DETROIT (AP) — Now that the United Auto Workers union has a tentative labor contract with GM, its negotiators are focused on a deal with Chrysler.
But Chrysler, which is much smaller, may not have the resources to match the bonuses and profit-sharing that GM offered its workers last week, people briefed on the talks say. The people did not want to be identified because negotiations between Chrysler Group LLC and the UAW were ongoing Wednesday. The automaker's prime objective is to hold labor costs steady at $49 per hour, among the lowest in the U.S. auto industry.
Chrysler and the UAW extended their current contract last week while negotiations continued, but the extension ends at 11:59 p.m. Wednesday. They could reach a deal by then, or the contract could be extended again. Under the terms of Chrysler's government bailout, workers cannot strike over wages.
Chrysler workers know that they may not get as good of a deal as workers at GM got, said Kristin Dziczek, head of the labor and industry group at the Ann Arbor, Michigan-based Center for Automotive Research.
The company isn't making a net profit yet that it can share with workers, and they know it still needs capital to retool plants and revamp more of its models, she said. Chrysler is upgrading its lineup with technology from Italy's Fiat SpA, which owns a majority of Chrysler.
"I think the UAW gets that, and they understand what they're going to have to do to get an agreement at Chrysler," Dzicek said.
Chrysler and the union could be close to a deal. Marchionne said Tuesday that he was optimistic they'd reach an agreement soon. He flew to the U.S. from Europe Tuesday night in case an agreement was reached.
A message was left for UAW spokeswoman Michele Martin seeking comment.
On Friday, GM and the UAW reached a tentative four-year contract agreement. The deal promises news jobs and car production in the U.S, a top union concern. It also offers buyouts for more expensive, longtime union workers.
Under the deal, GM's union workers get a $5,000 signing bonus and profit-sharing checks that will likely exceed the $4,300 workers received this year. Longtime workers won't get a pay raise, helping GM contain costs. But entry-level workers will get raises of up to 24 percent during the contract's four years. GM's workers begin voting on the deal this week.
Chrysler, however, may not have the ability to match those offers. It reported a $254 million net loss during the first half of the year, while GM earned $5.4 billion.
Complicating the Chrysler talks is the UAW's indirect ownership of company stock. More than 40 percent of Chrysler is owned by a UAW trust fund that pays retiree health care bills. That puts the union in a difficult position: it must win more money or job guarantees from Chrysler without hurting the company's ability to turn a profit and boost the stock price.
Meanwhile, negotiations between Ford Motor Co. and the UAW have slowed while the union concentrates on the other two companies.