October 16, 2007 / 10:50 PM / 12 years ago

Key UAW official, dissidents blast Chrysler deal

DETROIT (Reuters) - The proposed contract between the United Auto Workers and Chrysler LLC has come under fire from a top union negotiator as well as dissidents who charged the tentative deal gives away too much to the newly private automaker.

United Auto Worker striking union member Todd Macker pickets outside the Chrysler Warren Stamping Plant in Warren, Michigan, October 10, 2007. REUTERS/Rebecca Cook

In a striking break with the UAW’s tradition of closing ranks once a contract has been negotiated, Bill Parker, the chairman of the union’s Chrysler negotiating committee, sent an open letter to other leaders urging a return to the bargaining table.

Parker, chairman of UAW Local 1700, which represents some 2,700 workers who assemble the Chrysler Sebring and Dodge Avenger models, said he had voted against the contract when it was proposed last week.

Separately, the UAW dissident group Soldiers of Solidarity urged union-represented workers on Tuesday to “stand your ground. There’s nowhere to run,” in a posting on its Web site. About roughly 49,000 will vote on the four-year contract starting this week.

Critics within the UAW released excerpts from the proposed contract on Tuesday, saying the agreement would allow Chrysler to hire a large class of lower-wage workers at half the current wage without guaranteeing future investment in U.S. factories.

They also objected to a plan to create a health care trust fund for Chrysler retirees, saying it was underfunded compared with Chrysler’s $19 billion obligation for medical costs.

The UAW called a strike against Chrysler last Wednesday, but ended it six hours later after union leaders met that afternoon and decided to accept the terms of a contract proposal from the automaker from earlier that day.

Parker’s letter to UAW local leaders, which encouraged some to vote against adoption of the Chrysler agreement at a Detroit meeting on Monday, was released by union dissidents to bolster their case against the contract.

The terms of the deal are seen as crucial to the success of private equity firm Cerberus Capital Management LP CBS.UL in turning Chrysler around after the automaker posted a $680 million loss in 2006.

The contract, along with a now-ratified deal with General Motors Corp. (GM.N), will also be taken up as the pattern in talks involving Ford Motor Co (F.N). Many analysts see Ford as the most urgently needing to secure concessions to bounce back from a slide in market share and a $12.7 billion loss last year.

In a letter to Chrysler workers, UAW President Ron Gettelfinger and Vice-President General Holiefield acknowledged the union had been pushed hard by the automaker.

“Chrysler had an agenda that was nothing but cutbacks, but our membership turned the company around,” Holiefield said. “We saved plants, we saved parts distribution centers, and we saved jobs.”

The UAW won a pledge from Chrysler to drop plans to spin off its transportation unit and its MOPAR parts distribution business, but agreed in exchange to allow thousands of new union hires to come in at just $14 per hour, roughly half the current wage.

Chrysler also retained the right to close or sell five of its U.S. facilities, including an assembly plant in Delaware that makes the Durango SUV and one in Detroit dedicated to the high-performance Viper.

A side letter to the contract also spells out that any future Chrysler production in the United States is based on “market demand” and “favorable business cases.”

Job security is a hot-button issue for many UAW-represented Chrysler workers because the automaker under Cerberus has made it clear it will seek out production partners overseas to reduce costs and target new markets outside the United States.

Compared to larger rival GM, Chrysler also appeared to have won deeper concessions on retiree health care based on its pledge of $10.3 billion to fund the new trust that will start operation in 2010.

The funding would include a warrant issue that union leaders said has a “potential equity upside value” of $605 million. The basis of that calculation was not spelled out by the union.

GM’s contract was ratified by about two-thirds of its UAW workers.

Representatives of the UAW and Chrysler were not immediately available for comment.

Chrysler was taken private by Cerberus in August in a $7.4 billion deal. Former parent Daimler AG (DAIGn.DE) retains a stake of almost 20 percent.

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