With a May 1 deadline for avoiding bankruptcy fast approaching, Chrysler has reached an agreement with the UAW to reduce labor costs in the hope of keeping the automaker out of Chapter 11 and helping forge an alliance with Fiat. Automotive News reports:
Chrysler and the UAW agreed to revised labor terms that may help the automaker forge an alliance with Fiat S.p.A. and qualify for additional U.S. rescue loans.
The deal will alter Chrysler’s financial obligations to the union’s retiree health-care plan and comes four days before a U.S. deadline for Chrysler to tie up with the Italian automaker. Chrysler, surviving on $4 billion in U.S. aid, is still negotiating new terms with its creditors.
Chrysler said the agreement should provide the framework for competitiveness and help the automaker to “continue to pursue a partnership with Fiat.”
The new agreement does not cut wages, but it does apparently reduce Chrysler’s commitment to pay into the UAW-run retiree health care fund. The new deal still has to be ratified by the UAW membership at Chrysler plants. A similar agreement with the Canadian Autoworkers Union was just reached last week.