October 13, 2011 Autos Insider | Chrysler contract doesn't match rivals' | The Detroit News
Chrysler contract doesn’t match rivals’
Analysts say Chrysler deal is best union could get
The tentative agreement reached Wednesday between the United Auto Workers and Chrysler Group LLC is substantially less generous than the ones the union won from General Motors Co. and Ford Motor Co., but analysts say it was the best deal the union could get.
On the surface, the new contract appears very similar to those negotiated with the other two Detroit automakers. But there are important differences.
Chrysler workers will get significantly smaller signing bonuses — just $1,750 upfront and another $1,750 next year, but only if the company "achieves financial stability." Ford workers will get $6,000 if they ratify their contract, while GM workers — who already approved their new deal — got $5,000.
Like their counterparts at GM and Ford, Chrysler workers will get a new, more generous profit-sharing system in lieu of the customary wage increases and cost-of-living adjustments. But while those workers will get approximately $1 for every $1 million their companies make in North America, Chrysler's workers will get 85 cents for every $1 million their company makes worldwide. Almost all of Chrysler's business is in North America.
And while the deal includes impressive investments in new products totaling $4.5 billion over the next four years, almost all of that is for products and programs that Chrysler already announced or strongly hinted at in its 2009 five-year plan.
Chrysler CEO Sergio Marchionne also wrested important concessions from the UAW, including an agreement to substantially reduce the number of skilled trades job classifications at Chrysler — something Ford also wanted, but failed to win in its own negotiations with the union.
While the final language evolved over the course of the past four weeks, a source close to the negotiations said the bottom-line numbers are the same ones that were on the table on Sept. 14, when talks between Chrysler and the union broke down. Over the next month, UAW President Bob King tried to push Marchionne for terms that were closer to the ones he negotiated with GM and Ford. But Marchionne refused to budge, threatening to force the UAW into arbitration — a dangerous gamble that King was committed to avoiding.
"There was a contentious moment in bargaining," acknowledged UAW Vice President General Holiefield, who headed up the union's negotiating team at Chrysler. "We had to naturally sit down and pick our ways through."
Labor expert Kristin Dziczek of the Center for Automotive Research said the agreement reflects King's pragmatic approach to labor relations.
"It has a lot more contingencies than the GM or Ford agreements, but you couldn't do things that were more certain and not hurt the company," she said. "Chrysler is not a company that has turned the corner yet, and this is still a very tenuous economic recovery. It's probably the best deal they could get. There is no better deal waiting in the wings."
Marchionne did not get everything he wanted, either. For example, the UAW deflected his demand to defer a cap on less-expensive entry-level employees that goes into effect in 2015 through 2019.
King and Holiefield also negotiated modifications to Marchionne's original proposal that made the deal appear more in line with the pattern set at GM and Chrysler without adding to Chrysler's labor costs.
"We put together a framework at General Motors that we used at Ford, that we used at Chrysler, that got rewards for our membership, that got financial gains for our membership and also kept the corporations — all three of the companies — very competitive," King said. "We're looking to grow market share, grow jobs, grow successful companies over the next four years of this agreement."
The UAW also forced Chrysler to rethink controversial rotating shift schedules, at the company's Trenton Engine Complex and Global Engine Manufacturing Alliance plant in Dundee, that required workers to alternate between day shifts and night shifts.
Under the terms of the deal, GEMA workers will not be required to work rotating shifts, while workers at Trenton will get to decide how the alternative shift schedule is implemented at their factory.
"We're very happy with this agreement," said Gabe Solano, president of Local 372, which represents workers at Trenton. "It will let our members decide how they want this shift rotation to work."
Chrysler's 26,000 UAW-represented employees still need to vote on the agreement, a process that is expected to take approximately two weeks.
Local UAW representatives voted unanimously Wednesday to recommend ratification, before returning to their locals to sell the rank-and-file on the contract.
Workers on the morning shift at Chrysler's Warren Truck Assembly Plant and the adjacent stamping factory were waiting to hear more of the details before making up their minds, but said they would likely vote in favor of the agreement.
"I heard signing bonus and some other things, which doesn't really make up for all we gave up the past few years," said Ray Martinez, who has worked on the assembly line at Chrysler for 20 years.
"But if anyone thought we were going to get a great deal, they ain't been paying attention."
Larry McMillan, a second-generation Chrysler assembly worker, said he and most of his friends will complain about the deal, but vote for it in the end.
"Most of us know too many people in our communities who've been really screwed — lost their jobs, even their damn homes," he said. "Even if we stay at where we are at (in terms of pay and benefits), I'm thinking most of us will swallow it again this time."
Chrysler has the most entry-level workers — about 12 percent of its work force — and could add more if demand for its vehicles warrants it.
At Chrysler, entry-level or tier-two workers start at $14.65 an hour. Under the tentative agreement, new hires with less than one year with Chrysler will immediately get bumped up to $15.78 an hour upon contract ratification; workers with 1-2 years will get $16.66 an hour; and workers two years or more with the company will get $17.53 an hour.
All top out at $19.28 in 2014.
Entry-level workers also won better health benefits and life insurance coverage.
Under conditions of the U.S. Treasury bailout, Chrysler can hire an unlimited number of entry-level workers until 2015, at which time the number is capped at 25 percent of the work force. Chrysler fought to keep the cap off, but the UAW was able to retain it to ensure newer hires can move up to the higher-wage category. Veteran factory workers earn about $28 an hour.