Auto/Economy
9:53 am
Fri October 21, 2011

Keeping An Eye On Chrysler

There was a fair amount of anxiety in automotive circles over the new contracts hammered out between the United Auto Workers union and Ford and General Motors. GM remains the largest Detroit automaker, and this was the first post-bankruptcy contract.

The pact didn’t give workers as much as some had hoped for, and it did nothing to eliminate the new two-tier wage system that many old-time union members especially hate.

There was anxiety of a different sort at Ford. Unlike the two automakers who went through bankruptcy, Ford workers still had the right to go out on strike. Additionally, some workers there felt that because Ford was in better shape, they deserved a better deal.

So there was a sigh of relief when UAW members at both Ford and GM ratified their new contracts by nearly identical sixty-three percent margins. After that, it was felt likely that workers at Chrysler the smallest of the Detroit Three, would quickly follow suit.

That may yet happen. Voting is still under way at Chrysler plants across the nation. But workers in plants in the Detroit suburb of Warren and Belvidere, Illinois have rejected the deal in what may be an ominous sign. True, workers at a number of the plants in Indiana have voted yes. But there is clearly deep concern.

The union is no longer publishing a running tally of results on its web site, and has posted on Facebook, warning of the uncharted waters they’d face if the membership rejects the agreement.

That’s because, again, Chrysler UAW workers, like those at GM, gave up the right to strike this time, under terms of the agreement worked out when Chrysler entered the government-assisted “soft bankruptcy” that saved the company two years ago.

If the overall membership turns down this contract, their only recourse is to go to binding arbitration. Nobody really knows how that would work or how long it would take. An arbitrator could, experts agree, impose conditions on the union worse than what this contract calls for. Worse, the uncertainty could damage Chrysler in the marketplace; we’ve seen things like this happen before.

And we have no idea how Fiat, which now owns a majority of Chrysler, would feel about being dragged into compulsory arbitration. Somehow, I don’t think this is what Sergio Marchionne, the CEO of both companies, is looking for.

That doesn’t mean this contract is perfect. Long-time workers can’t be happy that their base wage is frozen for the four-year life of the pact. But it is necessary to note that while Ford and GM are again making money, Chrysler is not. It posted a quarter-million dollar loss for the first half of this year. The contract Chrysler workers are being offered does add jobs, provide for a signing bonus and some inflation protection. The lesser-paid second tier workers do see their wages rise significantly over the life of this pact.

Whatever happens next, we should remember that less than three years ago, it seemed entirely possible that there would be no Chrysler in any shape or form today. That thousands of workers are still on the job and have a long-term contract to sign has to be good news. Even if there are a few potholes ahead.