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Chrysler, UAW reach tentative labour pact

Tags: Chrysler

The United Auto Workers and Chrysler Group LLC reached tentative agreement on a four-year labour contract for the No. 3 U.S. automaker's 26,000 hourly production workers, the union said Wednesday.

This is the first labour pact for Chrysler since its 2009 bankruptcy and federally funded bailout.

The agreement follows deals between the UAW and Chrysler's Detroit rivals, General Motors Co and Ford Motor Co.

The GM contract was ratified by workers late last month, and Ford workers are in the process of voting on their pact. While the GM contract was ratified by a nearly 2-to-1 margin, early returns from Ford local union halls show essentially a 50-50 split. The voting at Ford continues through Oct. 18.

In a press statement, UAW President Bob King said the Chrysler contract will create 2,100 U.S. jobs and commit the company to a $4.5 billion US investment in vehicle production.

Further details will be issued later Wednesday by the UAW.

Chrysler is managed and majority-owned by Italy's Fiat SpA .

Labour analysts do not expect the contract to be as generous for workers as the deals at GM and Ford, due to Chrysler's relatively poor financial position.

Fiat took the reins at Chrysler after the company's 2009 restructuring. Chrysler has since reversed a slide in U.S. auto sales and repaid U.S. government loans. However, it remains in much weaker financial position than GM or Ford.

The 2009 U.S. rescue saddled Chrysler with an outsized debt load, in contrast to GM, which emerged from bankruptcy with little debt. Chrysler refinanced $7.6 billion of that debt on its balance sheet in May.

Sergio Marchionne, chief executive of both Fiat and Chrysler, has said Chrysler should not have to accept as expensive a contract as Ford and GM.

"Some of the deals that we've seen being signed between Ford and GM (with the UAW) are probably, given Chrysler's own predicament ... overly generous," Marchionne said last Friday.

The UAW's talks with Chrysler began in late July but stalled last month as the company pushed for more union concessions than its Detroit rivals got.

Ford was the only one of the three Detroit automakers to avoid bankruptcy and restructuring in 2009.

Ford's tentative deal with the UAW calls for each veteran hourly worker to get at least $16,000 in bonuses. The GM deal is slightly less generous, but Ford may benefit as lower-paid new workers fill new positions or replace veteran employees.

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