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United Auto Workers union gives notice of potential strike.

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Chrysler, UAW talks heat up

Negotiations over labor contract progress as United Auto Workers union gives notice of potential strike.

October 8 2007: 3:51 AM EDT

DETROIT (AP) -- The United Auto Workers put Chrysler LLC on notice that a strike is possible if contract talks stall, a person briefed on the talks said, but a labor expert said the union's action could be a bargaining tactic.

The union on Sunday gave Chrysler a 72-hour notice of a potential strike, the person said, but it was unclear exactly whether the notice would end on Tuesday or Wednesday.

Bargainers working in committees made progress during the weekend but still have much work to do on difficult issues, said the person, who asked not to be identified because the talks are private.

Negotiators bargained Saturday and into Sunday evening, then recessed for the night with plans to resume talks Monday.

"We remain optimistic," Chrysler spokeswoman Michele Tinson said Sunday afternoon.

UAW spokesman Roger Kerson declined to comment on the talks.

A strike notice could be a tactic by the union to put pressure on the company as the talks intensify, said Harley Shaiken, a professor at the University of California at Berkeley who specializes in labor issues.

"The union wants the deadline to encourage a settlement sooner rather than later," Shaiken said.

The UAW went on strike for nearly two days last month before coming to a tentative agreement with General Motors Corp. (Charts, Fortune 500) The union normally settles with one U.S. automaker and then uses that deal as a pattern for an agreement the other two. But this year, both Chrysler and Ford Motor Co. (Charts, Fortune 500) have said they have different needs than GM and may need different contract terms.

Shaiken said the notice doesn't necessarily mean there will be a strike because the UAW could extend its contract hour-by-hour when the deadline passes. A second strike in one set of negotiations would be rare, he said.

"I think the union may feel things are going well, but they want the discipline of a deadline," Shaiken said.

A short strike might not hurt Chrysler much. It has five U.S. plants scheduled to be shut down for a week or two starting Monday due to lower market demand for their products.

GM workers are now voting on the tentative agreement reached with the company, with totals expected to be done on Wednesday.

The union has not formally picked the second company it will negotiate with, but talks with Chrysler have intensified in recent days.

The UAW's contracts with Chrysler, Ford and GM were originally set to expire Sept. 14. The UAW chose GM as the lead company and strike target and reached a tentative agreement Sept. 26.

The UAW represents about 49,000 hourly workers at Chrysler, making it the smallest of the domestic automakers. The company also has about 78,000 retirees and surviving spouses represented by the UAW.

Chrysler has become a private company, which could be a factor in the talks. Private equity firm Cerberus Capital Management LP bought a majority share of Chrysler in August from DaimlerChrysler AG, which is now known as Daimler AG. As a private company, Chrysler no longer has shares and isn't required to file earnings reports.

Chrysler pays its workers an average of $75.86 per hour in wages, pension and health care costs, the highest among the Detroit automakers.

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By Poornima Gupta and Kevin Krolicki

DETROIT, Oct 8 (Reuters) - Negotiators from Chrysler LLC and the United Auto Workers were set to resume contract talks on Monday after the union set a deadline for wrapping up negotiations this week.

The struggling No. 3 U.S. automaker has been given a 72-hour strike notice by the UAW as they negotiate a new labor agreement, a person familiar with the talks said on Monday.

It was not immediately clear whether that deadline would expire Tuesday or Wednesday.

A Chrysler spokeswoman declined comment on the talks. The UAW could not be immediately reached for comment.

Talks were set to resume Monday morning at the automaker's Auburn Hills, Michigan, headquarters after high-level negotiations intensified over the weekend, said another person familiar with the negotiations, who asked not to be named because of the private nature of the talks.

Negotiations between the two sides had been at a standstill for three weeks after the UAW agreed to extend Chrysler's four-year contract on wages and benefits to focus on larger rival General Motors Corp (GM.N: Quote, Profile, Research).

The union reached a tentative deal with GM late last month.

