Chrysler group revives health care talks with UAW

Reuters / October 11, 2006 - 2:00 pm DETROIT -- The Chrysler group has restarted talks with the United Auto Workers union aimed at reducing the $2.3 billion it spends annually on worker health care in the United States, a spokesman for the automaker said today.

A representative of the UAW was not immediately available to comment.

The talks between the Chrysler group and the union stalled a month ago when union leadership ruled out granting the automaker the same kind of concessions given to its larger rivals General Motors and Ford Motor Co. over the past year.

At the time, UAW President Ron Gettelfinger, who sits on DaimlerChrysler's supervisory board, said the union believed the Chrysler group was in a stronger position than either GM or Ford.

But less than two weeks later, the Chrysler group said it was cutting second-half production by 16 percent because of a glut of unsold pickups and SUVs.

The Chrysler group, which had posted four years of profitable results, now expects a loss in the current quarter and a full-year loss of up to $1.2 billion.

Chrysler group spokesman Dave Elshoff confirmed that talks with the UAW had resumed but declined to provide other details. The resumption of the talks was first reported by the Detroit Free Press based on an interview with Gettelfinger.

The Chrysler group's health care burden represents a cost disadvantage of more than $1,000 per vehicle compared with Asian and European automakers operating without a unionized factory payroll in North America, the company has said.

DaimlerChrysler Chairman Dieter Zetsche criticized the union's opposition to negotiating a cost-saving deal on health care with the company as "irrational."

The UAW's initial rejection of concessions for the Chrysler group was seen by some industry watchers as an unusual break with the auto industry's established practice of pattern bargaining.

Under pattern bargaining, similar wage and benefit contracts have traditionally been negotiated for all of the Detroit 3.

The benefit rollbacks negotiated with Ford and GM, under which UAW workers and retirees pay more for their health care, met opposition from the union rank and file.

The cost-cutting deal for Ford was approved by 51 percent of union workers. At GM, the share of the vote in favor of the concessions was 61 percent.

The Chrysler group, Ford and GM are preparing for the next round of major contract talks with the UAW to begin in September 2007.

The automakers are expected to look for wide-ranging concessions, including even lower health care costs, to help them compete against Asian and European automakers.

The car companies also want more flexible work rules and a reduction in the number of workers guaranteed nearly full wages and benefits even after their plants are idled or shuttered.