With just over a day remaining until a strike deadline, representatives of the United Auto Workers union and Chrysler LLC bargained into Tuesday morning in a bid to reach a new contract for some 49,000 U.S. factory workers.
The union has given Chrysler a deadline of 11 a.m. EDT Wednesday and threatened to call the second national strike against a U.S. automaker in less than a month if a new deal on wages and benefits is not reached by then.
The UAW ultimatum came after a weekend of intensive negotiations between the union and the newly private automaker, which is controlled by Cerberus Capital Management LLC.
Talks at Chrysler's Auburn Hills, Michigan headquarters ran until almost 4 a.m. Tuesday in a marathon session that began Monday morning. The negotiations were set to resume later on Tuesday morning, Chrysler spokeswoman Michele Tinson said.
The impact of an immediate strike against Chrysler would be muted by a series of plant shutdowns that the struggling automaker has already undertaken to run down unsold inventory in the face of slack sales.
Five of Chrysler's U.S. assembly plants with UAW-represented workers were idled this week. Another plant in Sterling Heights, Michigan, was scheduled to be shut down next week, people familiar with those plans said.
Negotiations between Chrysler and the union had been at a standstill for three weeks after the UAW agreed to extend Chrysler's four-year contract to focus on larger rival GM.
Of about 180,000 UAW-represented workers at the three Detroit-based automakers, Chrysler has the smallest work force at roughly 49,000 compared with over 73,000 at GM and 58,000 at Ford Motor Co..
All three Detroit-based car companies are struggling to restructure after posting a combined loss of $15 billion last year and losing share to foreign rivals.
By shifting to Chrysler as his next bargaining target, UAW President Ron Gettelfinger is betting that the union will be able to find common ground with Chrysler's new private equity owner at a time when sales have sputtered and workers are bracing for a new round of cost-cutting.
Gettelfinger supported Cerberus' $7.4 billion acquisition of Chrysler from Daimler AG, which retains a nearly 20 percent stake in the automaker.
After a two-day strike, GM and the UAW agreed on the terms of a cost-saving contract on September 28 that would give the largest U.S. automaker the ability to hire almost 17,000 lower-wage workers and shift some $3 billion in retiree health care costs to a new trust fund.
Chrysler has the highest total wages and benefits at over $75 per hour for the average factory worker compared with $70 per hour for Ford and $48 per hour for Toyota Motor Corp's U.S. operations.
Chrysler's higher labor costs against its domestic rivals reflect a decision by the UAW to limit a round of 2005 concessions on retiree health care to Ford and GM.
Chrysler spent most of 2006 chasing a dollar-for-dollar concession from the UAW in the established tradition of the auto industry's pattern bargaining, saying the UAW's decision had cost it $1,000 on every vehicle it sells.
Before talks began, Chrysler made clear that if it did not get concessions to close that wage gap with Japanese automakers operating in the United States, it would need to shift production out of the country.
Under Cerberus, Chrysler has also been looking to spin off assets in order to generate cash, raising issues expected to come up in the UAW talks, executives have said.
The Detroit Free Press reported on Tuesday that Chrysler was also considering deeper cuts in its white-collar work force than initially planned.
Chrysler's current restructuring plan, announced in February at the time it was put up for sale by Daimler, included cuts of 13,000 jobs, including 2,000 salaried jobs, as part of a bid to return to profitability by 2009.
The newspaper said Chrysler was planning deeper cuts in its headquarters staff and among contractors providing services, quoting unnamed people briefed on the plan.