October 27, 2011 / 12:42 AM / in 7 years

UAW says Chrysler workers ratify contract

DETROIT (Reuters) - Unionized workers at Chrysler Group LLC ratified a four-year labor pact on Wednesday, closing out the first round of talks since two of the three Detroit automakers nearly collapsed and took federal bailouts in 2009.

The deals struck by the United Auto Workers union and the three U.S. automakers are not as lavish as in years past and help the companies bring their labor expenses closer to the costs paid by their Japanese, Korean and German rivals.

About 55 percent of Chrysler workers voted to ratify the deal, but in a rare twist, 56 percent of skilled-trades workers rejected the pact. Deals at General Motors Co and Ford Motor Co were ratified by a nearly 2-to-1 margin.

Skilled-trades make up a small portion of Chrysler’s 26,000 workers, but their rejection was a show of frustration over the terms of the contract, which is not as rich as the deals ratified at GM and Ford.

“The money was a big, big issue and especially because they saw their sisters and brothers at GM and Ford getting a lot more money,” UAW President Bob King told reporters.

Among the biggest sticking points was Chrysler’s $3,500 signing bonus, which will be paid in two parts, less than the onetime payouts of $5,000 to be given at GM and $6,000 at Ford, King said.

Union officials said this structure was necessary to help the weakest U.S. automaker regain its financial footing as it works to overhaul its vehicle lineup and execute a turnaround that will help it service its outsized debt load.

“I really wish we’d been able to financially be able to do the lump sum in one payment, I think that would have made a dramatic difference,” King told reporters.

In a statement, UAW Vice President General Holiefield said the UAW got a deal that would allow workers to benefit from Chrysler’s success “once it has regained financial stability.”

Chrysler workers will get a $1,750 bonus after ratification and $1,750 after Chrysler achieves a debt ratio of 5 to 1 for five quarters, King told reporters.


None of the new contracts do not include base pay or cost-of-living increases that were hallmarks of labor agreements when the UAW wielded more power.

Instead, a greater portion of worker compensation is based on profit-sharing bonuses that tighten the bond between workers and the financial success of the company.

This is part of a broader push by King to showcase the “21st Century UAW” as a union willing to make efforts to bolster companies during tough economic times.

King said the UAW helped its organizing efforts by successfully reaching contracts without a strike at Ford or resorting to arbitration at GM or Chrysler.

The UAW is prohibited from striking GM or Chrysler until 2015 as part of the companies’ 2009 bankruptcy agreements, which put Chrysler in the hands of Italian automaker Fiat SpA. Chrysler is now majority owned by Fiat.

With all three labor contracts in hand, King said he would personally become involved in the UAW’s organizing efforts, particularly at U.S. plants run by foreign automakers.

“We made a lot of progress,” said King regarding talks with foreign automakers with U.S. plants. “A lot of it has been made in confidential discussions.”

King would not say which automaker is farthest along in talking about being organized.


Labor experts said it was rare to have a vote split between skilled-trades and production workers on a national contract. King said this was common on the local level and happened in 1973 on a national Ford contract.

The rejection of the contract by skilled trades slowed the ratification process and prompted top UAW officials to hold a conference call with union leaders to consider its options, King said.

If skilled-trades workers had voted against the pact because of issues unique to them, the UAW executive board would have had to call for another vote, rework the contract’s skilled trades provisions or take those issues to arbitration.

But the union officials determined that these workers rejected the deal on broader issues that were not specific to skilled-trades workers. As a result, the deal was passed.

“You want to protect the rights of the minority, but you can’t let minority overrule the rights of the majority,” King said.

Separately, King said the grievance filed by the UAW against Ford will go to arbitration around November 17.

Reporting by Deepa Seetharaman and Bernie Woodall; Editing by Bernard Orr, Phil Berlowitz

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