The United Auto Workers said on April 26 it had reached a tentative deal with Chrysler and Italian giant Fiat and the U.S. Treasury, clearing a major hurdle to bolster the U.S. automaker's viability. The settlement agreement, which was subject to ratification by UAW members at Chrysler by April 29, came closely after a separate deal was struck between the automaker and the Canadian Auto Workers (CAW) union.
"The provisional agreement provides the framework needed to ensure manufacturing competitiveness and helps to meet the guidelines set forth by the U.S. Treasury Department," Chrysler chief bargainer Al Iacobelli said, "As a result, Chrysler LLC can continue to pursue a partnership with Fiat SpA."
White House economic advisor Larry Summers earlier voiced hope that talks to save Chrysler will succeed, four days before a deadline to reach a deal to unite with Fiat runs out. "We're hopeful that the negotiations which have been proceeding with great energy are going to conclude successfully," Summers said on Fox News. "You never know with any negotiation until the very end.
The government has given Chrysler until April 30 to reach a deal to tie up with Fiat or risk seeing government loans cut off. Chrysler is set to obtain $500 million on top of $4 billion already received in loans from the government.
"Once again," said UAW vice president General Holiefield, "our active and retired members are being asked to make extraordinary sacrifices in order to help Chrysler return to viability."
The media reported last week that the Treasury is pressing Chrysler to prepare to file for bankruptcy as early as next week, regardless of whether the Fiat deal is reached in time. But Summers said his goal was not to see any of the Detroit-based Big Three automakers -- Chrysler, General Motors (GM) and Ford -- forced into bankruptcy proceedings. "No, the focus, actually, is not there because in certain circumstances a bankruptcy is not about a liquidation at all ... it's really about change in legal form that actually protects the company and enables it to function more effectively," he said.
Chrysler's unionized Canadian workers on April 26 ratified an agreement with the company on a cut in pay and benefits for estimated savings of $240 million per year, CAW said. The deal clears the way for financial assistance from Ottawa, which had given Chrysler until Thursday to reach a deal with the union and submit a new restructuring plan.
Copyright Agence France-Presse, 2009