By shifting to Chrysler as his next target, UAW President Ron Gettelfinger is betting that the union, which represents some 180,000 workers at the Detroit-based automakers, will be able to find common ground with Chrysler's new owner, Cerberus Capital Management, at a time when sales have sputtered.

Chrysler is moving to idle production at six assembly plants this week to manage inventory levels. That includes a planned two-week shutdown at three UAW-represented factories, the company said.

Gettelfinger supported Cerberus' $7.4 billion acquisition of Chrysler from Daimler AG (DAIGn.DE: Quote, Profile, Research), which retains a nearly 20 percent stake in the automaker.

GM and the UAW agreed on the terms of a cost-saving contract on Sept. 28 that would give the largest U.S. automaker the ability to hire almost 17,000 lower-wage workers as higher-cost existing workers take early retirement packages still being hammered out by the two sides.

In a significant departure, the GM deal would shift the obligation for paying for retiree health care to a new trust fund aligned with the union, a concession expected to save GM almost $3 billion annually once it becomes effective.

Although the groundbreaking GM deal was expected to provide a blueprint for the union's talks with both Chrysler and Ford Motor Co (F.N: Quote, Profile, Research), both of those automakers have expressed concerns about some aspects of the agreement.

One concern is that the health-care trust considered the centerpiece of the GM deal would not begin to produce cash savings for the automaker until 2010.

Under Cerberus, Chrysler has shifted its focus to improving cash flow and has been reviewing a list of assets that could be spun off.

In addition, Chrysler was never granted the same 2005 concessions on retiree health care that the union gave Ford and GM by agreeing to shift some costs to its work force. That issue has now been pulled into the UAW negotiations, people familiar with Chrysler's negotiating position have said.

Before talks began, Chrysler made clear that absent concessions to close a wage gap estimated at about $30 per hour between it and Japanese automakers operating in the United States, it would need to shift production out of the country.

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this should prove most interesting...

It gets better

Strike warning goes up at Chrysler

Commentary: Auto workers remind Cerberus that old rules still apply

By MarketWatch

Last Update: 3:30 PM ET Oct 8, 2007

SAN FRANCISCO (MarketWatch) -- Not much of a honeymoon for Chrysler's new owners.

Just five months after private-equity heavyweight Cerberus Capital Management L.P. took the bulk of the slumping car company off Daimler's (DAI) hands for a cool $7.4 billion, the United Auto Workers have given management until Wednesday to come up with a new labor contract.

If they don't, they've got a full-blown, old-fashioned strike on their hands.

Leading the charge is UAW president Ron Gettelfinger, fresh from battle with General Motors (GM). The way things work in Detroit, the deal he just hammered out with GM lays the groundwork for subsequent contracts, whether they be with Ford (F), Chrysler, or any of the dozens of auto parts companies whose workers are represented by the union.

By making Chrysler their next target instead of Ford, the UAW is sending an unequivocal message to one of the world's leading private investment firms that new management does not mean a new game -- and the old rules still apply to labor.

Ford and GM, with a long history of at times bloody labor showdowns, already know this.

Even when the UAW and GM were making headway toward a new four-year labor pact last month, Gettelfinger and his team called a strike. It lasted only two days, allowed GM to draw down some bloated inventories and, most importantly, aimed to demonstrate serious backbone to the rank and file.

The public show of force also made it a bit easier for 74,000 GM working stiffs to swallow the fact that Gettelfinger had let their employer off the hook for $50 billion in long-term health-care commitments to retirees. In return, they got assurances of job security, a pay raise and some bonus money -- provided they sign the new contract.

Many of the same issues are on the table at Chrysler. And with Cerberus swinging around a fatter wallet than Chrysler ($60 billion in annual revenue from their holdings compared with $47 billion for Chrysler), the union is sensing there might be fatter stakes in the game.

While the union has already tipped its hand on health care, it could decide to get even tougher with Chrysler on pay and efforts to protect American jobs from offshoring, items that would be harder to push in talks with Ford, financially the shakiest of Detroit's Big Three.

