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New Chrysler Contract Hinges on Jobs, Health Care

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New Chrysler Contract Hinges on Jobs, Health Care

New Chrysler Contract Hinges on Jobs, Health Care

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It's MORNING EDITION from NPR News. I'm Steve Inskeep.


And I'm Deborah Amos.

A contract agreement with the second member of Detroit's Big Three.

(Soundbite of cheering)

AMOS: The mood was pretty raucous yesterday at a United Auto Workers local just outside of Detroit. Members were celebrating the end of their short strike against Chrysler. The two sides reached a tentative contract deal after a six-hour walkout. The new agreement is part of a landmark effort by the Detroit carmakers to slash costs so they can compete against foreign rivals like Toyota and Honda. Under the new contract with Chrysler, the union will take over responsibility for billions of dollars in retiree health care obligations.

In exchange, Chrysler is offering workers some job guarantees, as NPR's Frank Langfitt reports.

FRANK LANGFITT: As strikes go, it was really short. Workers left before noon. By suppertime the picket signs were down. Sean McAlinden, a Michigan auto analyst, put it like this.

Dr. SEAN McALINDEN (Center for Automotive Research): It's longer than a coffee break, but it was shorter than a shift.

LANGFITT: Neither the union nor the company would say what prompted the strike or its quick end. They wouldn't talk about the contract either. But a person with knowledge of the deal fleshed out key details: Chrysler will pay much of the $18 billion it owes for future retiree health care into a trust fund that the union will manage. That removes a growing expense that Chrysler can't control. The company will continue to build some products in U.S. factories and ensure some union jobs. But Chrysler didn't make as big a commitment to new vehicles as General Motors did in its contract last month, suggesting the union didn't get the assurances it had hoped for.

McAlinden says that points up a big difference between the two companies and their goals.

Dr. McALINDEN: General Motors is a classic automotive firm. They're in for the long haul, and they produced a long-haul UAW agreement that says we're going to save money on this agreement but it's going to take four years to roll off and we're going to do it with a lot of new product.

LANGFITT: Chrysler, on the other hand, was recently bought by Cerberus Capital. It's a private investment company that buys other firms, restructures them, and then tries to sell them or take them public for a healthy profit.

Dr. McALINDEN: Cerberus is a private equity firm who in the past hasn't really taken over a company to increase it's product line. It's really come in and knocked out a lot of cost, you know, that management was unwilling or incapable of knocking out, and then improving the financials that way and then quickly reselling the property. So really they are a cost-reduction outfit.

LANGFITT: The stakes in the contract are huge, and some union members were energized by the strike. Eli Urban Jr.(ph) is 45 years old. He moves materials around the Chrysler plant in Sterling Heights, a Detroit suburb.

Mr. ELI URBAN Jr. (Employee, Chrysler): For me, this is a history for us. You know, this is my first strike. I kind of, well, enjoyed it, you know.

LANGFITT: Dan Tucker(ph), a 49-year-old dye maker, saw the strike as an important way to standup to Chrysler's new owner. He's disappointed the walkout ended so quickly.

Mr. DAN TUCKER (Employee, Chrysler): I was hoping we will stay out longer to show that we're serious, that we're - our membership is serious about fighting, that we don't - we're not going to just lay down and quit. We're going to fight.

LANGFITT: Tucker doesn't know what's in the new contract, and he's concerned about what Cerberus might do to Chrysler.

Mr. TUCKER: I was worried about, you know, this new company that bought us selling us out, you know, taking it and selling it piece rate by selling the Jeep off, selling our staff and plant off.

LANGFITT: And like most U.S. autoworkers these days, he's afraid his job could be sent overseas.

Mr. TUCKER: It took me 16 years to become a dye maker, and all our jobs, all the dye-making jobs are going to Korea, China, wherever else they can ship to get cheap labor.

LANGFITT: In the coming days, the union will lay out the new contract to Tucker and about 45,000 members at Chrysler, then they'll have to decide whether this new deal is one they can live with. Voting on the contract could begin within a week.

Frank Langfitt, NPR News, Detroit.

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