The country’s largest automakers may have a better chance of competing with their foreign counterparts, thanks to a tentative labor agreement reached by the United Auto Workers and the country’s third-largest automaker Sunday.
Just hours after the midnight expiration of the previous four-year labor contract, UAW President Ron Gettelfinger announced the deal with DaimlerChrysler AG’s Chrysler Group at a press conference early yesterday morning.
Union negotiators could not strike a simultaneous agreement with General Motors Corp. and Ford Motor Co., but the deal with Chrysler will serve as a framework for agreements with the other major auto manufacturers, Gettelfinger said in a written statement.
Negotiations continued yesterday with Ford and GM, and officials said an agreement is close to completion. Gettelfinger said no labor stoppage will occur.
The deal, which observers said was unusual for how quickly it was reached, could allow the struggling Big Three automakers to contain their labor costs, helping them compete with foreign carmakers from Japan, Korea and Europe. United States car sales have been down this year and in August the Big Three claimed their lowest monthly market share ever, at 57.9 percent.
“Unlike in the past, the companies are on the same side. They have a common enemy, which is the Japanese transplants,” said Gerald Myers, adjunct University professor of organizational behavior and human resource management.
Details of the agreement were not released, but preliminary reports indicate that UAW workers will likely compromise on wage and pension increases. In 1999 UAW secured 3-percent wage increases, a $1,350 bonus and a 19-percent raise in pension benefits.
Analysts said the contract likely will also give Chrysler greater flexibility in closing plants, and in return, union members would continue to receive low-cost medical coverage.
Auto experts at the University who have been following the two-month-long contract negotiations said UAW had less negotiating leverage than in past years due to the declining market share and profits of the Big Three automakers.
Union negotiators understand how challenged the car manufacturers are, and that the reported contract terms sound like acceptable conditions for UAW, said Bruce Belzowski, senior research associate at the University’s Office for the Study of Automotive Transportation. “It’s kind of realistic for UAW to have that kind of contract,” he said.
While UAW negotiators apparently settled for more modest terms, union officials could also look for sacrifices to be made by white-collar officials working for the car companies, such as reduced pay increases, Belzowski said.
Historically, contracts took much longer to negotiate, but this year an agreement was reached quickly because union workers had no interest in striking, said Myers, a former American Motor Corp. chairman.
Myers added that Gettelfinger is also a much calmer, more composed negotiator than his predecessors at UAW.
While fights occasionally broke out during union strikes in the mid-1900s, in the last decade, “UAW and manufacturers have understood each other very well,” Belzowski said.
The deal with Chrysler and any tentative agreement with GM and Ford must still be approved by the workers. UAW is also negotiating a deal with parts suppliers Delphi Corp. and Visteon Corp., which may come after a contract with the Big Three is signed.
“Our bargaining committees at GM and Delphi and Ford and Visteon will continue to negotiate. They will stay at the bargaining table until a tentative agreement is hammered out with those companies. … We will continue normal operations at those locations,” Gettelfinger said in the statement.
– The Associated Press contributed to this report.