Bending the Guidelines

Within an hour, 74,000 Chrysler auto workers were scheduled to walk off the job at 47 plants across the U.S., bringing production to a standstill just as the 1965 models were beginning to roll off assembly lines.

Suddenly, the strike was off. After 23 straight hours of haggling in Chrysler's Detroit headquarters, United Auto Workers President Walter Reuther got on the phone to the White House, let Lyndon Johnson know that he had just reached a milestone settlement. The President was delighted, but he wanted to know whether the agreement conformed to the anti-inflationary standards set by his Council of Economic Advisers. "Are the guidelines intact?" asked Lyndon. "Well," replied Reuther, "they're bent a little."

Historic Agreement. That was quite an understatement. The current guidelines urge labor to limit wage increases to 3.2%, but the U.A.W.-Chrysler settlement provides nearly 5% in added benefits. The three-year package may cost Chrysler an extra $30 million a year, and if the still unsettled contracts for Ford (with 130,000 U.A.W. members) and G.M. (with 345,000) are anything like Chrysler's, their costs will be far greater.

The settlement ended ten weeks of hard bargaining, gave Reuther just about everything he asked for. In dollars and cents terms, it was the best auto contract ever. The previous record was set in 1955, when workers got a 45-c- hourly increase in wages and benefits, excluding automatic cost of living increases. The new contract gives them roughly 57-c- an hour more, not counting the cost of living raises.

Jubilant, Reuther hailed it as "the most historic agreement in the history of the American labor movement."

More important than the wage increases were benefits in areas that most concern workers these days. By establishing one of the largest pension programs in U.S. industry, the contract permits production workers to retire with a decent in come at 55 or 60, opens up jobs for younger workers and eases the impact of automation (see U.S. BUSINESS).

Good Friday & Birthdays. Specifically, the new agreement boosts pension benefits for workers who retire at 65 from $2.80 per month for each year of service to $4.25. It provides substantial supplemental benefits that will give pensions averaging $381 per month to workers who retire at 60 after 30 years' service, $200 or so to those who retire at 55. It gives every worker an additional week of vacation time, adds two extra paid holidays (Good Friday and the worker's own birthday) to the old total of seven, commits Chrysler to footing the whole bill (instead of half of it) for a worker's life and accident insurance. Finally, it gives assembly-line workers an extra twelve minutes a day of relief time--"John time" in the industry--in addition to the 24 minutes they had been getting.

Relief time may sound like a trivial matter, but workers cherish it as a break from their machines and time for a smoke or a cup of coffee. It was the issue that nearly stymied the negotiations and brought on a strike. To industry officials, it was a question of "less work with more pay," but Reuther argued that workers needed a longer break from the numbing monotony of the assembly line, refused to budge until they got it.

Swinging for Triples. After Reuther and Chrysler Vice President John D. Leary announced the settlement, Chrysler stock began climbing, rose 4 1/4 points to a record 63 1/8 by week's end, helped carry the Dow-Jones average to a historic high of 867.13. As for the agreement's impact on the rest of the U.S. economy, most experts agreed that it might be mildly inflationary but not enough to be alarming. Car prices were not expected to rise because the auto industry, en route to its first 8,000,000-car year, should have no trouble absorbing the added costs. Auto profits and prospects were good enough, in fact, to make a strong argument that the companies should have passed at least some of the benefits on to consumers in the form of a long-overdue price cut before yielding to labor.

Will Reuther's agreement set a pattern for labor leaders in other, less profitable industries? "Reuther hit a home run," said Harvard Business School Professor John Lintner, "and we're going to see others swinging for triples and doubles when they might have gone only for singles." If that happens, the 3.2% guideline might be broken, not just bent.

Politically, the agreement was a big plus for Lyndon Johnson. The settlement reinforced the general aura of economic wellbeing that pervades the nation, without raising a dire threat of inflation. For another thing, a strike was averted, at least for the moment. And a strike in the capstone auto industry, whose purchases of steel, glass, rubber and a dozen other basic products are so important to the economy's vigor, would surely have done Johnson considerable political harm.

Double Trouble. Such a strike remains a possibility. With Chrysler out of the way, the U.A.W. now has to take en Ford and G.M. Ford is expected to come to terms with little trouble, but G.M., traditionally the toughest of the Big Three to crack, may prove the real problem. G.M.'s production workers point to a backlog of 19,450 unresolved demands, most of them for improved working conditions ranging from doors on toilet stalls to relaxed production levels. They are just spoiling for a fight, last week staged short-lived wildcat walkouts at two plants.

With balky workers on one side and tough management bargainers on the other, the U.A.W. thus faces double trouble at G.M. The negotiations are likely to go into October, which is carrying things uncomfortably close to Nov. 3. It is a safe bet that Lyndon Johnson won't be entirely satisfied until he hears Walter Reuther's voice at the other end of the line bringing news of a settlement with G.M.

This file is automatically generated by a robot program, so reader's discretion is required.