Chrysler and UAW Reach New Labor Contract

Chrysler became the last of the three major American carmakers to sign a new labor contract with the United Auto Workers yesterday, capping off a season of speculation, negotiations, and financial wrangling.

The deal, which covers roughly 26,000 employees, passed yesterday with 55.75 percent of Chrysler’s UAW-represented workforce voting in favor of the contract.

The main provision of the Chrysler contract is a $3500 signing bonus for workers, which will be paid out in two parts: $1750 up front, and $1750 if Chrysler’s debt ratio is under 5 to 1 for five consecutive quarters.

That’s less than the $5000 Ford will shill out to its UAW employees or the $6000 on its way to GM workers, and for a reason: even with recent successes Chrysler is less financially successful than its competitors. It is looking to make between $200 and $500 million this year in net income, which would make 2011 its first profitable year for the automaker since 2005. Even so, that’s well behind the $1.6 billion Ford made in the third quarter of this year alone.

The contract vote did expose a bit of a rift between the company’s skilled trades workers and production workforce. 68.8 percent of Chrysler’s assembly employees voted in favor of the new contract, but nearly 55.59 percent of skilled trades workers were opposed to its ratification. While the skilled trades workers, who represent a minority of the overall workforce, have the ability to slow or stop the vote, the UAW says its management declared the deal ratified after finding the no votes stemmed from reasons “predominantly economic and not unique to skilled trades members.”

Sources: Chrysler, Automotive News (Subscription required), Reuters

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