Chrysler-UAW deal backed by secret product pledge

DETROIT (Reuters) - Chrysler LLC guaranteed that it would keep some U.S. factories running well beyond the 2011 expiration of a proposed contract with the United Auto Workers union if the deal was approved, people familiar with the matter said on Monday.

The ratification of the Chrysler contract by almost 49,000 UAW-represented factory workers was thrown into jeopardy over the weekend after major union locals voted to reject the deal.

Some of that unexpectedly fierce opposition has come from those who say that the UAW failed to secure the same explicit investment guarantees for U.S. factories at Chrysler that it won from General Motors Corp GM.N.

But UAW Vice President General Holiefield told union Local 1700 leaders on Monday that Chrysler’s Sterling Heights, Michigan assembly plant would be guaranteed production until 2016 under a previously undisclosed understanding between the union and the privately held automaker, according to a person familiar with that briefing.

The broad terms of that arrangement, which extend to some but not all UAW-represented Chrysler plants, were confirmed by a second person familiar with the matter.

The UAW pledge to representatives of Chrysler’s Sterling Heights assembly plant is significant because the facility has become closely associated with the grass-roots movement to kill the proposed contract.

“It sounds to me like they’re making one more push for the deal, to get it ratified,” said Erich Merkle, analyst at IRN Inc. “I guess it comes to down to whether the member base of the UAW trusts the leadership in terms of these handshake-type deals.”

Bill Parker, president of UAW Local 1700, which represents the plant making the Dodge Avenger and Chrysler Sebring, was on the UAW negotiating team at Chrysler and has urged workers to reject the proposed contract.

Parker did not attend a meeting called by Holiefield as part of his campaign to build support for the deal, but about 60 local representatives attended at a Detroit area hotel.

Holiefield told them about Chrysler’s commitment to keeping one of its most flexible and valuable assembly plants.

“We’re just trying to do our job,” Holiefield told Reuters as he left the union meeting. “We’re trying to keep the media out of it.”

A Chrysler spokeswoman declined to comment.

In an attempt to secure ratification of the proposed four-year contract, UAW leaders have stepped up their lobbying efforts.

The deep-seated opposition to the Chrysler deal has threatened a major setback for leadership of the UAW, which reached a tentative agreement with Chrysler on October 10 after a six-hour strike.

UAW President Ron Gettelfinger, who is waiting to negotiate a contract with Ford Motor Co F.N, may have to go back to the bargaining table with Chrysler if the deal is rejected. Voting is expected to conclude this week.

According to a tally provided to Reuters by a person opposed to the contract, six UAW-represented facilities representing about 11,150 workers have voted against the contract while nine others, representing 8,294 workers, have approved the proposed four-year contract.

Most of Chrysler’s UAW-represented factory workers must ratify the deal for it to take effect.

Holifield told union leaders on Monday that one of Chrysler’s two St. Louis assembly plants had also been given an undisclosed product guarantee, but declined, when asked, to say if those commitments extended to other facilities, the person familiar with the briefing said.

Private equity fund Cerberus Capital Management CBS.UL took Chrysler private in August. Former owner Daimler AG DAIGn.DE maintains a roughly 20 percent stake in Chrysler.

Chrysler management has indicated it will move forward with plans to cut up to five models from its lineup under an accelerated turnaround plan.

Partly because the product plans remain in flux and because its own capital expenditure budget only runs until 2011, Cerberus has been unwilling to commit on paper to new vehicles for U.S. plants beyond the proposed contract, one person familiar with the contract said.