- auto industry - Canada - Chrysler - financial crisis
AFP - The United Auto Workers said Sunday it had reached a tentative deal with Chrysler and Italian giant Fiat and the US Treasury, clearing a major hurdle to bolster the US automaker's viability.
The settlement agreement, which was subject to ratification by UAW members at Chrysler by Wednesday, came closely after a separate deal was struck between the automaker and the Canadian Auto Workers (CAW) union.
"The provisional agreement provides the framework needed to ensure manufacturing competitiveness and helps to meet the guidelines set forth by the US Treasury Department," Chrysler chief bargainer Al Iacobelli said in a statement.
"As a result, Chrysler LLC can continue to pursue a partnership with Fiat SpA."
White House economic advisor Larry Summers earlier voiced hope that talks to save Chrysler will succeed, four days before a deadline to reach a deal to unite with Fiat runs out.
"We're hopeful that the negotiations which have been proceeding with great energy are going to conclude successfully," Summers said on Fox News Sunday. "You never know with any negotiation until the very end.
"There are some issues that have been worked out. There are some issues that remain to be worked out. But it's in everybody's interest, we believe, to see these negotiations succeed, and we're hopeful that they will."
The US administration has given Chrysler until Thursday to reach a deal to tie up with Fiat or risk seeing government loans cut off. Chrysler is set to obtain 500 million dollars on top of four billion dollars already received in loans from the US government.
"Once again," said UAW vice president General Holiefield, "our active and retired members are being asked to make extraordinary sacrifices in order to help Chrysler return to viability."
US media reported last week that the Treasury is pressing Chrysler to prepare to file for bankruptcy as early as next week, regardless of whether the Fiat deal is reached in time.
But Summers said his goal was not to see any of the Detroit-based Big Three automakers -- Chrysler, General Motors (GM) and Ford -- forced into bankruptcy proceedings.
"No, the focus, actually, is not there because in certain circumstances a bankruptcy is not about a liquidation at all ... it's really about change in legal form that actually protects the company and enables it to function more effectively," he said.
Chrysler's unionized Canadian workers on Sunday ratified an agreement with the US automaker on a cut in pay and benefits for estimated savings of 240 million dollars per year, CAW said.
The deal clears the way for financial assistance from Ottawa, which had given Chrysler until Thursday to reach a deal with the union and submit a new restructuring plan.
In the United States, President Barack Obama's administration has given GM until June 1 to present an aggressive restructuring plan, after the government rejected its previous proposals in late March.
The embattled auto firm, which is set to receive five billion dollars on top of the 13.4 billion dollars in loans already received from the US government, is working on a 60-day deadline provided by the White House to come up with a new viability plan or face bankruptcy.
The firm has said it wants to avoid filing for bankruptcy protection, but is preparing for it nevertheless.
GM and Chrysler have received a combined 17.4 billion dollars in public aid since December, in an effort to stave off collapse as the world's largest economy suffers its second year of recession.