UAW summons leaders; may signal Chrysler deal

DETROIT (AP) ― The United Auto Workers has asked local union leaders from Chrysler factories to meet in Detroit, normally a sign the union has agreed to a new contract with an automaker.

UAW spokeswoman Michele Martin confirmed that union leaders will meet on Monday. She said negotiations for a labor contract between the union and carmaker are continuing to make progress but no deal has been reached.

Chrysler spokeswoman Jodi Tinson said Saturday that bargaining would continue through the weekend.

Chrysler is the only Detroit automaker without a new labor agreement. Workers at General Motors Co. approved a new four-year contract 10 days ago. Ford workers are voting on their deal.

The UAW has agreed to profit sharing instead of raises for most workers under those agreements. The workers also will get signing bonuses and the companies promised to add thousands of new union jobs.

At Chrysler, a local union official said the UAW wouldn’t summon all the local presidents and bargaining chairmen to Detroit unless both sides were close to a deal. The official was told that the talks are still hung up on the size of profit-sharing checks and the number of entry-level workers the company can hire. He did not want to be identified because the talks are private.

Entry-level workers are paid around $14 per hour, about half the wage of a veteran UAW worker.

Neither Chrysler Group LLC nor the union spokeswoman would comment on the issues that haven’t been settled.

Even though there’s no deal yet, summoning the union leaders to Detroit is a good sign. The union called leaders from Ford factories to Detroit last week before it had a deal with the company. But a labor agreement was reached and union leaders voted overwhelmingly to recommend it to members.

At Ford Motor Co., union workers will get at least $16,700 over the life of their contract, including a $6,000 signing bonus and profit-sharing payments. Ford promised to hire 5,750 new workers by 2015 and make $6.2 billion in investments at its U.S. plants. The GM deal was similar to Ford’s but not quite as rich.

Sergio Marchionne, CEO of Chrysler and Italian automaker Fiat SpA, said Friday that the GM and Ford deals may be too rich for Chrysler. The company, unlike GM and Ford, lost money during the first half of the year.

Marchionne said he hopes a new deal can be reached without resorting to binding arbitration. Chrysler workers gave up the right to strike over wages under the terms of its 2009 government bailout. But either side in contract talks can take disputes to an arbitrator.

Chrysler was initially expected to reach an agreement before Ford and GM, but the UAW shifted its focus to GM as a Sept. 14 deadline to reach an agreement grew closer. That angered Marchionne, who wrote an angry letter to UAW President Bob King accusing him of missing an appointment to sign a deal.

King never publicly discussed the letter, but insisted he and Marchionne have a good relationship.

Later in September, talks between the UAW and Chrysler broke down again for several days because of the union’s demand that Chrysler cap the number of workers who are paid lower wages. At that point, the talks moved over to Ford, where it reached an agreement Oct. 4.

Work at Chrysler has continued under a contract extension that expires on Oct. 19.

Chrysler began the talks with lower labor costs than its rivals, an estimated $49 per hour for wages and benefits. Those costs are similar to what non-union Hyundai pays its U.S. workers. But it’s less than the $58 rate at Ford Motor Co. and $55 at Toyota Motor Corp. That’s because Chrysler has hired more entry-level workers. Around 12 percent of Chrysler’s 23,000 U.S. hourly workers are making a lower-tier wage, compared to just 70 workers at Ford.

Al Iacobelli, Chrysler’s chief negotiator, kicked off negotiations in July saying that the company wanted to reward workers but not add costs that make it uncompetitive.

Chrysler, which has been majority-owned by Fiat since July, is still struggling to make a profit. The company made $116 million in the first quarter, its first quarterly net profit in five years. But it lost $370 million in the second quarter, mostly because of charges for refinancing debt.

Chrysler expects to make a profit of $200 million to $500 million this year, excluding the debt charges. If so, it will be Chrysler’s first profitable year since 2005. But the company is earning only a fraction of what its Detroit rivals are.

(Bloomberg)