There was some dissent and a lot of questions, but in the end, local United Auto Workers leaders voted to recommend approval of a new four-year contract with Chrysler LLC that is similar to one ratified last week with General Motors Corp.
UAW President Ron Gettelfinger said the deal was approved overwhelmingly by voice vote among several hundred local union presidents and bargaining committee chairs. The vote clears the way for the union to present the pact to about 45,000 Chrysler workers covered by the contract, and balloting was expected to get under way in the next day or two.
The deal will cut what Chrysler says is about a $28-per-hour labor cost disparity with its Japanese competitors, although it was unclear just how big a cut it would make.
In the bargaining, UAW negotiators were able to fend off the company's demand for $1.01 per hour in wage cuts and cost-of-living adjustment delays, according to a booklet summarizing the deal. They also saved about 1,500 jobs at the Toledo, Ohio, machining plant which was slated to close.
But 14 of 21 factories listed in the booklet have no future products to make after the current product life cycle or the life of the new contract. Seven others were to get future products.
The deal also includes a lower-tier wage scale for newly hired “noncore” employees who do not build vehicles or manufacture parts. The lower tier starts around $14 per hour, but does not affect the pay of current workers doing noncore jobs.
Like the GM deal, the union won a moratorium on plant closing and outsourcing. The outsourcing ban on noncore work will keep 8,000 jobs, the booklet said.
“It was not unanimous, but it was a big vote for it,” said Ross Rushing, a shop committeeman from Local 72 in Kenosha, Wis., who said he was satisfied with the deal. “Our bargaining committee did the best they could.”
Chrysler workers would see gains of $10,235 over the life of the agreement, according to the booklet. Chrysler also would contribute $10.3 billion toward retiree health care, including $8.8 billion to create a union-run trust for retiree health care and $1.5 billion in retiree health care costs until the trust takes effect. Chrysler has an $18 billion retiree health care obligation.
Health benefits also will be protected for active workers, and retiree health care will be funded starting in 2010 by the trust, called a Voluntary Employees Beneficiary Association. The VEBA must gain court approval.
Chrysler also will fund the VEBA with a financial instrument called a warrant with a potential equity value of $605 million. And retirees will get a raise of $66.70 in their pension checks per month, of which $51.67 will go toward the VEBA.
“Chrysler had an agenda that was nothing but cutbacks, but our membership turned the company around,” UAW Vice President General Holiefield said in the booklet.
The union also said it reversed a company plan to sell its Mopar parts division and a parts-trucking operation as part of the negotiations.
The voice vote approving the tentative agreement came after a four-hour meeting at which national bargaining committee members explained the deal to hundreds of local leaders.
Several union leaders said there was some dissent over the contract's job security provisions, which were less extensive than those in an agreement reached earlier between the UAW and General Motors Corp.
Some of the leaders said dissenters didn't like the lower-tier wages and a lack of future products for so many plants.
“Anytime that you go into a council, anybody can raise their hand and raise any issue they want,” Gettelfinger told reporters after the meeting. “A lot of people are concerned about a particular issue that impacts them.
“There was a lot of discussion around all the aspects of the agreement, which we're very pleased with, and we're happy that it was overwhelmingly recommended.”
A plant without a new product doesn't necessarily mean it will be closed. New Chrysler Vice Chairman and President Jim Press has said the company is evaluating its model lineup and could add or subtract products.
Chrysler's national UAW contract also covers about 78,000 retirees and spouses. A majority of active workers must vote for the contract for it to take effect.
Chrysler and the UAW reached the tentative agreement Wednesday after a six-hour strike.
GM workers voted to approve their agreement last week. GM's contract promised workers $13,056 over the life of the agreement, or $2,821 more than Chrysler's tentative contract.
Chrysler has said its hourly labor cost is $75.86 including wages, pensions and health benefits, while Toyota Motor Corp.'s is $47.60 and GM's is $73.26.
Gettelfinger said he hoped for a two-thirds ratification margin among Chrysler workers, similar to the GM approval.
Like the GM pact, the deal includes a $3,000 signing bonus and lump-sum payments of 3 percent in the second year, 4 percent in the third year and 3 percent in the final year.
The UAW now moves on to Ford Motor Co., the last of the Detroit Three without an agreement with the union. On Monday, Gettelfinger said he had been negotiating with Ford as recently as Friday.
“We're continuing to work with them now. They're combing through the agreement, obviously, at Chrysler, and we're getting ready to start up,” Gettelfinger said of the Ford talks.
At an event Monday to celebrate manufacturing of the 2008 Ford Focus, Ford CEO Alan Mulally and chief UAW-Ford negotiator Bob King said they wouldn't discuss the negotiations but said the company and the union have a good relationship.
“This negotiation is one more opportunity to improve over our competitors,” Mulally said amid a tour of the Wayne plant where the Focus is made.
Chrysler, which has 24 U.S. manufacturing facilities, became a private company shortly after the contract talks began in July. The private equity firm Cerberus Capital Management LP bought a majority share of Chrysler from Daimler AG in a $7.4 billion transaction.
