UAW reaches tentative deal with Chrysler

DETROIT (Reuters) - The United Auto Workers union said on Wednesday that it had reached a tentative labor agreement with Chrysler LLC, ending a strike against the No. 3 U.S. automaker by some 37,000 workers within hours of when it began.

The UAW said in a statement it was calling off the strike against Chrysler, effective immediately. The union said the tentative agreement would protect wages, pensions and health care for UAW-represented Chrysler workers and retirees.

Both sides said the tentative agreement included establishing a trust fund that would take over responsibility for retiree health care.

That follows the pattern of a ground-breaking deal between the union and General Motors Corp. reached last month.

Details were not immediately available.

The deal now faces ratification by Chrysler's almost 49,000 UAW-represented workers.

Picketers outside Chrysler factories began to disband as word went out from local union branches about the settlement, which came just six hours after the strike began.

"Everyone is just relieved. No one wanted this to go on too long," said Michael Yanoulakis, a Chrysler electrician who was leaving a picket line in Sterling Heights, Michigan. "Now the membership will speak at ratification."

The UAW and Chrysler conducted their whirlwind negotiations under tight wraps and many workers said they were concerned about what concessions the union had offered up.

"It's good that the strike is over, but now I'm apprehensive," said James Mosley, 55, a Chrysler veteran of 35 years in Kenosha, Wisconsin. "What I want to know is what we got and what we had to give up."

Chrysler said in a brief statement that it expected the deal to improve its manufacturing competitiveness. It also said the deal was subject to review by the U.S. Securities and Exchange Commission.

The surprise settlement capped a dramatic showdown between the union and newly private Chrysler under the ownership of Cerberus Capital Management.

The UAW called a strike at 11 a.m. EDT when a marathon bargaining session failed to produce an agreement by a deadline the union had set earlier.

Some analysts had expected the gap between the two sides on key issues such as health care and job security to lead to a relatively long strike that would have also helped Chrysler run down some unsold inventory.

Instead, the Chrysler settlement came faster than the labor deal the UAW concluded with GM last month to cap a two-day strike.

"This agreement was made possible because UAW workers made it clear to Chrysler that we needed an agreement that rewards the contributions they have made to the success of this company," said UAW President Ron Gettelfinger.

David Cole, chairman of Center for Automotive Research in Ann Arbor, Michigan, said it would be important to see how the Chrysler deal differed from the one the union struck with GM.

"I don't think the union would sign anything unless it has what they needed," he said.

The short strike may have helped spark the quick settlement, he said.

"Sometimes it is necessary to raise the focus a little bit as getting this kind of contract ratified is very difficult," Cole said.

PROGRESS WITH GM DEAL

Separately, the UAW said on Wednesday evening that 66 percent of GM workers had ratified the union's new four-year contract with the No. 1 U.S. automaker.

The focus now shifts to Ford Motor Co., which now faces still-pending contract talks with the UAW and has indicated that it needs to clinch a deal that will sharply cut its own operating costs.

The short-lived UAW strike against Chrysler had shut down 20 of the automaker's plants. The union purposely excluded five plans that were in temporary shut-down due to excess inventory in an attempt to increase the financial cost of the strike for the automaker.

Parts shortages had also forced a short closure of Chrysler's Windsor, Ontario plant, which makes the all-new version of Chrysler's highly-touted minivans.

Chrysler was taken private by Cerberus Capital Management in August in a $7.4-billion deal. Former parent Daimler AG retains a stake of about 20 percent.

Chrysler's U.S. sales have slipped 3 percent through September, in line with a slump in the broad market. The company ranks behind GM, Toyota and Ford in U.S. sales.

The last UAW strike against Chrysler was in 1997.

(Reporting by Nick Carey in Kenosha, Wisconsin and David Bailey in Detroit)