Chrysler and the United Auto Workers union struck a deal on Sunday that satisfies the U.S. government’s April 30th deadline for labor cost reductions. Details of the agreement have not been disclosed, and it still must be ratified by workers. Meanwhile, Canadian Auto Workers union on Sunday ratified the agreement negotiators struck on Friday, which promises to save the automaker $240 million per year. Chrysler says the two developments will enable it to continue pursuing a partnership with Fiat. As such, it appears getting debtholders to agree to concessions is the final hurdle to avoid bankruptcy.
“We are pleased that the men and women of the CAW have voted to ratify this contract,” said chief bargainer Al Iacobelli in regard to the Canadian deal. “We know that these are unprecedented times within the automotive industry and we have the utmost respect for the Canadian represented employees. We appreciate the hard work and dedication that they bring to the job each day.”
Although details of the UAW deal have not yet been disclosed, Iacobelli expressed his satisfaction with terms. “We commend the UAW’s leadership for their endless determination and perseverance in reaching this tentative agreement especially during these unprecedented economic circumstances that plague the automotive industry,” he said. “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.”
Assuming the UAW approves the contract modification with Chrysler , the automaker will be able to turn its attention to stamping out debt reduction deals with bondholders. Chrysler is said to be attempting to slash its debt from $6.9 billion to just $1 billion.
