UAW Strikes against Chrysler for a Few Hours

After settling with General Motors, the United Auto Workers’ union targeted a new contract with Chrysler. Since Daimler sold Chrysler to a private investment entity, Cerberus Capital Management LP, not long ago, there was some concern that this deal would be a tougher one to make. Although the talks faltered and although the UAW walked off the job, the strike lasted just six hours. In that time, an agreement came together, suggesting Cerberus wants to make friends among its workers.

While the details of the agreement haven’t officially been made public, insiders have said anonymously that the company has guaranteed to continue production of a wide range of cars, truck and parts (which means job security), has promised to endow an $18 billion trust fund that the union will manage for retiree health care (similar to a larger fund GM is creating), and there will be a lower wage scale for new employees.

Cerberus needs to cut costs, and Chrysler’s labor costs are the highest in the industry at $75.86 an hour when all benefits are included. GM’s costs were $73.26 an hour before the latest contract, and at Ford, the costs are $70.51 an hour. On average, the Asian companies making cars in the US pay just $46 an hour when everything is totaled up.

The worry was that Cerberus would come out playing hardball. Chrysler had sufficient cars on the lots to hold out for 71 days, although some of the more popular models would have run out sooner than that. The UAW probably couldn’t have managed a 10-week walk-out without some serious troubles. So why didn’t Cerberus-Chrysler go in for the kill?

Quite simply, the new owners know they are going to need the cooperation of the labor force to put the company back on its feet. The UAW has had two short strikes now, and its leadership looks to be standing up for its members. Chrysler’s new owners look like tough, but not unreasonable, guys. The four-year contract will give everyone a shot at looking at the long term. And that has been missing in Detroit for ages.

© Copyright 2007 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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