UAW shifts to Chrysler in next turn of labor talks

By Kevin Krolicki

DETROIT, Oct 7 (Reuters) - Chrysler LLC and the United Auto Workers were negotiating the terms of a new labor agreement on Sunday as the union targeted the newly private automaker in a round of talks deemed crucial to the U.S. auto industry's turnaround.

Talks between negotiators for the UAW and Chrysler continued on Sunday at the automaker's Auburn Hills, Michigan headquarters, a person familiar with the negotiations said.

High level 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)

The union reached a tentative deal with GM in late September.

By shifting to Chrysler as his next target, UAW President Ron Gettelfinger is betting that the union representing 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.

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

Gettelfinger supported the $7.4-billion Cerberus acquisition of Chrysler from former parent Daimler AG,(DAIGn.DE) which retains a nearly 20-percent stake in the automaker.

Moves by Cerberus since its August acquisition of the struggling No. 3 U.S. automaker have been taken by analysts as an indication that it intends to hold the company for a longer-term turnaround.

Cerberus moved quickly to name former Home Depot Inc.(HD.N) Chief Executive Robert Nardelli as its chief executive officer and chairman and then cleared room for Toyota Motor Corp (7203.T) veteran Jim Press, naming him in a newly created vice-chairman role in charge of sales and marketing.

Tom LaSorda, who had been Chrysler's CEO under Daimler, has stayed on as vice-chairman with responsibility for the UAW talks and manufacturing operations.

The Chrysler talks shifted into a higher gear on Friday and continued on the weekend, according to the person familiar with the negotiations, who asked not to be named because of the private nature of the talks.

A UAW spokesman was not immediately available for comment. Chrysler had no comment.

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.