Setting a new precedent with an innovative labor agreement

"It's unheard of in the auto industry to contract out what's considered core work," says John Cashen, a partner in Bodman's Workplace Law Group.  But, to reduce its workforce and cut costs, Chrysler entered into a precedent-setting agreement with suppliers and the United Auto Workers (UAW) to outsource its Jeep Wrangler assembly operation.

The deal involved three suppliers, each building a facility on land leased from Chrysler, where each would handle one phase of the assembly.  The first supplier was Bodman's client: KUKA Toledo Production Operations (KTPO).  Workers at KTPO would marry the chassis to the frame using state-of-the-art robotics.  The vehicle would then move to the other suppliers before ending up at Chrysler, where trim would be added.

KTPO hired many of the Chrysler employees, but in its negotiations with the UAW, the company wanted to radically change the traditional assembly process to one that stressed teamwork.  "Our goal," says Cashen, "was to reflect the different working model in the labor agreement and provide equivalent, but different, benefits, including a 401(k) plan."  The contract, remarkable for its departure from Chrysler's collective bargaining agreement with the UAW, was ratified by the union.

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