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Detroit Three Extends Contract With UAW, Talks Continue

Thu, 09/15/2011 - 8:45am

DETROIT (AP) — Negotiations between General Motors, Chrysler and the United Auto Workers union continued Thursday even though bargainers missed a key deadline to agree on a new contract.

The union, which represents 111,000 workers at Detroit's carmakers, agreed to keep working under the old GM and Chrysler contracts, which expired Wednesday at 11:59 p.m.

General Motors Co. appeared close to a deal. Its talks with the union resumed at 10 a.m. EDT Thursday. The automaker has taken the lead on the negotiations and its agreement may be used as a model for the other two companies.

"We are hopeful that an agreement can be reached soon," UAW leaders said in a statement early Thursday. "While we have made significant progress, we have not been able to secure a new agreement."

Chrysler Group LLC's negotiations were strained, however. Just before Wednesday's contract expiration, CEO Sergio Marchionne wrote an angry letter to the UAW president saying that he failed to show up to finalize a deal. Chrysler would say only that both sides are talking.

The UAW has already extended its contract with Ford Motor Co.

The negotiations, which began earlier this summer, will determine wages and benefits for workers at all three companies. They will also set the bar for wages at auto parts companies, U.S. factories run by foreign automakers and other manufacturers, which employ hundreds of thousands of people. The talks are the first since GM and Chrysler needed government aid to make it through bankruptcy protection in 2009.

The union wants bigger profit-sharing checks instead of pay raises, higher pay for entry-level workers and guarantees of new jobs. Ford and GM want to cut labor costs, while Chrysler wants to hold its costs steady. Health care costs are also an issue.

Once agreements are reached, workers will vote on them.

Up until Wednesday's deadline, the negotiations seemed free of the acrimony marking past talks. As part of the bailouts, GM and Chrysler workers agreed not to strike over wages. In the past, workers might have gone on strike.

But the mood of the talks turned tense for Chrysler. Marchionne complained Wednesday that he had been snubbed by UAW President Bob King. That caused the two sides to miss the deadline for the new agreement, he wrote.

"I know we are the smallest of the three automakers here in Detroit, but that does not make us less relevant," Marchionne said in the letter, which was obtained by The Associated Press.

Marchionne said a few mainly economic issues separate the two sides. He told King in the letter that he would travel out of the country for business and will return next week. He said he would agree to a weeklong extension of Chrysler's current contract.

"We did not accomplish what leaders who have been tasked with the turning of a new page for this industry should have done," he wrote.

King would not comment on the letter when reached by telephone early Thursday.

King spent much of the day Wednesday negotiating with GM, but it was unclear why he didn't appear at Chrysler's Auburn Hills, Mich., headquarters.

It's likely that any setback at Chrysler is temporary. The union has an interest in reaching a deal. A union-run trust that pays retiree health care bills owns more than 40 percent of Chrysler. Chrysler has turned a small profit in the first half of the year, excluding a one-time accounting charge for refinancing government bailout debts.

GM nearly ran out of cash and needed $49.5 billion from the government to survive. But it's made billions in the last two years because its debt and costs were lowered in bankruptcy and its new products have been selling well.

Under terms of both companies' bailouts, unresolved issues can be taken to binding arbitration, and the union's new contracts must keep the companies' labor costs competitive with Asian automakers such as Toyota Motor Corp. and Honda Motor Co.


Copyright 2011 The Associated Press.

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