rapids. Merkle added that Ford��s production must compensate for its falling market share.
Among the Detroit three, Ford Motors (produces Volvo accessories) is considered the weakest after losing $12.6 billion in 2006. The company also mortgaged almost all of its facilities to generate the $23.4 billion budget needed for its restructuring program. The program also sets 16 plant shut downs in 2012.
According to Merkle, the struggling automaker will try to follow the pattern of the GM and Chrysler deals though it is not in good financial health to do such. Future product guarantees in its facilities is something Ford cannot give at the moment.
"I just don't think they're going to get the things that they need," Merkle said. "But at the end of the day, the less the UAW gives up, the more it's going to hurt Ford from a financial position long-term."
