* UAW says Chrysler deal will create 2,100 jobs
* UAW says Chrysler to invest $4.5 bln in U.S. production
* Fiat shares close up nearly 8 pct
By Deepa Seetharaman and Bernie Woodall
DETROIT, Oct 12 The United Auto Workers and
Chrysler Group LLC have reached a tentative agreement on a
four-year labor contract that would pay workers smaller bonuses
than unionized workers at General Motors Co and Ford
Motor Co .
Chrysler workers are due to vote on the tentative agreement
over the next two weeks. GM workers ratified their contract in
September, and Ford workers are voting on their proposed deal
through Oct. 18
Ratification of the Chrysler and Ford contracts will bring
labor rates at the three U.S. automakers closer to rates paid
at non-union U.S. plants run by Japanese, Korean and German
None of the new contracts include base pay increases for
veteran workers. Instead, they call for profit-sharing and
ratification bonuses. They also exclude the cost-of-living
increases that had been a hallmark of labor agreements when the
UAW wielded more power.
UAW President Bob King said the union had gotten fair deals
at all three companies, but he said the clock was ticking to
reach an agreement with Chrysler and to get a Ford deal
ratified because of the risk of another downturn in the U.S.
"We rushed," King said. "I wanted to complete all these
negotiations before the economy got worse."
The Chrysler deal announced on Wednesday is the first for
26,000 UAW-represented Chrysler workers since the company's
2009 bankruptcy and the federally funded bailout that handed
control of the No. 3 U.S. automaker to Italy's Fiat SpA.
If the contract is ratified, Chrysler's workers would
receive an initial signing bonus of $1,750 and an additional
$1,750 if the company meets certain financial targets in 2012.
Chrysler workers would begin to get profit-sharing bonuses
of $1,250 once Chrysler makes a $1.25 billion profit, and top
out at $12,000 if the company makes $12 billion in profit.
Entry-level workers, who make about half as much as veteran
production workers, would receive pay raises that top out at
$19.28 per hour, the same rates negotiated by GM and Ford.
Fiat shares closed up 7.8 percent at an eight-week high
after news of the Chrysler agreement.
King said the Chrysler contract would create 2,100 U.S.
jobs and commit the company to a $4.5 billion investment in
"I'm confident that we'll get positive ratification for all
three companies," he said.
The $3,500 signing bonus for Chrysler workers, if the 2012
financial targets are met, would be less than the $5,000 to be
given at GM and the $6,000 signing bonus offered to Ford
workers. UAW officials said that reflected a concession to the
relative financial health of the three companies.
Ford workers are guaranteed at least $16,000 in signing and
Chrysler, unlike GM and Ford, will not offer buyout
incentives to veteran workers, said General Holiefield, the
lead UAW negotiator in the Chrysler talks. Chrysler has about
2,750 second-tier workers, compared with about 600 at GM and
fewer than 100 at Ford.
"We did not enter this set of negotiations to break any one
of these companies," Holiefield said. "We understand that these
companies are in different stages of making a comeback."
Like GM and Ford, Chrysler workers were not offered pay
increases. King admitted that it was a sore point that veteran
UAW workers have not received an hourly pay increase since
King said the UAW was pressing to organize auto plants
mainly in the southern United States run by Japanese, Korean
and German automakers.
The 2009 U.S. rescue saddled Chrysler with an out-sized
debt load, in contrast with GM, which emerged from bankruptcy
with little debt. Chrysler refinanced $7.6 billion of that debt
on its balance sheet in May.
Chrysler lost $254 million in the first half of the year.
Ford posted a first-half net profit of $4.95 billion and
has shown a net profit for nine consecutive quarters. GM has
shown a profit for six straight quarters and had a first-half
net profit of $5.7 billion.
Sergio Marchionne, chief executive of Fiat and Chrysler,
has sparred with UAW leadership and said Chrysler could not
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 deeper
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 receive 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