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Marchionne Wants to Eliminate 2-Tier Wage Structure at Chrysler

“Economic disparity…cannot go on indefinitely.”

by on Oct.28, 2011

CEO Sergio Marchionne is signalling Chrysler must find a way to eliminate the 2-tier union wage structure.

Despite the significant cost savings it is bringing to the smallest of the domestic automakers, Chrysler CEO Sergio Marchionne signaled that the maker’s two-tier wage structure is something he plans to eliminate in the not-too-distant future.

About one in eight of Chrysler’s 26,000 union workers in the U.S. currently fall into the second tier, earning about half as much as more senior members of the United Auto Workers Union – a figure expected to grow to at least one in four by the time the newly ratified 4-year UAW contract expires in 2015, said Marchionne during a conference call.

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The union failed to eliminate the two-tier structure during its recent contract talks with Chrysler, General Motors and Ford, though it did win so-called “new hires” a modest increase of about $3 an hour in wages and some additional benefits.  But in an unexpected turn, Marchionne suggested that having multiple grades is “structurally undesirable.”


Chrysler Claws Back into the Black

$212 mil profit reflects rising sales.

by on Oct.27, 2011

Third-quarter results were "totally in line" with Chrysler's plans, says CEO Sergio Marchionne.

Long struggling Chrysler is having a decidedly good week.  Just a day after getting word that its U.S. hourly workers have approved their new contract, the automaker is reporting it clawed back into the black during the third quarter with a $212 net profit.

The maker lost $84 million during the July – September quarter in 2010.  The black ink is the result of a sharp surge in demand for Chrysler products, with revenues for the latest quarter up 19% to $13.1 billion.

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“In the third quarter, Chrysler Group achieved increased sales and positive financial results, totally in line with the plan we laid out in November 2009. And in October, together with the United Auto Workers, we crafted a solid four-year contract that will support us in our growth plans and significantly reward our employees for their contribution to the revival of Chrysler,” said Sergio Marchionne, Chairman and CEO of both Chrysler LLC and its Italian partner, Fiat.


UAW Hourly Workers Approve Chrysler Contract

But rejection by skilled trades workers raises problems.

by on Oct.26, 2011

Chrysler workers barely approved their new contract.

Members of the United Auto Workers Union have ratified their new four-year labor agreement with Chrysler Group LLC but also opened the door to protests inside the company that union leaders could find difficult to control.

The new agreement covers approximately 26,000 hourly and salaried workers employed by Chrysler in the U.S.

The vote tally was released barely a week after Ford workers approved their own contract by a two-to-one majority.  At Chrysler the results were significantly closer, the “Yes” vote totaling only 55%.  And even then, the union had to resort to a procedural maneuver after skilled tradesmen voted down their portion of the contract by 69 percent to 31 percent.

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“Because a majority of UAW skilled trades members voted against the tentative hourly agreement, under the UAW Constitution, the UAW International Executive Board (IEB) investigated the reasons skilled members voted against the proposed agreement and determined that these reasons were predominantly economic and not unique to skilled trades members.  Accordingly, the IEB declared the agreements ratified under the UAW Constitution,” the union said in a statement.


Ford Contract Near Approval

Late votes overcome early resistance.

by on Oct.17, 2011

Rouge workers have given thumbs-up to the new Ford contract, likely preventing its defeat.

A big ‘”yes” vote by workers at the Rouge manufacturing complex in Dearborn, Michigan appears to have saved the United Auto Workers Union tentative agreement with Ford Motor Co. and removed the potential for a strike against the automaker had the contract been rejected.

The threat of a strike had become increasingly likely, last week, as voting moved ahead on the 4-year settlement, workers at several key plants turning thumbs down in the hopes of sending negotiators back to the bargaining table for an even more lucrative offer from the most profitable of the Detroit Big Three automakers.

