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Chrysler Cuts May Ease Talks With UAW

March 1, 2007
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To the extent that layoffs could be said to have an upside, DaimlerChrysler might have found one in announcing this month that it is cutting 13,000 jobs within its Chrysler Group over the next three years. The company was following in the footsteps of its fellow sales-challenged auto­makers, General Motors and Ford, which have announced layoffs of 35,000 and 30,000, respectively.

Experts predict that by timing its announcement as it did, just months before the Big Three automakers enter contract negotiations with the United Auto Workers, DaimlerChrysler might actually be making those talks easier on itself. That’s particularly true as the company looks into the possibility of selling off Chrysler Group.

Newark, Delaware, and reducing production at a number of other plants. Overall, the company anticipates cutting its workforce by about 16 percent in an effort to return to profitability.

Even those cuts might not be enough to revive Chrysler Group, DaimlerChrysler CEO Dieter Zetsche has admitted. To that end, the company is also exploring the idea of selling the U.S. division.

Announcing major layoffs just months before contract negotiations with a union might appear to some to be an intimidation tactic, says Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School.

“It might be harder for union members to take a chance on a strike in an effort to gain something when massive layoffs are still fresh in people’s minds,” he says.

The UAW and Chrysler are in talks about how many of the 13,000 workers will receive buyout offers. But the possibility of a sale of the U.S.-based unit may put the union at a disadvantage, experts say. If the company gets sold, it might mean that even more employees will be out of a job, says Arthur Wheaton, industry education specialist at the School of Industrial Labor Relations at Cornell University.

Conversely, cutting thousands of jobs before union negotiations might give the UAW an upper hand, says Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts.

“The usual management philosophy is that you cut wages and benefits to keep jobs,” he says. “But now they can’t use that because they have already cut the jobs.”

All of this happens against an interesting backdrop—a seemingly positive shift in the overall tone of labor/management discussions within the auto industry, says Robert Bruno, an associate professor at the Institute of Labor and Indus- trial Relations at the University of Illinois at Urbana-Champaign.

A few years ago, these negotiations tended to be hostile; now there seems to be more of an attempt from both management and the union to recognize common ground, Bruno says.

“Both parties appear to be entering these discussions with an understanding that the industry is [in] a real crisis,” he says. “They understand that there are mutual gains and mutual losses.”

There is also an understanding among both management and union officials that the current downsizing is a marker of how the industry is going to be from now on, Chaison says.

“The Big Three have really gone to the philosophy that smaller is better,” he says. “And this isn’t a temporary idea. It’s here to stay.”

Jessica Marquez

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