But the union is also making painfully clear to Cerberus that buying a "legacy" U.S. car maker means more than just managing the brand. It also means managing labor relations with employees who bring their own costly baggage into the deal -- a lesson not lost on Daimler in its nine-year struggle to forge a winner from the battered U.S. auto industry.

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I disagree that the old rules still apply to labor. If Chryslerberus doesn't get a contract hammered out in a reasonable amount of time, I don't think Cerberus would have any qualms about selling off the company right out from under the UAW.

with that being said...

can manufactures sign a different union to handle the workers?

for example... UAW strike... (just for argumenative sake) could the parent company sign Teamsters or CAW to manage the employees instead of UAW when it came time to sign contracts?

if that were true...

why dont the unions bargin for the lowest bidder like that?

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I disagree that the old rules still apply to labor. If Chryslerberus doesn't get a contract hammered out in a reasonable amount of time, I don't think Cerberus would have any qualms about selling off the company right out from under the UAW.

Except they wont be selling THE company. It would probably be worth more broken into pieces at that point. The UAW better be careful.
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I still have the feeling that it's going to be Cerberus who'll take a bit out of the UAW.

Cerberus has a reputation for being almost vicious.

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If the unions don't bargain, Cerebus could replace 'em all w/ illegal Mexicans...other industries (farming, meat packing, McDonalds, etc) thrive working that way....

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thats what companies like cerbrus do... cut costs, change a companies financial standings dramatically...

they are willing to go to extreme measures to make things profitable... and because UAW doesnt really have a grip on Cerbrus's wallet, they are almost useless... striking Chrysler doesnt hurt Cerbrus, it only hurts Chrysler... or in other words... striking only hurts Chryslers employees...

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thats what companies like cerbrus do... cut costs, change a companies financial standings dramatically...

exactly... whoever heard of an investment/financial company intentionally losing their butts... just doesnt look good on the record when they do. they got no stake in it, the ceo doesnt get money until out of the red so whats to lose if they whore out chrysler to the highest bidder?

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I still have the feeling that it's going to be Cerberus who'll take a bit out of the UAW.

Cerberus has a reputation for being almost vicious.

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I heard a rumor that 1100 contract workers are getting cut and 400 white collar jobs too, no matter what happens with the UAW.

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Well I guess I was a little late with the news, so here you go.

Chrysler to cut deeper

UAW strike deadline looms: As 11 a.m. Wednesday nears, trims may be tactic to help seal labor deal

October 9, 2007

BY TIM HIGGINS

FREE PRESS BUSINESS WRITER

Chrysler LLC, deep into labor contract negotiations with the UAW, also is making changes to its nonunion workforce -- cutting hundreds of salaried and contract jobs.

The Auburn Hills automaker announced plans in February to eliminate 13,000 jobs over three years, including 2,000 salaried jobs. Now it intends to reduce even more white-collar positions by cutting the nonunion salaried workforce by 5% and cutting the contract workforce at Auburn Hills by 37%, said people who had been briefed on the plan but were not authorized to speak publicly about it.

The move comes as the UAW has given Chrysler an 11 a.m. Wednesday deadline to reach a new labor agreement or face a nationwide strike, according to a memo sent Monday by UAW President Ron Gettelfinger and UAW Vice President General Holiefield to UAW local leaders.

Although Gettelfinger told local leaders that Chrysler had "thus far failed to make an offer that adequately addresses the needs of our membership," several industry observers said the new deadline could indicate the two sides are near a deal.

"It is meant to put the negotiations into their endgame," said Harley Shaiken, a labor expert from the University of California, Berkeley.

"A deadline like that indicates two things that are a bit contradictory: first that a deal is near. Second that there is some trouble closing it."

Chrysler, which is undergoing historic evolution as the first privately held major American automaker in more than 50 years, is racing along at breakneck speed in an effort to make changes at all levels -- from the chief executive's suite to the assembly line.

In August, Cerberus Capital Management acquired majority control of Chrysler, putting Bob Nardelli in control as CEO and keeping former CEO Tom LaSorda around as president and vice chairman.

Last week, minority owner Daimler AG confirmed that LaSorda, who is leading the UAW negotiations for Chrysler, was paid a bonus related to the sale of Chrysler to Cerberus. A German union leader called the bonus "unreasonably high."

