Chrysler Started Talks With Uaw

By: Evander Klum

After all the formalities were said the officials of Chrysler Group the producer of high quality and the United Auto Workers has sit down to discuss on how they will go about the negotiations.

However one thing is clear that health care is going to be one of the focused of the discussion.

UAW President Ron Gettelfinger last Friday has repeatedly evaded questions about bargaining strategy but told reporters that the union has already done a lot to help Detroit's Three to become more competitive again.

As a fact of this, the UAW has agreed to give General Motors Corporation and Ford Motor Co. health care concessions plus even consented on buyout and early retirement packages that resulted to all three Detroit-based automakers to downsize their work forces.

It can be remembered that in the past UAW President has stressed that the union is not in a concessionary mode but present turn of events tells a different story.

Chrysler, GM, and Ford have already said that they would need to reduce labor costs in order to compete head-to-head with their Japanese rivals mainly Toyota, Honda, and Nissan. This was even seconded by industry analysts saying that cutting costs is vital to the survival of the domestic companies.

John Franciosi, Chrysler Senior Vice President and the company's chief negotiator explained that Detroit's Three domestic companies would start with a more aggressive lobbying campaign in Washington addressing concerns on health care costs. It can be noted that UAW President has been clamoring for the same issue and has even called for a national health care system.

And according to Gettelfinger and Franciosi that the domestic automakers are competing against foreign automakers whose governments have taken the responsibility of taking the tab for health care. Unfortunately for the domestic automakers without national health care, they would still have to deal with the huge problem of their retirees' medical expenses.

Detroit's Three have an accumulated unfunded liability for retiree health care amounting to $90.5 billion and would very much want to eliminate or at least reduce the said amount. One of the solutions that is being cited in the negotiation is the settlement contract last year between Goodyear Tire & Rubber Co. with the United Steelworkers. The settlement contract goes like this: the company agreed to pay the union with $1 billion to create a trust and take over the $1.2 billion in hourly retiree health care liabilities.

Franciosi has also explained that reducing cost to become more competitive is important for both the union and the company.

There were studies showing that Detroit Three make around $2,000 less per vehicle as compared to their Japanese rivals with much of the cost going to labor. But UAW refuted such studies and said that labor cost is only 10% of the price of a new vehicle.

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