Shame on Chrysler!

Less than one week after the UAW agreed to brave, historic concessions to help Chrysler emerge from bankruptcy, Chrysler has announced they are firing 12,000 employees. This comes in addition to the 13,000 layoffs announced back in February. This is a slap in the face to American workers, and a promising rapprochement between labor and management may be dead.

The workers who voted to ratify the new four-year contract--which includes a two-tier wage structure, has fewer production guarantees for U.S. plants, and shifts health care costs to workers--did so because they believed it was the only way to save their jobs in the long run. They took on faith promises that their sacrifices would be meaningful. Turns out that at least 12,000 of the 45,000 workers who participated in the vote might as well have gone on strike instead.

It is almost certain the UAW leadership knew these cuts were coming but accepted the contract anyway in order to save the jobs of the other 75% of their membership--and they allowed Chrysler to conceal this news until after ratification. If the layoffs had been announced last week, the contract surely would have been rejected: the contract was only narrowly approved as it was, and the votes of the 12,000 sold down the river would almost surely have tipped the balance.

Despite the devastating effect this will have on morale, there may well be a more insidious reason why Chrysler decided to announce the layoffs so soon after winning these concessions. UAW still has to negotiate a new contract with Ford, the last of the big three, and those negotiations now will surely be complicated by this move. UAW members are likely to be far less willing to accept the good faith of Ford executives and the UAW leadership will feel under great pressure not to give Ford the concessions given to Chrysler and GM.

I am sure the UAW negotiators felt the layoffs were inevitable and did their best to salvage the jobs for those workers who would remain. But the thing about Faustian bargains is that they never pay off like you think they will. I doubt we have heard the last of the "restructuring" plans at Chrysler, now in the cold hands of Cerberus Capital Management... I just hope the remaining workers will keep their jobs through Christmas.