The United Auto Workers union extended its contracts with General Motors Co. and Chrysler Group LLC early Thursday after failing to meet a deadline to reach a new agreement.
GM broke off talks after midnight and said they would resume at 10 a.m. ET Thursday. Chrysler didn't say when its talks would resume.
The decision has little impact on the 71,000 U.S. factory workers covered by the GM and Chrysler contracts. In the past, workers might have gone on strike if the UAW hadn't extended their contracts. But as part of their 2009 government bailouts, GM and Chrysler workers had to agree not to strike over wages.
"We should continue to do the things we do until we receive official notification otherwise," a UAW local official at a GM factory in Lordstown, Ohio, wrote Wednesday in a message posted on the local's website.
The UAW extended its contract with Ford Motor Co. last week, as talks have progressed more slowly with that automaker. The Ford contract covers around 40,000 workers.
Up until the deadline, the negotiations that began over the summer appeared to be proceeding without the acrimony that plagued them in the past. But just before the 11:59 p.m. ET Wednesday deadline, the CEO of Chrysler fired off a letter to UAW President Bob King saying an agreement likely wouldn't be reached because King didn't come to the table Wednesday night to finish the deal.
"I know we are the smallest of the three automakers here in Detroit, but that does not make us less relevant," Chrysler CEO Sergio Marchionne said in the letter, which was obtained by The Associated Press.
No deadline for new deal
Marchionne said he planned to travel out of the country for business and will return next week. He said he would agree to a weeklong extension of Chrysler workers' current contract. The UAW didn't set a new deadline to reach agreements.
UAW President Bob King wouldn't comment on Marchionne's letter when he was reached by phone early Thursday.
The UAW extended its contract with Ford Motor Co. last week, as talks have progressed more slowly with that automaker.
Marchionne said he and King met a week ago and agreed to finish work on the new contract before the deadline. He said not meeting the deadline hurts Chrysler's workers.
"You and I failed them today," he wrote. "We did not accomplish what leaders who have been tasked with the turning of a new page for this industry should have done."
Things appeared to be progressing more smoothly at GM. Joe Ashton, the UAW's vice-president in charge of the GM negotiations, told local union officials Tuesday night in a note that bargainers have made "much progress" in talks with the company. GM has taken the lead on the negotiations and its agreement may be used to set the pattern for the other two companies.
Setting the bar
The contract talks will determine wages and benefits for 111,000 union workers at the auto makers, and they 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 more. The contract talks are the first since GM and Chrysler needed government aid to make it through bankruptcy protection in 2009.
GM nearly ran out of cash and needed $49.5 billion from the government to survive, but it's been making billions in the last two years because its debt and costs were lowered in bankruptcy and its new products have been selling well.
Ashton wrote that "difficult restrictions" have been placed on the union and company as a result of the bailout. To get the government funding, the union had to agree not to strike over wages at GM and Chrysler. Also, unresolved issues can be taken to binding arbitration, and the union's new contracts must keep the companies' labour costs competitive with Asian automakers such as Toyota Motor Corp. and Honda Motor Co.
"As you know, several difficult conditions were agreed to in order to obtain financing during the bankruptcy," Ashton wrote in the note to local union officials. "We are confident that we can reach an agreement that will meet many of the goals we set at the beginning of negotiations."
The union has been seeking bigger profit-sharing checks instead of pay raises, higher pay for entry level workers who make $14 to $16 per hour, signing bonuses and guarantees of new jobs as auto sales recover. Ford and GM want to cut their labour costs to get them closer to Honda and Toyota, while Chrysler wants to hold its costs steady. Health care costs are also an issue.
Once the contract agreements are reached, workers will vote on them.