More buyouts in works at Chrysler

Tuesday, May 12, 2009

More buyouts in works at Chrysler

Christine Tierney and David Shepardson / The Detroit News

Washington — A proposed alliance between Italy’s Fiat SpA and Chrysler LLC envisions further buyouts of hourly workers at the bankrupt U.S. automaker and also would limit the United Auto Workers’ rights to challenge management in the next contract negotiation.

The information was disclosed Tuesday in filings with the U.S. Bankruptcy Court in New York. The documents also indicated that top executives of a restructured Chrysler may not be subject to pay caps the Treasury Department has imposed on companies receiving federal aid if the executives are assigned to Fiat.

The details about more job cuts were outlined in a letter from Chrysler to UAW Vice President General Holiefield, who is the union’s top Chrysler bargainer. The automaker said further cost-savings should be realized through jointly designed special attrition programs aimed at achieving 3,500 voluntary separations.

New production workers brought on during the term of the current contract and the next one running from 2011 until Sept. 14, 2015, will be classified as lower-tier hires, Chrysler said. It added that 318 UAW-appointed representatives would be eliminated under the terms set for U.S. Treasury loans.

In addition, if the negotiations for the next union contract end in 2011 without an agreement, disputed issues "shall be resolved through binding arbitration with wage and benefit improvements to be based upon Chrysler maintaining an all-in hourly labor cost comparable to its U.S. competitors, including transplant automotive manufacturers," the letter said.

Some of the terms were imposed by the Treasury, which has provided Chrysler with $4 billion in emergency loans and offered another $6 billion to the combined Chrysler-Fiat entity.

Court documents dealing with executive pay revealed that Chrysler could bypass the government’s $500,000 executive salary cap for companies receiving federal assistance if managers are considered Fiat employees who are essentially loaned to Chrysler. That arrangement would allow compensation beyond the cap to be paid by Fiat.

Fiat CEO Sergio Marchionne is expected to take over for Chrysler CEO Bob Nardelli once the automaker emerges from bankruptcy.

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