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Chrysler And UAW Reach Tentative 4-Year Contract

October 14, 2011
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(Story via Edmunds AutoObserver ) Chrysler Group LLC has reached a tentative agreement with the United Auto Workers union on a new 4-year labor agreement. Chrysler is the last of the Detroit Three automakers to reach a tentative pact with the UAW; General Motors Co.’s contract has been ratified, while Ford’s tentative agreement is currently with its rank-and-file workers for ratification, with the final results of the nationwide voting expected today. Chrysler did not disclose terms of the tentative new 4-year contract, which requires ratification by its 26,000 hourly employees.

But UAW president Bob King did release a statement that gave broad indications about the scope of the contract. “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,” King said. The union added that Chrysler plans to invest $4.5 billion in the U.S. to manufacture new and refreshed models and new major components produced in UAW plants.

Chrysler’s agreement with the UAW likely is comprised of many of the same basic aspects as the contracts reached with GM and Ford. The primary features of those contracts included large signing bonuses for all workers – $5,000 per worker in the case of the ratified GM contract – increased wages for so-called “tier two” newly-hired workers and some type of profit-sharing program that increases payouts to UAW workers based on metrics of the company’s success.

There was tension in the process, however, including a highly-publicized letter from Chrysler CEO Sergio Marchionne that in a prickly tone accused the UAW’s King of delaying the contract negotiations to concentrate on the UAW’s talks with Ford. Marchionne also publicly said that Chrysler could not afford to the same concessions won from GM and Ford, particularly the increase in hourly wages for the second-tier workers. Reports then indicated the UAW believed it was close to an agreement with Chrysler this weekend, but the agreement did not come. It wasn’t until Wednesday morning that Chrysler announced the parties had reached the tentative agreement that now will go before workers for a vote. Chrysler and the UAW had extended the current contract until October 19.

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