Chrysler Agreement Prevents Strike by UAW Until at Least 2015

[Pale Blue Dot]

May 13 (Bloomberg) -- Chrysler LLC, seeking to sell most of its assets out of bankruptcy to a new company run by Fiat SpA, won’t have to contend with a strike by the United Auto Workers until at least 2015.

The union’s contract with Auburn Hills, Michigan-based Chrysler, ratified April 29, will be extended past its Sept. 14, 2011, expiration until that date in 2015, with any changes handled by binding arbitration, according to court documents filed yesterday.

Labor stability in its U.S. operations would help the new company compete in a shrinking auto market. The UAW contract also trims costs by reducing health-care benefits, consolidating job classifications and tightening attendance rules. By removing the strike threat, the arbitration clause gives the union less leverage should it try to recoup what it gave up.

“This sets a precedent that says, ‘In the most troubled of times, we will forgo the right to strike to ensure the survival of the company,’” said Harley Shaiken, a labor affairs professor at the University of California at Berkeley. “It recognizes the reality that in two years, Chrysler will likely still be in rough waters.”

The Detroit-based union also agreed to accept a 55 percent stake in the new company to fulfill half of the automaker’s $10.6 billion liability to a union retiree health-care fund.

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