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The Rouge was seen by some as the make-or-break plant since it is one of the centers of dissent over the new contract.  That sent UAW leaders scurrying to try to curry support.  Their lobbying appears to have paid off and Local 600 reported that the yes votes favoring the contract totaled 3255, or 62%, while 2027, or 38%, voted to rejected the proposed agreement, according to information supplied by the union.

With the suburban Detroit complex voting in favor, the Ford contract now appears headed for ratification despite some fierce resistance.


Chrysler Commits to 2,100 More Jobs, $4.5 Bil Investment

But new UAW contract puts less cash in workers’ pockets.

by on Oct.12, 2011

Chrysler CEO Sergio Marchionne announcing the pay-off of the maker's federal bailout in May.

As part of its new contract with the United Auto Workers Union, Chrysler will invest $4.5 billion in new vehicles and technology, including two compact models based on Fiat products that will be built at the automaker’s assembly plants in Michigan and Illinois.

But the deal – which also guarantees at least 2,100 new jobs – comes with a price.  The union agreed to accept a smaller signing bonus than at General Motors or Ford Motor Co. to help the company achieve financial stability. And only half the $3,500 bonus will be paid immediately upon ratification while the balance will be paid after the company reaches financial stability.

The provision reduces the upfront cost of the contract which also includes a pay increase for second tier workers and limited changes in the health care plans. An additional $1,000 annual bonus also will be deferred until the company is in better financial health, the union said.

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The agreement was reached after a series of bruising meeting between UAW President Bob King and Chrysler/Fiat chief executive officer Sergio Marchionne, who had hoped to reduce the cost of the pact while preserving the company’s working relationship with the union. King had said he wasn’t looking for a confrontation with Chrysler but wanted his members to see the contract as fair.

“It’s a new day at Chrysler,” said King, officially confirming the settlement, which came almost a month after the original September 14th deadline.


Chrysler, UAW Reach Settlement

Contract agreement comes nearly a month after original deadline.

by on Oct.12, 2011

Chrysler CEO Sergio Marchionne with UAW President Bob King seen earlier this year.

Working well into the night, Chrysler and United Auto Workers Union negotiators hammered out a new contract for 26,000 hourly employees – nearly a month after the maker’s original labor contract was set to expire.

The deal makes the conclusion of this year’s round of bargaining for the Detroit makers – contract talks considered crucial to both labor and management.  Significantly, the talks steered clear of the angry rhetoric and confrontations that had seemed a traditional part of bargaining for the domestic manufacturers.

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While specific details of the Chrysler contract have yet to be released initial indications are that the settlement follows the pattern set last month by the UAW’s contract with General Motors, which would include a small “signing bonus,” improvements in profit sharing, some inflation protection and a modest increase in wages for new workers hired into a lower second tier.

But, notably, there will be no increase in base wages for its hourly workers.  And, overall, Chrysler is likely to have accepted little of an increase in its overall labor costs, which averaged just over $50 an hour going into this round of talks.


UAW Intensifies Talks at Ford, Chrysler

Despite concerns, meanwhile, GM workers appear ready to approve their new contract.

by on Sep.27, 2011

Chrysler CEO Sergio Marchionne with UAW President Bob King.

United Auto Workers Union negotiators have intensified talks with the Ford Motor Co. and Chrysler Group LLC as the union pushes for settlements with both automakers.

Obstacles, however, remain including the union’s desire to win a larger signing bonus than at GM, which agreed to a $5,000 one-time payment in a tentative agreement finalized earlier this month.

The GM agreement, meanwhile, appears to be winning solid support among the rank-and-file despite concerns about the continuation of an unpopular two-tier wage program that nets new employees barely half what veteran line workers earn.

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The UAW has put a focus on wrapping up Ford’s contract as soon as possible taking advantage of the relatively good relationship the two sides have long enjoyed.  But negotiations are also moving forward at Chrysler despite recent news reports suggesting those talks were put on hold as the result of a dispute between CEO Sergio Marchionne and union President Bob King.