Through The Fly's Eyes: UAW and Chrysler

from Joseph Lazzaro of Theflyonthewall.com


With Wed. Chrysler Deadline Set, Analysts Debate UAW Leverage

As United Auto Workers set a Wednesday morning deadline for a new contract agreement with privately-held Chrysler, auto industry analysts and workforce consultants debated the overall strength and leverage of the UAW, given Chrysler's partial operation status.

A strike against a cash-rich, robust automaker with dominant market share is a move that could yield results, labor analysts generally agreed, but automaker Chrysler is not in the that category. Recently taken private by Cerberus Capital Management, Chrysler has already idled five of nine assembly plants in order to eliminate unsold inventory, due to sub-par sales. Hence, any potential strike would not hurt the automaker as much as, for example, when an automaker is loaded with backorders, market share, and has pricing power.

Chrysler has underscored that contract concessions are needed to make the automaker more-competitive with Japan-based and related competitors. Among other concessions, Chrysler wants to adapt its health care plan to better-suit its needs. The UAW has sought to minimize wage & benefits concessions, while also seeking certain guarantees regarding pension payments, among other items.

The negotiations had little affect on the publicly-traded automakers Monday. Ford was down 14 cents to $8.23 while General Motors declined 22 cents to $37.98 in afternoon trading. [As noted, Chrysler is privately-held: Cerberus spent $7.4 billion to purchase 80.1 % of Chrysler this summer.]

Chrysler has the the smallest UAW-represented work force, with about 49,000 workers as members; Ford (F) has 58,000 and General Motors (GM) has 73,000, Reuters reported.

Last month, the UAW struck General Motors for about two days before coming to a tentative agreement with the company; UAW's GM workers are expected to ratify that deal by week's end.