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The U.A. W. to Chrysler: No

The grinding U.S. recession has this year forced labor unions to make a long string of concessions to employers on wages and work rules. But last week Chrysler workers were saying they deserved more, not less. With the balloting half over, members of the United Auto Workers were rejecting a new contract with Chrysler Corp. by a lopsided 50% margin. Although the voting does not formally end until this week, union officials privately conceded that the one-year package covering some 50,000 Chrysler employees was dead.

The agreement, which negotiators reached on Sept. 16, was turned down by rank-and-file members largely because it lacked a guaranteed salary increase. Chrysler workers have gone two years without a pay boost of any kind, and they now make about $2.50 an hour less than their counterparts at Ford and General Motors. Instead of granting an immediate raise, however, the rejected pact called for wage hikes tied to future Chrysler profits. The settlement would also have restored a cost of living adjustment that would have taken effect in December and added about 500 an hour to the average worker's pay by the end of the contract.

Analysts also blamed the defeat on the public posturing of Chrysler Chairman Lee Iacocca, 57, who has been working vigorously to convince car buyers and investors that the company is again sound. At Chrysler's new-car introduction in Houston last month, for example, Iacocca boasted that the firm had accumulated a $1 billion hoard of cash and securities. Said he: "That's the most cash we've had on hand in the history of the company." Said David Healy, of Drexel Burnham Lambert: "The popular opinion is that Iacocca's blabbing about the billion dollars did them in. The workers are saying that some of that money belongs to them."

The defeat is also a rebuke to U.A.W. President Douglas Fraser, who led the team of union bargainers that negotiated the contract. Fraser, 65, who will retire next May as head of the union, had not been optimistic about ratification because he was aware of the frustration and bitterness felt by many workers. Said he: "I'm disappointed by the outcome, but not shocked."

One point both sides agreed on is that a strike at Chrysler is unlikely since it would be suicidal for both the company and the workers. Although the automaker earned $106.9 million in the second quarter, it remains an ailing company that has not had a profitable year since 1977. Union leaders and company officials are probably headed back to the bargaining table, perhaps as early as next week.

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