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Lots of Give, Little Take in UAW Contract with Chrysler

October 11, 2007
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The United Auto Workers gave Chrysler L.L.C. similar contract concessions to those given General Motors Corp., but it received less in return.

On Wednesday, October 10, the UAW reached a tentative agreement with Chrysler on a new four-year contract after a six-hour strike. The deal must be ratified by about 45,000 Chrysler workers represented by the UAW.

Unlike GM, Chrysler did not make specific future product commitments plant by plant, say sources familiar with the agreement.

The UAW did not end a two-day strike against GM last month until it received detailed plans for new products launching as far out as 2013.

Most of the rest of the contract was patterned after GM’s. The contract calls for a Chrysler-financed retiree health care trust that would be controlled by the UAW. Provisions would allow Chrysler to permanently unload about $18 billion of retiree health care obligations for about $11 billion. The annual savings — and the financing sources for the fund’s underwriting — have not been disclosed.

GM agreed to an even larger health care trust in a contract that was overwhelmingly ratified by UAW rank-and-file on Wednesday, October 10. To fund a voluntary employee beneficiary association with the UAW, GM will pay about $29.9 billion to hand over future retiree health care liabilities of about $50 billion.

Neither Chrysler nor the UAW is commenting on details of the agreement.

The UAW will begin its final negotiations with Ford Motor Co. in the coming days.

At Chrysler, the UAW also agreed to a new-hire wage and benefit package for nonproduction jobs. Under the terms at both GM and Chrysler, hires would receive about half the $28 an hour wage to replace veteran workers who are expected to receive another incentive package to retire or take a buyout to leave, the sources said.

As with the GM deal, Chrysler workers will receive small annual bonuses during the life of the contract instead of a wage increase. Assuming the agreement follows the GM agreement, workers would get a $3,000 signing bonus the first year plus annual lump sum bonuses of 3 percent, 4 percent and 3 percent during the last three years of the contract.

Analysts say the deals will help GM and Chrysler shrink considerably a $20-$30 an hour labor cost gap with their Japanese competitors in the United States. The new GM contract covers about 73,000 active hourly employees.

—David Barkholz

Filed by David Barkholz of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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