WASHINGTON — Months after the government bailed out General Motors and Chrysler, some lawmakers are questioning tough contract demands by the two auto companies that union officials argue could lead to the replacement of hundreds of union carhaulers with nonunion drivers.
Michigan lawmakers have raised the issue with GM CEO Fritz Henderson and Chrysler CEO Sergio Marchionne in letters during the past week, concerned that the automakers could reduce business with auto transport companies whose drivers are represented by the International Brotherhood of Teamsters.
“We demand an explanation of your position,” wrote Rep. Dale Kildee, D-Mich., in letters to Henderson and Marchionne. “We do not support your plans to abandon your long-term carrier partners.”
Union officials said GM and Chrysler have sought cost savings of at least 25 percent from Allied Systems Holdings Inc. of Atlanta, and Cassens Transport Co. of Edwardsville, Ill., who deliver assembled vehicles to car dealers in the U.S. and Canada.
The Teamsters represent about 4,800 workers who deliver new cars and trucks to auto dealers. More than 2,000 employees work for Allied, Cassens and Jack Cooper Transport Co. in Kansas City, Mo.
Chrysler Group LLC’s contracts with Allied and Cassens expired Sept. 30 and the company has shifted some work to nonunion contractors, affecting 129 union drivers, including 50 in Detroit, said Fred Zuckerman, director of the Teamsters’ automobile transport division.
According to a one-page summary titled “Chrysler Vehicle Distribution Changes,” the company said some of the changes occurred because a new facility built in Toledo, Ohio, allowed the automaker to mix vehicles in one location for distribution.
Chrysler said in the document that Allied and Cassens failed to address uncompetitive cost structures and beginning Oct. 1 the auto company would re-source 28 percent of its haulaway carrier business “to improve transit time and reduce costs by $31 million over three years.” Chrysler said in the document that Allied and Cassens would reduce 77 Teamster jobs in Michigan.
Zuckerman called it an attempt by Chrysler to undermine union drivers. “We don’t believe for a minute that it had anything to do with cost,” he said.
In addition to the 50 jobs in Detroit, Zuckerman said the Chrysler moves led to union job losses in Winston-Salem, N.C., Warren, Mich., Richfield, N.J., Buffalo, N.Y., Miami, Jessup, Md., and Shelbyville, Ky.
Teamster officials are also watching upcoming talks between General Motors Co. and Allied, whose contract with the automaker expires Feb. 1, 2010. About 400 union drivers deliver GM vehicles for the transport company.
Allied filed for bankruptcy in 2005 and imposed a 17.5 percent wage cut on its workers in 2007 and 2008, Zuckerman said. He said GM has sought cost reductions of 26 percent, cuts he said would be unsustainable.
A GM spokeswoman declined comment. Messages left with Allied and Cassens officials weren’t immediately returned.
The union job losses have caught the attention of several Michigan lawmakers, who sought government loans for GM and Chrysler and pushed for a $3 billion Cash for Clunkers program to revitalize auto sales.
“I urge you to not discriminate against the unionized labor work force,” wrote Rep. Gary Peters, D-Mich. “Although cutting costs is a necessary measure, I expect that you will not base your decision exclusively on which operators pay their employees the lowest wage rate.”
Rep. Thaddeus McCotter, R-Mich., wrote the “intent of the government’s support for GM and Chrysler and the ‘cash for clunkers’ program was to keep the automobile industry viable and not to force companies in the supply chain like the car haul industry into bankruptcy.”
In a letter to Congressman Peters, Mike Keegan, Chrysler’s senior vice president of supply chain management, wrote that the company explained to Allied and Cassens its inability to continue subsidizing their uncompetitive business models, particularly in light of the automaker’s recent bankruptcy action and the concessions made by the UAW, CAW and dealers.
Keegan wrote that Chrysler’s business relationship with Allied and Cassens will continue in segments and regions where they are more competitive. Of the 77 Teamster jobs that will be lost in Michigan, he said 20 of these positions will be filled by Teamsters in Toledo, Ohio.