Chrysler contract rejected by Indiana plants

By Kevin Krolicki

DETROIT (Reuters) - Two Chrysler LLC plants in Indiana voted on Tuesday to reject a proposed contract for the No. 3 U.S. automaker, marking the latest and most serious setback to a tentative four-year deal negotiated by the United Auto Workers union.

The pair of votes by the two Indiana UAW locals, which represent more than 4,000 workers, push the vote against the contract to a slight majority, according to a plant-by-plant tally of votes in the closely watched ratification battle.

About a third of Chrysler's UAW-represented workers at plants in Michigan and Illinois will vote on the proposed contract on Wednesday and Friday. Local officials in both states have been prominent in a grassroots campaign to kill the deal and send union negotiators back to the bargaining table.

A UAW local official in Kokomo, Indiana, said a Chrysler casting plant there had rejected the proposed contract by a 79 percent margin while a nearby transmission plant had rejected the deal by a 72 percent margin.

A total of 2,855 votes were cast against the contract at the two plants compared with 1,053 for the deal, the local officials said.

Including Tuesday night's results from Indiana, eight UAW locals representing more than 15,000 Chrysler workers have voted to reject the proposed contract, which critics within the union have blasted as offering unacceptably deep concessions.

Like an earlier deal with General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz), the proposed Chrysler deal would set a $14 starting wage for non-production workers -- roughly half of current average wages -- and shift the cost of retiree health care to a union-aligned trust fund.

But while GM promised to build future models at 16 U.S. plants, Chrysler under its new private equity owner, Cerberus Capital Management CBS.UL, offered no such pledge beyond the four-year term of the proposed contract.