Bloomberg News

GM, Chrysler Return to UAW Bargaining After Contract Extensions

September 15, 2011

Sept. 15 (Bloomberg) -- General Motors Co. and Chrysler Group LLC, bailed out by the U.S. in 2009, negotiated today with the United Auto Workers for four-year labor deals after failing to meet a deadline yesterday to reach new accords.

The union, which pledged not to strike either automaker, continued negotiations with GM and Chrysler into this afternoon, the companies each said in e-mails. While GM and the UAW didn’t set a new deadline for an agreement or turning to binding arbitration, Chrysler Chief Executive Officer Sergio Marchionne offered in a letter to UAW President Bob King to let teams negotiate for one more week.

Marchionne criticized King for not meeting with him last night to settle the final economic issues. The deadline had been known since they pleaded together for government aid, he said. While Chrysler is the third-largest U.S. automaker, its 26,000 employees are “more relevant” than larger social issues that are “close to your heart,” Marchionne said.

“You and I failed them today,” Marchionne wrote in the letter obtained by Bloomberg News. “We did not manage to agree to a set of simple conditions that would have given certainty and peace of mind to 110,000 actives and retirees.”

The UAW represents 113,000 production employees at Fiat SpA-controlled Chrysler, GM and Ford Motor Co. The Detroit-based UAW and Ford on Sept. 13 agreed to extend their contract while negotiations continue. All the companies originally had deadlines of 11:59 p.m. yesterday.

Sticking Points

Talks may have stalled over the amount of the signing bonuses or the union’s desire to raise entry-level wages, said Arthur Schwartz, president of Labor & Economics Associates, a consulting firm in Ann Arbor, Michigan. If the union settles too quickly, the membership may think that negotiators didn’t fight hard enough and vote against a tentative agreement, he said.

“It makes no sense for the union to settle early because they never get everything they want,” Schwartz said. “So why would they settle early? That could be a ratification issue.”

The UAW proposed signing bonuses of $8,000 to $10,000 for each member, four people familiar with the discussions said last week. Michele Martin, a spokeswoman for the UAW, has denied the union is seeking such large bonuses.

GM and the UAW negotiated past 1 a.m. this morning before resuming at 10 a.m. A tentative agreement with GM may set a pattern for Chrysler and Ford.

“We are hopeful that an agreement can be reached soon,” the union told members in a message on UAW websites. “While we have made significant progress, we have not been able to secure a new agreement that we would recommend for ratification.”

Marchionne’s Flight

Marchionne said in his letter that he flew back from the Frankfurt motor show to complete a new labor deal. King couldn’t be present due to “competing engagements,” the letter said. The two sides were down to a few issues, “primarily involving the economics of our employees for the next four years,” Marchionne said in the letter.

Marchionne, who is also CEO of Fiat, expressed his frustration that the UAW and Chrysler, which required U.S. government assistance to get through its 2009 bankruptcy, couldn’t come to terms after negotiating since July.

“We argued and pleaded, together, to be given a second chance to put Chrysler right,” Marchionne wrote in the letter. “And we even agreed that, were we still around in 2011, that we would not go back to the old adversarial and confrontational ways of the past to resolve unsettled matters. Until now, there have been encouraging signs of a new paradigm governing the relationship between us.”

The two sides haven’t yet agreed on “procedures for arbitration,” he said.

Strike Bans

UAW members at GM and Chrysler agreed to a strike ban for these negotiations as part their U.S.-backed bankruptcies. Any unresolved issues are subject to binding arbitration. Ford did not receive a U.S. bailout and didn’t enter bankruptcy. UAW members at the automaker rejected a no-strike pledge and arbitration.

GM rose 52 cents, or 2.3 percent, to $22.70 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have fallen about a third since the initial public offering in November when they sold for $33. The U.S. Treasury Department owns 32 percent of GM. Ford gained 31 cents, or 3 percent, to $10.63.

The key issues in the talks are signing bonuses, increasing wages for new hires and investments to secure future work at U.S. plants. GM executives have said that they want to tie compensation to company performance targets, which the union has traditionally opposed.

Workers at Ford have filed an “equality of sacrifice” grievance against the automaker after salaried workers received raises, tuition assistance and 401(k) matches last year. An arbitration hearing on that dispute was held today.

--With assistance from Craig Trudell and Keith Naughton in Southfield, Michigan. Editors: Bill Koenig, Jamie Butters

To contact the reporter on this story: David Welch in Southfield, Michigan at dwelch12@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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