The United Auto Workers (UAW) union has finally agreed on a new 4-year contract with Chrysler Group LLC, 53.5% owned by Italy’s Fiat SpA(FIATY).
Previously, the union ended agreements with Chrysler’s cross-town rivals, General Motors Co. (GM) and Ford Motor Co. (F). Overall, UAW’s agreement with the Detroit automakers would add 20,000 jobs by 2015.
The tentative agreement between UAW and Chrylser includes a $3,500 signing bonus, which will be paid in two installments: $1,750 as a signing bonus and $1,750 once Chrysler achieves financial stability. The deal covers 23,000 factory workers and 3,000 salaried workers.
The agreement also allows hourly wages of entry-level workers to rise from $15.78 to $19.28 by 2015. About 12% of Chrysler’s factory workers are paid entry-level wages, which is about half the wage of longtime union workers. However, the new agreement will not provide any annual raises to most of the workers.
Under the new agreement, Chrysler has promised to invest $4.5 billion in U.S. plants, including Kokomo, Indiana transmission plants, Belvidere, Illinois, and Sterling Heights, Michigan assembly plants. The company revealed that voting by workers on the contract will be over within two weeks.
At the end of September, workers at GM ratified the UAW deal. Under the agreement, most of the workers would not get annual pay raises, but will receive signing bonuses totaling $5,000, profit-sharing checks and other payments amounting to at least $11,500 during the tenure of the deal.
Wages of entry-level workers would increase 22% from the current $15.78 per hour. The deal would also save more than 6,000 U.S. jobs and create another 5,100 jobs at GM plants.
Also under the proposed agreement with UAW, Ford would invest about $4.8 billion in U.S. plants creating 5,750 jobs. The majority of the additional 5,750 jobs will be at entry-level wages.
In addition, the agreement would allow UAW workers at Ford to receive at least $16,000 in bonuses over the tenure of the deal, which includes early retirement offers for veteran workers and plans to shift some assembly work from Mexico.
Chrysler reported a quarterly profit of $116 million in the first quarter of 2011. It posted a profit of $181 million in the second quarter of the year, compared with a net loss of $172 million in the same quarter of 2010 (excluding special items). The company expects to earn between $200 million and $500 million in 2011, excluding debt charges.
