Deal less generous than GM, Ford agreements
WARREN, Mich. – Chrysler and the United Auto Workers union have finally agreed on a new contract.
The company was the last Detroit carmaker to reach a deal with the union after more than two months of bargaining and several snags. The tentative agreement, reached Wednesday, creates up to 2,100 new jobs and promises $4.5 billion in investments at U.S. plants. It was the first labor agreement for Chrysler since its government bailout and bankruptcy two years ago.
The deal is less generous than those reached earlier with General Motors Co. and Ford Motor Co., but Chrysler Group LLC is also less profitable than its rivals.
Union officials said the contract, which includes a $3,500 signing bonus but gives most workers no annual raises, is the best they can do. They promised profit-sharing checks once the company is making money again.
“Naturally we would have wanted to do a lot more for the Chrysler workers,” said UAW Vice President General Holiefield, who led the Chrysler negotiations. Holiefield said the union wanted to reward workers but not hurt the company’s bottom line as it struggles to make a profit.
GM workers, who ratified their labor agreement last month, are getting $5,000 signing bonuses. Ford workers will get $6,000 bonuses if they approve their agreement.
Chrysler said it won’t discuss the contract until workers vote on it. Voting is expected to take about two weeks.
Chrysler’s contract promises to invest $1.3 billion in its Kokomo, Ind., transmission plants, which will retain 3,500 jobs, and to add new products to its Belvidere, Ill., and Sterling Heights, Mich., assembly plants.
“If it was not for the UAW bargaining, all these jobs would be going to Korea and China and Mexico,” King said at a union training facility in Warren, Mich., where UAW leaders gathered to learn details of the new contract.
The contract governs 23,000 Chrysler U.S. factory workers as well as 3,000 salaried workers such as engineers.
Under the agreement, wages of entry-level workers will rise from $15.78 an hour to $19.28 by 2015. About 12 percent of Chrysler’s 23,000 factory workers are now paid entry-level wages, about half the wage of longtime union workers.
These were the first negotiations for Chrysler since Italian automaker Fiat SpA took over management of the company. Fiat was given a 20 percent stake in Chrysler by the U.S. government in exchange for expertise and technology. The Italian automaker has since raised its stake to more than 50 percent.
Chrysler hasn’t made an annual profit since 2005. The company earned $116 million in the first quarter, its first quarterly net profit in five years.