Overhaul by Steven Rattner

Author:Steven Rattner
Language: eng
Format: mobi, epub
ISBN: 9780547443218
Publisher: Houghton Mifflin Harcourt
Published: 2012-02-19T06:46:27+00:00

The head butting led Ron reluctantly to conclude that Fiat and the UAW would never reach agreement on their own. He summoned both parties to Washington and installed them in separate rooms on different floors of Treasury. A third room was reserved for Nardelli and company, who would spend the following days overseeing Chrysler via their cell phones and BlackBerrys and cooling their heels. For most of a week, Ron was Henry Kissinger shuttling between the North and South Vietnamese. Fiat and the UAW both understood that Chrysler's wages would have to be competitive with those of the transplants. Now that Sergio had committed to a projection of future sales, there was finally a quantitative basis on which to negotiate.

We knew from the outset that reducing hourly pay for active autoworkers would be confrontational beyond imagination, so we were relieved when it turned out that base wages were not that different between the Detroit Three and the Japanese transplants. Ron found other aspects of the contract where it would be easier to ask for cuts. Apart from cash income, UAW members enjoyed a gamut of benefits that added substantially to the automakers' costs. Another big burden for the automakers was the UAW work rules. These required both GM and Chrysler to maintain scores of job classifications. A worker at Chrysler could not so much as tighten a screw if it was not in his job description.

Ron focused on expanding a provision that new employees—so-called tier-two workers—could be hired at a lower wage. This category had been created in 2007 as a way to lower Detroit's labor costs without penalizing existing workers. It allowed for a limited number of new workers to come in at $14 per hour, versus about $28 per hour that existing UAW members earned. But because the automakers had been mainly laying off rather than hiring, few tier-two workers were actually on the domestic payrolls. To bring Sergio's projected costs down, Ron persuaded Gettelfinger to raise the limit on the number of tier-two workers that Chrysler would be allowed to hire. Of course, for Sergio's costs actually to decrease, Chrysler's business would have to grow enough to need new workers.

As the third week of April ended, an agreement between Fiat and the UAW at last seemed within reach. Ron knew he had to close the deal—hardly a given with Sergio, who as a "volunteer" was liable to back away again at any time. But Ron realized that he had a trump card to play.

He went to Sergio and said, "How about if I can promise you labor peace? Not just through this contract but through another contract after that? If I can tell you that there won't be a strike, that's especially valuable, because you want to change the culture." Ron offered other goodies as well. These included a commitment to keep wages frozen for the life of the contract, through 2011, and a commitment to have any open issues at the end of the next negotiation be subject to binding arbitration based on maintaining competitive wages with the transplants.

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