What new reductions could mean

Before the ownership change, Chrysler, which lost $2 billion in the first three months of the year, implemented a turnaround plan that shed about 1,000 white-collar jobs this year and another 1,000 next year.

Under the new plan, an additional 5% reduction of nonunion salaried workers could mean the loss of 535 white-collar jobs.

The automaker also has 3,000 contract workers in Auburn Hills. A 37% reduction could mean the loss of 1,110 jobs.

Chrysler declined to comment for this report. In August, LaSorda seemed to indicate that more cuts were on the horizon when he refused to rule out that the turnaround plan would go deeper than initially announced, noting that the economy was hitting the auto business hard. The automaker's U.S. sales are down 3% this year compared with 2006.

Shaiken said it was not surprising that Chrysler would be making cuts to its white-collar ranks while negotiating a UAW contract.

"White-collar folks at the Detroit automakers are in the unfortunate position of any time a company wants to make a point to the union, they demonstrate it on the white-collar folks, either to set the example or to show that they mean business or both," Shaiken said.

UAW memo authorizes strike

Leaders of UAW locals at Chrysler plants were prepared for a Sept. 14 strike, when the 2003 contract was set to expire, but work continued around the nation under an indefinite extension at Chrysler and Ford Motor Co. while the UAW worked to get a deal with General Motors Corp. first.

Talks with GM went nearly two weeks past the Sept. 14 deadline and included a two-day strike at GM facilities before a tentative agreement was reached Sept. 26.

Although GM's tentative deal serves as the template for a Chrysler agreement, the companies are in different situations, with GM much farther along in restructuring its North American operations.

Talks between the UAW and Chrysler intensified during the weekend. Negotiators met late into the evening Sunday and were expected to go late Monday, people familiar with the talks said.

"Your bargaining committee worked long hours this weekend in an attempt to reach a tentative agreement," Gettelfinger and Holiefield said in their memo. "Many difficult issues have been discussed involving the wages and benefits of the UAW-represented members."

During the weekend, the UAW delivered the 72-hour notice required to end the indefinite contract extension with Chrysler, which the two sides had agreed to Sept. 13. The Gettelfinger memo said the contract extension officially ends at 11:59 tonight, apparently giving the two sides an hour-by-hour extension to reach a deal by 11 a.m. Wednesday.

If no deal is reached by that time, Gettelfinger warned, "we will be left with no choice but to commence a strike at all UAW Chrysler facilities. ... Unless you receive notice otherwise, a strike is authorized at all locations at that time."

Experts said a strike against Chrysler could be devastating for the automaker.

"Everybody hopes that it does not come to pass," said David Gregory, professor of labor law at St. John's University. "Chrysler's really not in the position to take any significant, protracted strike. It could be the end of the company.

Edited by RJB
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exactly... whoever heard of an investment/financial company intentionally losing their butts... just doesnt look good on the record when they do. they got no stake in it, the ceo doesnt get money until out of the red so whats to lose if they whore out chrysler to the highest bidder?

.....and that highest bidder will be a Chinese firm. If that happens, I predict that the Chinese firm will move ALL production (cars, parts, etc.) to their home country and export back to the USA. This will bring Chrysler back into competition and the dealer base will be happy they kept their franchise.

Edited by Clownzilla
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.....and that highest bidder will be a Chinese firm. If that happens, I predict that the Chinese firm will move ALL production (cars, parts, etc.) to their home country and export back to the USA. This will bring Chrysler back into competition and the dealer base will be happy they kept their franchise.

Just asking ... if the Chinese did that what would they have bought besides the brand name, the retiree benefits, and some left over tooling?

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Just asking ... if the Chinese did that what would they have bought besides the brand name, the retiree benefits, and some left over tooling?

If the price was right, they could do well with buying the brand, patents, designs, and any special tooling they have. I'm sure there would be a way to eliminate any obligations to US factory workers if there were an initial bankruptcy. Especially if their going to move production out of the USA to restructure.

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