US workers, consumers feel pinch of wage -- price squeeze; 'Chrysler has jobs at $17.50. We don't have them at $20' -- Lacocca
Will US auto workers willingly accept a wage freeze to help the ailing Chrysler Corporation? The answer carries multimillion-dollar implications for the rest of the US auto industry, financially strapped by increased foreign competition and slumping sales.
The Ford Motor Company, like Chrysler, lost well over $1 billion in the first nine months of this year and has many more hourly workers. Ford has let it be known that it will be waiting to see what happens at Chrysler "with interest."
Ford vice-president Peter Pestillo has said that previous united Automobile Workers (UAW) concessions to Chrysler have already put his company at a competitive disadvantage.
"We haven't asked for anything," stresses Ford spokesman Bill Harris. "If we do, it won't be for a quick fix -- it will be for long-term relief."
Chrysler has requested a 22-month wage freeze in its current contract with auto workers. A freeze would save $600 million. All told, the company has pledged to the Chrysler Loan Guarantee Board that it will slash expenses by $1.5 billion in 1981.
While the UAW leadership has asked its membership to open wage talks once again, they won't guess whether the union will bow to company demands.
"Some may feel, 'How much more can we give?' But then again if a person is told it's either no job or no pay increases, that's some choice," says UAW spokesman Jerry Dale.
Some auto industry analysts predict that Chrysler employees in the end will agree to the management request.
"It's my opinion that, difficult as it is, the rank and file will go along with this one," says Arvid Jouppie, a Detroit analyst with the John Muir Company. "I would call it a necessity. The real losers in this case are the ones laid off and not working."
Some auto industry analysts regard further UAW concessions as financially important to Chrysler but not necessarily crucial.
"it's a step in the right direction, but it certainly won't solve all their problems," observes David Healy of Drexel Burnham Lambert Inc.
Despite $446 million in pay and time-off concessions by employees under the current contract, Chrysler has had to lay off about half of its work force in recent months. Some employees, already off for the Christmas break, have been asked not to return until Jan. 19. Only 16,000 of the new Chrysler K- cars were sold in November, as compared with the company's target of 40,833.
"What makes this situation unusual is its gravity and the number of employees involved -- it's going to be very difficult for the union leadership to handle," comments Dr. Nels Nelson, director of Cleveland State University,s industrial Relations Center.
The wage freeze would reduce take-home pay and benefits for Chrysler blue-collar workers from an average $20.45 to $17.31 an hour in 1981 and from $ 22.11 to $17.52 in 1982.
"It's freeze time, boys," Chrysler board chairman Lee A. Lacocca said Dec. 17 . "Simply stated, Chrysler has good jobs available at $17.50. We don't have them at $20."
Chrysler officials are expected to ask for an additional $400 million in government guaranteed loans at the end of this week.