October 7, 2011 / 7:28 PM / 7 years ago

Rivals' UAW deals too rich for Chrysler, CEO says

MONTREAL (Reuters) - Chrysler Group LLC intends to reach a four-year labor contract with the United Auto Workers without arbitration, but Chief Executive Sergio Marchionne warned that the union’s deals with its crosstown rivals may be too costly for the smallest U.S. automaker.

Earlier this week, the UAW and Ford Motor Co reached a tentative four-year contract that allows veteran workers to get at least $16,000 in bonuses. Last week, UAW workers at General Motors Co ratified a slightly less generous labor contract.

Chrysler, the smallest of the Detroit automakers, is under more pressure to hold the line on costs because its finances are more precarious.

“Some of the deals that we’ve seen being signed between Ford and GM (with the UAW) are probably, given Chrysler’s own predicament... overly generous,” Marchionne said after a speech to the Italian Chamber of Commerce in Montreal.

Chrysler, which nearly collapsed two years ago, is still executing its turnaround and trying to change public perceptions of its vehicle lineup.

The company emerged from bankruptcy with a debt load that included $7.6 billion in government loans. In May, Chrysler repaid those loans through a refinancing that helped reduce its interest payments.

As a result, Chrysler is eager to hold down its fixed costs beyond the 2015 expiration of the deal being negotiated.

Chrysler’s contract with the UAW expired on September 14, but both sides extended the deal to October 19.

As part of Chrysler’s bankruptcy restructuring in 2009, workers gave up the right to strike and agreed to binding arbitration if a deal could not be reached.

“The intent is to try and get to a deal without going to arbitration,” Marchionne said. “I think we’re approaching this with the best of intents.”

There will be “intense negotiations” between the union and Chrysler over the next three to four days, Marchionne said.

Chrysler is majority-owned by Italian automaker Fiat SpA. Marchionne is also CEO of Fiat.

Reporting by Allison Martell. Writing by Deepa Seetharaman. Editing by Gerald E. McCormick and Robert MacMillan

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