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Chrysler And UAW Reach Agreement

Chrysler And UAW Reach Agreement

"This agreement is the latest in a remarkable turnaround for Chrysler."

The United Auto Workers and Chrysler Group LLC have reached a four-year labor contract for the No. 3 U.S. automaker's 26,000 hourly production workers, report Reuters.

"Less than three years ago, Chrysler was teetering on the edge of bankruptcy," UAW President Bob King said in a recent USA Today article. "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."

As far as the other major U.S. car companies are concerned, GM's contract was ratified by workers late last month and Ford workers are currently in the process of voting on theirs.

"This agreement is the latest in a remarkable turnaround for Chrysler," said UAW Vice President General Holiefield said in a statement today. "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."

Further details of the agreement will be issued later on Wednesday by the UAW. Most analysts did not expect Chrysler's contract to be as generous for workers as those at GM and Ford, due to the automaker's relative poor financial standing (they have yet to post a profit since their government bailout in 2009).

USA Today reports some of the known details to the agreement:

  • $3,500 signing bonus, with half to be paid upfront and half to be paid at a later date when Chrysler reaches certain financial targets.
  • Inflation protection bonus of $500 each year over the four-year contract for a total of $2,000 over the life of the contract. This is less than the $3,000 GM workers received for a similar bonus in their contract and the $6,000 Ford workers could gain from their contract.
  • A $500 annual bonus for meeting quality goals.
  • A revised profit-sharing formula similar to an agreement ratified by GM workers, which called for basing the bonus on North American profits, not just U.S. results.
  • All new jobs will be entry-level jobs at the second-tier wage.
  • Entry-level, second-tier workers hired since 2007 -- now making about $14.65-an-hour plus benefits -- will receive raises to $19.28-an-hour by the end of the four-year contract. Veteran first-tier workers, as at GM and Ford, receive no hourly rate raise on their current wage of about $28 per hour.
  • No cap on entry-level hires until 2015.
  • Plant investments at Belvidere, Ill., for a new compact vehicle, at Sterling Heights, Mich., for another new compact, Kokomo, Ind., for a new front-drive 9-speed transmission and rear wheel drive 8-speed, Toledo, Ohio, for new steering columns and torque converters, Trenton, Mich., to reopen part of the recently idled North to produce 3.8-iter, V-6 engines.

Chrysler's veteran workers, who are now paid about $28 an hour, would receive no hourly increase. Other benefits include the restoration of the tuition assistance program and a $500 annual bonus paid every June through 2015, reports the Wall Street Journal.

"They got us back some decent health care which I find is a big relief but the money doesn't look too good," 33-year-old Elisa Gurule, who works on the production line at Chrysler's Sterling Heights Assembly plant in Michigan and is an entry-level wage worker, told the Journal. "Even though we will be above $19 an hour at the end of the contract, it still isn't enough to buy the cars you build and it's just barely enough to keep you head above water if you keep your living expenses very lean."

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