The United Auto Workers has turned its focus in contract negotiations to Ford Motor Co after progress in talks with smaller rival Chrysler appeared to stall, two people with knowledge of the discussions said on Wednesday.
The abrupt shift in negotiating tactics by the union came just after the UAW announced that it had agreed to extend its current contract with Chrysler until October 19.
Negotiations between Chrysler and the UAW wrapped up for the day on Wednesday and were set to resume at the automaker's Auburn Hills, Michigan headquarters on Thursday.
UAW local officials were told by representatives of the union's bargaining team that the No. 2 automaker had become the next focus for the UAW, which reached a tentative contract with General Motors last week.
The union had planned to negotiate near concurrent deals with GM and Chrysler before turning to Ford. Both GM and Chrysler were bailed out by the Obama administration, and workers at both companies are barred from striking until 2015.
But negotiations with Chrysler became strained last week when Chief Executive Sergio Marchionne scolded UAW President Bob King for failing to meet a commitment to reach a new four-year contract by the expiration of the former pact on September 14.
In talks this week, Chrysler negotiators hammered home the message that the contract deal negotiated with GM was too rich for Chrysler to match, a person with knowledge of the talks said.
In addition, Chrysler pressed the UAW for some assurance that it would not seek to push fixed costs higher even after 2015, beyond the scope of the contract being negotiated, the person said.
The uncertainty around the outlook for auto sales in 2012 and the risk of a renewed U.S. recession have made the companies reluctant to offer traditional wage increases.
The pressure is especially intense for Chrysler, which is operating under the control of Fiat.
Credit ratings agency Moody's cut Fiat's credit rating on Wednesday further into junk status to reflect the Italian automaker's closer ties with Chrysler and tough market conditions in Europe and Brazil.
Despite Chrysler's hard line, Marchionne, who flew back to Detroit from Europe on Tuesday, had been hopeful of reaching a deal with the union by Friday, when the automaker's board was scheduled to meet, a source said.
Meanwhile, UAW local officials representing Ford plants were surprised by the sudden notice that contract talks with the No. 2 U.S. automaker had shifted into a higher gear.
UAW Local 551, which represents workers at the Chicago assembly plant that builds the Ford Taurus, posted a Facebook update confirming the union's change in strategy to focus on Ford. The update was quickly pulled.
Ford was the only Detroit automaker to avoid restructuring in bankruptcy. Its roughly 41,000 UAW-represented workers have retained the right to strike and have the highest expectations for wages and bonuses because of the automaker's performance.
The talks at Ford are also complicated by an unsettled contract grievance.
The union has said the company broke a pledge to treat workers equally when it restored raises and 401(k) matching for white-collar workers without making a similar payout to factory workers.
The proposed GM contract, which is expected to be ratified by late next week, has been expected to provide a rough outline for deals at both Ford and Chrysler.
The GM contract would keep or create more than 6,000 factory jobs, raise wages for entry-level workers and guarantee all workers bonuses of at least $11,500 over four years.
The GM agreement may require extensive tailoring to reach an accord at Chrysler, said Kristin Dziczek, a labor analyst at the Center for Automotive Research.
Marchionne has sparred with the UAW before. In 2009, he told the union's then-president Ron Gettelfinger that U.S. autoworkers had to accept a culture of poverty rather than expect a culture of entitlement, according to the head of the Obama administration's auto task force, Steve Rattner.
(Additional reporting by Ben Klayman and Meghana Keshavan, writing by Kevin Krolicki; Editing by Carol Bishopric and Steve Orlofsky)