Tuesday, October 23, 2007

Chrysler Workers on Verge of Deal?

Chicago Sun-Times
Financial Times

Chrysler employees at six plants in Michigan and Indiana will decide the fate of the new four year labor contract negotiated this week. This deal is similar to the most recently negotiated United Auto Workers deal with General Motors and includes broad measures to cut Chrysler’s health care costs and boosting production competitiveness.

As of Tuesday, the results have been split--with 10,000 workers at eleven facilities have approved the deal, and 11,000 workers at six larger plants have rejected the deal. 1/3 of the Chrysler workforce, based primarily in Michigan and Indiana, will vote as the tie-breaking force. Plants in favor of the deal have approved the deal by over 80 percent, while anti-deal plants have rejected it by 63 percent.

This current deal has come under fire from both outside and within the union. Critics have blasted the deal for the inclusion of a concession that allows Chrysler to hire new workers at half the wages of current employees. Furthermore, critics claim that Chrysler is making fewer long-term manufacturing commitments than GM. The Canadian Auto Worker's Union leaders believe this deal will ultimately fail, which would force Chrysler and UAW to go back to the drawing board. This may also delay the upcoming labor discussions with Ford. Nevertheless, Chrysler has attempted to lure and sweeten the deal for workers by giving some temporary workers a substantial signing bonus. Furthermore, this deal supposedly gives Chrysler additional, long-term viability as one of the leading US automakers.

Discussion Question:

Assuming Chrysler workers agree to the deal, will the concession allowing Chrysler to hire workers at half the wages of current employees eventually strip unions the power to later negotiate for higher salaries?

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