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Chrysler pact returns to parity with GM, Ford.

Chrysler pact returns to parity with GM, Ford

Contract uniformity returned to the domestic automobile manufacturers when Chrysler Corp. and the Auto Workers negotiated a 28-month agreement, bringing 66,000 employees up to the wage, benefit, and job security levels prevailing at General Motors Corp. (GM) and Ford Motor Co. Contract terms had been essentially identical at the three companies, but in the 1979 and subsequent settlements, Chrysler employees accepted terms providing for less wages and benefits than did Ford and GM employees to help Chrysler overcome financial difficulties. Throughout the concessionary period, union leaders vowed to return to parity, and movement toward the goal occurred in the 1982 and 1985 settlements, following Chrysler's return to profitability. Barring financial problems at any of the companies, uniformity presumably will continue, with current contracts at all three companies now expiring on September 14, 1990. (See Monthly Labor Review, November 1987, pp. 31 -33, for terms of the Ford contract and December 1987, p. 51, for the GM contract.)

Despite early indications that Chrysler and the Auto Workers would agree to a return to contract parity with GM and Ford, and the peaceful outcome of the talks, union officials criticized Chrysler for several events which occurred before and during the talks. One was Chrysler's announcement of plans to close its assembly plants in Kenosha, WI, at a cost of 5,500 jobs. In the national settlement, Chrysler agreed to additional measures to aid the displaced workers. Other controversial issues were Chrysler's announced plans to sell its 11 Acustar parts manufacturing plants (later revised, after an angry reaction by the union, to provide for retention of seven of the plants), and the size of bonuses distributed to Chrysler executives.

The new contract provides for an immediate $1,000 "early settlement bonus" (in cash or Chrysler stock), which reflected the fact that Chrysler employees, unlike Ford and GM employees, did not have a profit-sharing provision in their expiring contract. (Gm employees did not receive an annual profit-sharing distribution in 1988; Ford employees received an average of $3,700.) The Chrysler employees-who are now covered by the same profit-sharing formula as at Ford and Gm-had received $500 payments in 1988 under provisions of the old agreement which called for adoption of profit sharing either during the term of that agreement or as part of the 1988 settlement.

Like Ford and Gm employees, Chrysler employees will receive performance bonus payments in October of 1988 and 1989, each equal to 3 percent of their qualified earnings during the preceding 12 months. The provision for automatic quarterly cost-of-living pay adjustments also followed the pattern, except that a total of 15 cents will be withheld from adjustments to equalize the allowance with that for Ford and GM employees.

The feature of the settlement was a job security program that differs only in name from the Guaranteed Employment Numbers program at Ford and the Secure Employment Numbers program at GM. Chrysler's program, Base Employment Levels, will be backed by a $210 million company commitment, compared with $1.3 billion at GM and $500 million at Ford, reflecting both the variation in the number of protected employees and the difference in contract duration.

In a departure from the GM and Ford settlements, Chrysler agreed that it would not grant cash or stock bonuses to its executives in years when profits are insufficient to trigger profit-sharing payments to employees in the bargaining unit. The union conceded that this provision contained loopholes, but called it a "solid start in curing the worst inequities."

The Chrysler contract also bans plant closings, except for those resulting from conditions beyond Chrysler's control and those announced before the start of the negotiations. Similar bans were contained in the union's contracts with Ford and Gm.

Chrysler and the Auto Workers agreed to special provisions for 7,000 employees in Kenosha and Milwaukee, including $6,000-$8,000 payments to the employees, representing a reported 83-percent payback of money the workers had loaned American Motors Corp. under an aid program established in 1982. Chrysler, which purchased American Motors in 1987, also agreed to special guaranteed and extended Supplemental Unemployment Benefits and other assistance to the 5,500 workers in Kenosha who will lose their jobs when assembly and stamping operations cease at the end of the year.

An engine plant in Kenosha and a parts depot in Milwaukee will remain open, bringing a total of 1,500 employees under the national contract and also under a "Modern Operating Agreement" designed to improve efficiency and worker morale through changes such as broadening job duties and using team production techniques. Local Modern Operating Agreements, the cornerstone of Chrysler's drive to improve its competitive position, have been adopted at six locations in recent years. In some cases, employees have reacted adversely to certain innovations, and during the controversy surrounding the 1988 national negotiations, the Auto Workers national leaders threatened to cease negotiating Modern Operating Agreements. The first such agreement was adopted in 1986 at Chrysler's machining and forge plant in New Castle, IN. The others are at assembly plants in Newark, DE, and Detroit, mi; an engine plant in Trenton, mi; a foundry in Indianapolis, IN; and an electronics plant in Huntsville, AL.

Local approaches to improving efficiency and morale in the industry are not unique to Chrysler. GM and Ford have also been negotiating innovative terms with the Auto Workers in local supplements to their national agreements.
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Author:Ruben, George
Publication:Monthly Labor Review
Date:Jul 1, 1988
Previous Article:Employment Cost Index series to replace Hourly Earnings Index.
Next Article:Teamsters accept contract despite opposition.

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