Chrysler, Ford May Take Different Path with UAW
ALEX COHEN, host:
This is DAY TO DAY. I'm Alex Cohen.
After months of negotiations and a brief national strike, it looks like workers at General Motors will finally approve a new contract this week. Usually once one big car company comes to an agreement with the United Auto Workers, the others quickly fall in line. But not this time. At least not yet.
Today, the UAW said if it can't reach an agreement with Chrysler by Wednesday morning, they may strike.
NPR's Celeste Headlee reports.
CELESTE HEADLEE: If it sounds familiar, it should. The UAW has once again given an automaker a strike deadline, and the pressure is on to reach a deal before workers across the nation walk off the job. But will it work with Chrysler as it worked with General Motors?
Auto analyst Lorie Harber(ph) says she's not convinced it was the strike that really brought the GM negotiations to a successful conclusion.
Ms. LORIE HARBER (Auto Analyst): They were very close to settlement, and it was a function of being able to kind of work through the final details of that. And the union took a stand as they probably needed to do at that point, but it's not clear whether the strike is what helped solve everything. I think they were relatively close as it was.
HEADLEE: Perhaps the most significant component of the GM contract is the VEBA, the Voluntary Employees Beneficiary Association. GM will pay about $35 million to help create a health care trust fund.
John Wolkonowicz of Global Insight says the VEBA was a win for both the union and the automaker.
Mr. JOHN WOLKONOWICZ (Auto Analyst, Global Insight): For the worker, it allows the union to control the fund instead of General Motors, which is something that they probably feel more comfortable with. And it also allows them to still have a health care fund should something happen to General Motors.
HEADLEE: But that's what happened at GM. Ford and Chrysler have yet to reach an agreement with the UAW, and negotiations with Chrysler are coming to a head. Wolkonowicz says it's impossible to predict what will happen in these negotiations because Chrysler is now owned by Cerberus Capital Management. He says that means everything could be on the table because the union is not negotiating with an automaker now. They're dealing with a private equity firm.
Mr. WOLKONOWICZ: Even the idea of a four-year contract with - in a private equity firm, that four years sounds like forever. But one thing for sure that Chrysler will be looking for is to get the same give back on health care that GM and Ford got from the union back in 2005.
HEADLEE: Those health care concessions were worth about $300 million a year. The union didn't grant them to Chrysler two years ago because the company was then owned by Daimler, and the union's position was that Daimler had deeper pockets and didn't need any give backs. As for the VEBA or anything else outlined of the GM deal, Lorie Harber says all bets are off with Chrysler.
Ms. HARBER: It's an unknown. You know, that there are things that happen in the Chrysler model with Cerberus that I never expected, you know, we never expected to see a move so quickly and move management around. I never expected to see one of our domestic big three owned by a private equity firm. So it's really up in the air.
HEADLEE: And don't forget, when the ink is finally dry on the Chrysler deal, there's still one more contract to go. Wolkonowicz says we can expect to see some form of VEBA in a Ford deal, but the automaker will probably not be able to fund it as generously as GM has.
Mr. WOLKONOWICZ: Ford has fewer retirees and Ford has less cash on hand to pay for the VEBA, so they're likely to want a better deal from VEBA. GM is funding their VEBA at 70 percent of the amount. Ford may want to fund at a lower rate, and it's going to be interesting to see if the union would grant that lower rate.
HEADLEE: Talks between the union and Chrysler are underway today, and UAW members across the nation are watching closely to see if this week will see them on the job or on the picket line.
Celeste Headlee, NPR News, Detroit.
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