UAW says it has reached tentative contract wtih Chrysler

UAW says it has reached tentative contract wtih Chrysler
David Phillips
Automotive News | October 12, 2011 – 6:55 am EST

DETROIT — The Chrysler Group and the UAW – after a weekend of final negotiations – reached a tentative agreement today providing wage and benefits for 23,000 hourly workers, according to a UAW statement.

The statement, released this morning, said the contract would provide 2,100 new jobs to UAW members at Chrysler’s U.S. plants.

The UAW said the agreement also includes $4.5 billion of investment to produce “new models and upgraded vehicles and components by 2015, all of which will be invested directly into retooling and upgrading plants.”

The statement offered no other details. The union called a press conference to discuss the deal at 11:30 a.m. in suburban Detroit.

“This tentative agreement builds on the momentum of job creation and our efforts to rebuild America by adding 2,100 new jobs by the end of the agreement in 2015 to communities left in turmoil in the wake of the country’s economic collapse.” UAW President Bob King said in the statement.

Chrysler is the last Detroit automaker to secure a new labor accord. General Motors Co. workers ratified a new four-year contract on Sept 28. Ford workers are currently voting on their deal.

The UAW has agreed to enhanced profit-sharing and lump sum payments instead of raises for most workers under previous GM and Ford agreements.

Jobs jobs jobs

In return, the union has won promises that Ford and GM will add thousands of new union jobs as part of new product programs and plant improvements.

Union officials said the weekend talks at Chrysler focused on remaining hurdles that included the size of profit-sharing checks and the number of entry-level workers the automaker can hire.

Chrysler sought assurances during the talks that its labor costs — the lowest among Detroit’s 3 automakers — would not rise during the contract. The automaker also wanted a pledge its labor costs would not climb well beyond the expiration of the new agreement.

Chrysler’s hourly labor costs — estimated at $49 for wages and benefits — are the lowest among Detroit’s automakers but on par with what non-union Hyundai pays its U.S. workers.

Chrysler also wanted greater leeway to hire more entry-level workers that earn substantially less than veteran UAW workers.

Entry-level workers are paid around $14 per hour, about half the wage of a veteran UAW worker. GM and Ford agreed to raise starting wages to $15.82 an hour during their new contracts.

Chrysler has hired more entry-level workers than GM and Ford since the three automakers won the right to do so in the 2007 contract.

About 12 percent of Chrysler’s 23,000 U.S. hourly workers earn the lower-tier wage, compared to just 70 workers at Ford and about 2,500 at GM.

Ford deal pending

Under the Ford deal, workers will receive at least $16,700 over the life of their contract, including a $6,000 signing bonus, annual lump sums of $1,500 and profit-sharing payments. At GM, the deal included a signing bonus of $5,000 and $1,000 annual lump sum payments in lieu of cost-of-living adjustments.

The union, battered by the recession and restructurings at GM and Chrysler, made job creation a top priority during the talks.

Ford pledged to create 5,750 new jobs by 2015 and invest $6.2 billion in its U.S. plants. GM promised to add 6,400 and invest $2.5 billion in its U.S. factories. It will also reopen an idled assembly plant in Tennessee.

Chrysler workers forfeited the right to strike over wages under the terms of its 2009 government bailout. Any disputes over wages and other financial matters would have to be settled in arbitration — a development both sides wanted to avoid.

While its U.S. sales have rebounded 23 percent this year through September, Chrysler is still struggling to earn consistent profits.

The company made $116 million in the first quarter, its first quarterly net profit in five years. But it lost $370 million during the second quarter because of charges tied to refinancing its government debt.

GM earned $6.2 billion last year while Ford reported a profit of $6.6 billion.

Chrysler expects to generate net income of $200 million to $500 million this year – marking its first profitable year since 2005. And Chrysler has far less cash — about $10 billion – than GM and Ford.

All three Detroit automakers have slashed costs, shed workers and closed plants since the downturn to become profitable at much lower industry sales volumes, raising hopes profits will surge when industry volumes recover.

Chrysler’s U.S. market share — helped by 16 new or refreshed models — has increased more than 1 percentage point to 10.6 percent through September from 9.5 percent a year ago.

U.S. auto sales are up 10 percent this year through September and are expected to come in at or below the 13 million unit mark for the year. That is well below the peak of 17.4 million units set in 2000.

PRESS RELEASE: UAW and Chrysler reach tentative agreement: New Jobs, A New Day: Rebuilding America

DETROIT – Just eight days after reaching a tentative agreement with Ford Motor Co., the UAW reached a tentative agreement with Chrysler Group LLC today, completing its third agreement with domestic automakers in a month.

“Less than three years ago, Chrysler was teetering on the edge of bankruptcy as our nation was thrown into the worst economic crisis since the Great Depression,” said UAW President Bob King. “This tentative agreement builds on the momentum of job creation and our efforts to rebuild America by adding 2,100 new jobs by the end of the agreement in 2015 to communities left in turmoil in the wake of the country’s economic collapse.” King added.

“This tentative agreement, coupled with the new agreements at General Motors and Ford bring more than 20,000 new jobs to communities across America,” said King. “Together with the jobs created in suppliers and other businesses supported by auto manufacturing, a total of 180,000 jobs will be added to the country’s battered economy. Through collective bargaining and working together with the domestic automakers, we have shown that cooperation and collective bargaining work,” King added.

The UAW Chrysler proposed agreement also includes $4.5 billion of investment to produce new models and upgraded vehicles and components by 2015, all of which will be invested directly into retooling and upgrading plants.

“This agreement is the latest in a remarkable turnaround for Chrysler,” said UAW Vice President General Holiefield, who directs the union’s Chrysler Department. “The company declared bankruptcy just a few years ago and with great sacrifice by UAW Chrysler workers and with federal loans and support from the Obama Administration, Chrysler has paid back the loans in full. Today, thanks to the dedication of its UAW workers, Chrysler is showing strong sales and adding new cars to its line-up, additional shifts at plants, and creating new jobs. Chrysler has turned the corner and with this agreement will continue to move forward. It’s a new day at Chrysler,” Holiefield added.

The Chrysler loans from the U.S. Government were paid in full, six years before they were due. The loans provided the foundation for the company’s turnaround, and its ability to now give its workers what they deserve.

The UAW reached a tentative agreement with GM on Sept. 16 and with Ford on Oct 4. The GM agreement was ratified by UAW members with a 2:1 ratio on Sept. 28. The Ford agreement is pending ratification by UAW members. Voting at Ford will be completed by Oct. 18.

The UAW represents 26,000 employees at Chrysler, including 3,000 salaried employees at 48 Chrysler facilities in the United States, making vehicles and components with the Chrysler, Jeep, Dodge, Mopar and Ram Truck brands.

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