After a whirlwind six-hour strike Wednesday, Chrysler and the United Auto Workers union [UAW] reached a tentative four-year labor agreement. Although exact details of the agreement are being withheld until it can be ratified, the new pact between Chrysler and the UAW is fairly similar to the accord reached between the UAW and GM in September (full story). Among the finer points, Chrysler will create a multibillion-dollar fund to cover the rising costs of retiree health care. Chrysler, 80% of which was bought by Cerberus Capital Management earlier this year (the remaining 20% is held by former parent Daimler), also offered employee safety by guaranteeing certain models would continue to be made in the U.S. As a concession to Chrysler, which is trying to rein in costs following unprecedented losses in 2006, it can hire new workers at lower wages and reduced benefits compared to what existing union members receive. Said UAW President Ron Gettelfinger, “This agreement was made possible because UAW workers made it clear to Chrysler that we needed an agreement that rewards the contributions they have made to the success of this company." Assuming it receives UAW member approval, the UAW has only Ford left to contend with. Those negotiations may be tougher than those with Chrysler and GM due to Ford's compromised financial situation, industry analysts say.
Sources: Press Release, Wall Street Journal, CNNMoney, TheStreet.com
Commentary: The Invisible Hand of Cerberus [WSJ Deal Journal] • UAW / GM Reach Tentative Agreement; Strike Halted • The Quotable Bob Nardelli: What His Appointment Means For Chrysler
Stocks/ETFs to watch: DAI. Competitors: GM, F, TM, HMC
Earnings call transcript: DaimlerChrysler Q2 2007
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