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Chrysler takes a back seat to Ford as UAW shifts gears

So much for a quick settlement: Contract negotiations between the UAW and Chrysler Group LLC have been extended to Oct. 19, both sides of the talks said this evening. Last week's extension of the 2007 contract expired today. Just as quickly as the UAW was announcing today's extension with Chrysler, it issued a short statement saying Ford Motor Co. would move ahead of Chrysler and be up next in the negotiation rotation.


Both automakers want four-year contracts.

A statement posted on the UAW's media site tonight said, simply: "The UAW will focus its attention on Ford Motor Co. in negotiations for a tentative agreement. ..."

Chrysler CEO Sergio Marchionne (pictured) told reporters when he flew into town from Turin, Italy, this week that he hoped to have a new contract in place with the UAW within a few days, or "soon," possibly within a week. He has not said whether any progress has been made so far. But the UAW's decision to shift gears abruptly signals to even the most casual observer that negotiations have been anything but smooth.

The UAW issued a statement on its Facebook page tonight saying an extension is needed to continue the conversation. It declined to say whether any progress had been made with Chrysler.

The statement said: "Today the UAW and Chrysler Group LLC agreed to extend the current collective bargaining agreement while we continue negotiating toward a tentative agreement.

"The current contract extension was set to expire today.

"The UAW will not provide further comment regarding negotiations or speculate about timing or the potential outcome of these negotiations at this time."

The pay and benefits earned by Chrysler's 26,000 UAW auto workers fall 25% below compensation paid to UAW auto workers at General Motors Co. and Ford Motor Co. Hourly compensation comes to about $48 in pay and benefits for a veteran auto worker at Chrysler, between $8 and $10 less than its Detroit Three breathren. Chrysler wants to keep it at that as it struggles to make money.

Chrysler's finances are wobbly and the UAW knows that. Chrysler lost $652 million in 2010 and recorded a loss of $370 million in this year's second quarter. Portending hope for better days at Chrysler is a profit of $116 million in 2011's first quarter. The company hopes to make at least $200 million by year's end, but even if it does that it needs consistent profits before it will be willing to give the UAW the kind of deal the union won from GM.

There might be a strike at Ford Motor, but the UAW has agreed in writing not to strike Chrysler as part of the bailout arrangement the carmaker made with President Obama in 2009.

Preceding negotiations last week was a rift between Marchionne and UAW President Bob King over King's cancellation of a prescheduled negotiating session with Chrysler to tend to the four-deal deal the union successfully negotiated with GM. Marchionne took the cancellation as a slight and wrote King a nasty letter, which King ignored. Marchionne and King have both told reporters everything is fine between them.

"I know that we are the smallest of the three automakers here in Detroit, but that does not make us less relevant. Our people are no less relevant," Marchionne told King in the Sept. 14 letter.

Here is the letter:

Sept. 14, 2011

Mr. Bob King
International Union, UAW
800 East Jefferson Ave.
Detroit, MI 48214

Dear Bob,

It is now 10 p.m., September 14th, 2011 and the collective agreement between Chrysler Group LLC and the UAW is going to expire in a couple of hours.

You and I met last weekend and agreed that we had to get this new contract agreed and signed by today.

We have had a large number of people working on issues, 13 bargaining committees who since July 25 have been working diligently to resolve matters that are essential to the formulation of a new collective agreement that will take us into 2015. They have done their work, and we are down to the resolution of a few issues, primarily involving the economics for our employees for the next 4 years.

I flew back from the Frankfurt Motor Show late last night to be here today to finalize the dialogue that has been started by our teams but that required your presence and mine to conclude. You, unfortunately, could not be here, I am told, due to competing engagements.

We have known about this expiration for a long time.

It was discussed at length during an incredibly painful period in 2009 when we argued and pleaded, together, to be given a second chance to put Chrysler right. And we even agreed that were we still around in 2011, we would not go back to the old adversarial and confrontational ways of the past to resolve unsettled matters: that we would have someone else arbitrate our differences.

And so as I sit at my desk now, I am thinking of our 26,000 employees who tomorrow will be working without a new contract, without even an understanding between Chrysler and the UAW that the old one is extended. We have not even agreed on the procedures for arbitration.

Until now, there have been encouraging signs of a new paradigm governing the relationship between us.

We share a view that World Class Manufacturing is to be rapidly deployed throughout the organization to put dignity back in the workplace, to make our factories and our people safer, to produce high quality products by eliminating all waste from our processes.

We share a commitment to create a new order wherein our employees can share in the economic success of this new Chrysler, one in which we can gradually restore economic wellbeing to our people but in a manner which reflects and parallels both the improvement in the market acceptance of our products and the financial performance of the company.

These shared commitments are at the heart of the new Chrysler. They are the reason why notwithstanding the naysayers and again all odds, we are still here today.

They are the reason why Chrysler people, be they blue or white collar, have worked incessantly, with unwavering dedication and without hesitation during the last 27 months to bring Chrysler back.

These are the reasons why we have continued our investment programs in the US, committing more than 4 billion dollars without knowing the outcome of these labor negotiations.

You and I failed them today.

We did not accomplish what leaders who have been tasked with the turning of a new page for this industry should have done.

We did not manage to agree to a set of simple conditions that would have given certainty and peace of mind to the lives of more than 110,000 actives and retirees.

I know that we are the smallest of the three automakers here in Detroit, but that does not make us less relevant. Our people are no less relevant.

And they are certainly more relevant than some of the larger issues, including those on the international front, that are close to your heart but that do not impact on the quality of the lives of our people.

I need to travel out of the country now for business reasons and will return early next week.

I am willing to extend the current contract by an additional week to allow closure on all outstanding matters.

I hope you concur.


Negotiations resume on Thursday.

Hawke Fracassa covers the automotive beat from Detroit for TN. You can reach him at [email protected] and (248) 747-1550. Or follow him on Twitter @HawkeFracassa.

Image source: TN