* Current contracts expire Sept. 14
* Shorter talks expected this year
* Much has changed since last labor contract was reached
(Adds comments from UAW president, source close to talks,
By Bernie Woodall and Deepa Seetharaman
AUBURN HILLS, Mich. (Reuters) - Chrysler Group LLC
and the United Auto Workers union expect to reach a deal on a
new labor contract without resorting to arbitration, officials
for the company and union said Monday.
In the four years since the two sides last negotiated a
labor contract, the Detroit automakers were pushed into crisis
by collapsing vehicle demand and the financial convulsion of
2008. Both General Motors Co and Chrysler, now
majority-owned by Italy's Fiat SpA, were bailed out by
the Obama administration.
Chrysler and the union would prefer to avoid arbitration as
that process would increase the chance for an imposed
settlement that neither side finds palatable.
"If arbitration happens, if anything like that happens,
then I'd say we haven't done our job," said UAW President Bob
King, whose union represents about 112,000 U.S. production
autoworkers, of which about 22,800 are at Chrysler.
"We don't want some third-party outsider who doesn't know
the industry as well as we know the industry making decisions
that impact our long-term viability."
Negotiators for the two sides wore matching maroon jackets
as they entered an amphitheater at Chrysler headquarters on
Monday, in a gesture of cooperation as the talks kicked off.
King and General Holiefield, the UAW's vice president for
Chrysler relations, spoke for the union. Scott Garberding, head
of manufacturing, and Al Iacobelli, head of labor relations,
represented the No. 3 U.S. automaker.
As a precondition to Chrysler's bankruptcy, the UAW agreed
to a no-strike clause. If talks reach an impasse, either side
can seek binding arbitration, an option that GM has as well.
Both companies obtained no-strike clauses from workers -- a
concession not granted by UAW members to Ford Motor Co.
Chrysler emerged from a federally funded bankruptcy a
little more than two years ago operated by Fiat.
Last week, the Italian automaker bought the remaining
Chrysler stakes held by the U.S. and Canadian governments and
took majority control. That leaves Fiat and UAW, through its
retiree healthcare trust, the two main Chrysler shareholders.
Chrysler's Iacobelli and the UAW's Holiefield each said
that the union and the car company owe a lot to U.S. taxpayers
for bringing Chrysler back from the abyss.
"We have a responsibility to the American public and the
Canadian government," said Iacobelli.
The current labor contract expires on Sept. 14. GM and Ford
are also expected to launch talks this week, on Wednesday and
President Barack Obama was present last year when
Chrysler's Grand Cherokee was launched at the Detroit auto
plant where Chrysler now has the most so-called second-tier
workers who earn about half the wages of established workers.
LABOR, HEALTHCARE COSTS
Chrysler's all-in labor costs of about $50-$51 per hour are
the lowest among the Detroit auto companies and on par with
Japanese automakers that have U.S. plants. Iacobelli said the
company would not resort to "the old formulas" of the past that
saddled it with uncompetitive labor costs.
Chrysler would like between $2 and $3 of hourly worker
wages to be tied to the company's performance, a person close
to the situation said before the talks began. To make room,
Chrysler needs to cut that much in costs, said the person, who
asked not to be identified discussing the negotiations.
Four years ago when the two sides met at the table,
Chrysler's all-in labor costs were about $76 per hour. Much of
that savings came from the establishment of the Voluntary
Employee Beneficiary Association, or VEBA, that shifted retiree
healthcare costs from the company balance sheets.
The person familiar with the talks said the UAW's financial
stake in Chrysler changes the dynamics of the talks. "It
tempers the dialogue substantially, to be quite honest with
you, because they own part of the company," the person said.
King last week agreed the union is deeply invested in the
ongoing profitability of the automakers.
"Our goal is to help Chrysler be as successful as possible
so we can get the maximum value for the stock we hold," he told
Reuters, adding the union would look to exit its stake as soon
as possible so the trust could diversify its holdings.
King opened Monday's news conference with a pledge to find
further savings on healthcare for Chrysler, which he said can
be achieved without further cost to UAW members.
Active UAW members at Chrysler pay 7 percent to 8 percent
of overall healthcare costs, compared with about 31 percent for
the average American worker.
King reiterated his stance that he hopes to negotiate
agreements with all three Detroit automakers simultaneously
rather than to pick a "target" company to single out, as has
been the practice in years past.
King and Chrysler's Iacobelli and Garberding did not say
which issues are "off the table" this year, but King said the
UAW will not entertain more financial concessions from its
workers, whom he said sacrificed greatly in the 2007 full talks
and 2009 reopening of the contracts after the 2008-2009 auto
industry downturn and GM and Chrysler bankruptcies.
King noted the talks are starting later than usual this
year and are expected to be of shorter duration. In 2007, the
final contract for the three automakers was signed in
mid-November. He and Chrysler's Iacobelli said the two sides
have already worked through some of the major issues including
changes in work rules and streamlining manufacturing processes,
which often take considerable time during talks.
(Reporting by Bernie Woodall and Deepa Seetharaman, additional
reporting by Ben Klayman, editing by Matthew Lewis and Maureen
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