The contracts of the United Automobile Workers (UAW) with US automakers are under growing pressure as a result of financial problems within Chrysler Corporation, which once again is at the brink of bankruptcy.
The auto industry hoped for a recovery in car sales during the last three months of 1980. For a time, those hopes appeared to be materializing; sales improved briefly. Then interest rates began climbing and sales figures dropped. Auto company losses mounted, piling new deficits atop old ones.
Chrysler, the hardest hit, is looking ahead to possible losses of $2 million a day in the first quarter of 1981. It faces serious problems paying December bills. Lee A. Iacocca, Chrysler chairman, announced that the company would have to have additional federal loan guarantees, at least $400 million, merely to survive the next three months.
Chrysler applied to the Federal Loan Guarantee Board for that amount from the already had received $800 million in federally backed loans, so the added guarantees would bring the company perilously close to its limit.
To help persuade the government to approve its loan appeal, especially at time of uncertainty about the incoming Reagan administration's commitment to the bailout, Chrysler pledged to cut operating expenses more than $1 billion over the next 20 months.
As in 1979, it asked the UAW for help, by agreeing to a freeze on wage increases and benefits due in 1981. Mr. Iacocca said the company could provide jobs at the 1980 rate of about $17 an hour, but not at a rate exceeding $19 an hour as the agreement with UAW had stipulated.
Iacocca told the union that Chrysler had nothing to offer workers in exchange "except jobs."
Douglas a. Fraser, president of UAW who also holds a seat on the Chrysler executive board, presented the company proposal to his union board in Detroit last week. He warned of a "literal collapse" not only of Chrysler but also of the auto industry and called for "an emergency summit meeting on the crisis" early in the Reagan term.
"We are not facing a cyclical downturn from which there will be an inevitable and automatic recovery," Mr. Fraser said. "Unless the Reagan administration acts affirmativly to establish an auto policy for this country, the devastation affecting hundreds of auto-based communities will spread to thousands of other towns and cities as this crisis ripples through the economy."
Meanwhile, the UAW board moved reluctantly toward giving Chrysler relief. The union has requested "formal submission of a new plan" from Chrysler and will submit it to union locals for "evaluation" as soon as possible.
Eventually, the UAW is expected to approve concessions, but around the country UAW members appear disturbed about surrending wage and benefits gains without Chrysler assurance that what they give up in 1981 will be recouped later.
The Ford Motor Company and American Motors Corporation already have been talking of asking for contract reopenings to reduce their wage and benefits costs to levels nearer those in the 1979 Chrysler settlement.