Chrysler workers in Indiana approve contract

October 22, 2011 - 2:15 PM

DETROIT (AP) — Workers at Chrysler's largest United Auto Workers local have voted in favor of a new four-year contract, a sign that the deal will be approved when voting ends next week.

If Chrysler's 26,000 union workers ratify their contract, they will join workers at Ford and General Motors in approving deals that give up annual pay raises for most workers but replace them with profit sharing and signing bonuses. The deals also promise at least 13,000 new union jobs at all three companies.

Wednesday's announcement of the vote by union workers at three Chrysler facilities in Indiana comes on the same day that the United Auto Workers said union members had approved a new contract at Ford Motor Co., with 63 percent of those casting ballots in favor. General Motors Co. workers ratified their deal last month.

The contracts set the wages and benefits for 112,000 auto workers nationwide, and also influence the pay at auto plants owned by foreign companies, auto parts supply companies and other industries.

United Auto Workers Local 685, which represents about 3,500 workers at three Chrysler transmission factories in Kokomo, Ind., approved the contract in voting on Tuesday, said Jerry Price, vice president of the local.

He said that 58 percent of production workers voted in favor of the contract, while skilled trades workers such as electricians and pipe fitters split 50-50. Since most of the local's 3,500 members are production workers, Price said the vote is a good sign that the contract will be ratified by the time voting ends next week.

He conceded that the contract isn't the best of the Detroit Three automakers and said those who opposed it were unhappy that GM and Ford workers got better signing bonuses.

"Chrysler's still not financially as good as Ford or General Motors," Price said. "We live to fight another day."

The Kokomo local was among the first in the company to count ballots. Voting is expected to end next Tuesday.

The Chrysler deal includes a $3,500 signing bonus and profit-sharing, but it's not as rich as the contracts at Ford and GM. Ford's signing bonus, for instance, is $6,000, while GM's is $5,000. Chrysler Group LLC has yet to make a full-year profit since it emerged from bankruptcy protection in 2009, while GM and Ford have each made billions.

Chrysler CEO Sergio Marchionne, who also runs Italy's Fiat SpA, said Wednesday in Turin, Italy, that he is confident the deal will be approved by the UAW even though it doesn't give workers as much as the company's Detroit competitors.

"I think the UAW and ourselves hammered out the best possible deal that we could. We know the limitations," Marchionne told reporters.

If the deal is rejected, it would go to an arbitrator, who would hold a hearing and decide what the workers will get. Workers at Chrysler cannot strike over wages under the terms of the company's 2009 government bailout.

Chrysler hasn't made an annual profit since 2005. The company earned $116 million in the first quarter, its first quarterly net profit in five years. But it lost $370 million in the second quarter, mostly because of charges for refinancing debt.

Chrysler expects to earn $200 million to $500 million this year, excluding the debt charges. But the profit is tiny compared with its Detroit rivals. Ford reported a profit of $6.6 billion last year, while GM earned $4.7 billion.

The Chrysler deal promises up to 2,100 new jobs and investment of $4.5 billion in U.S. factories.

At Ford, workers overcame early opposition and overwhelmingly approved their contract in voting that lasted two weeks.

More than 22,000 workers, or 63 percent of those who cast ballots, voted in favor of the pact, while almost 13,000, or 37 percent, opposed it, the union said in a statement Wednesday.

Ford promised $4.8 billion in new investments in its U.S. plants and 5,750 new jobs. Both sides reached agreement on Oct. 4, but like the other two companies, workers had to ratify it with a majority vote.

Most workers won't get annual raises, but they will get profit-sharing checks, inflation adjustment payments and other bonuses worth at least $16,700 through 2015. The deal at GM was similar.

The vote ends the threat of a strike at Ford, the only company where the union could stage a walkout. Strikes over wages also were banned at GM as part of its government bailout. Ford borrowed billions from private sources and didn't take government money.

UAW Vice President Jimmy Settles, the union's top Ford negotiator, said in a statement that workers at Ford were frustrated with the economy, a lack of pay increases and what he called "outrageous" executive pay packages, yet they still approved the pact. Eighty-five percent of the union's 41,000 members at Ford voted, he said.

"As the nation's economy remains stalled and uncertain and its employment rate stagnates, we were able to win an agreement with Ford that will bring auto manufacturing jobs back to the United States from China, Mexico and Japan," union President Bob King said.

The company said the deal means it will add shifts at four U.S. factories: Michigan Assembly in Wayne, Mich., near Detroit, where the Focus compact is made; the Chicago Assembly Plant, where Ford makes the Taurus sedan and Explorer SUV; Louisville Assembly in Kentucky, where Ford will make the new Escape small SUV; and the Auto Alliance plant in Flat Rock, Mich., which will get additional production of the Fusion midsize car.

The company also will move production of medium-duty trucks from a joint venture with Navistar International Corp. in General Escobedo, Mexico, to an assembly plant in Avon Lake, Ohio, near Cleveland. That plant now makes E-Series large van.

The fate of the Ford contract was in doubt early when workers in Wayne, Mich., and Chicago voted to reject it. The deal was losing by a narrow margin until Friday, but several factories voted overwhelmingly in favor to tip it toward passage.

"Our agreement is fair to our employees and it improves our competitiveness in the U.S.," Mark Fields, Ford's president of The Americas, said in a statement.

Despite the signing bonuses and profit-sharing, analysts expect a minimal impact to Ford's labor costs, in part because most of the new workers will be hired at lower wage rates than the company's longtime workers. Brian Johnson, an auto analyst with Barclays Capital, estimates the contract will add around $70 million to Ford's costs each year. If large numbers of older workers leave under buyout and early retirement offers, Ford will spend less, he said.

Johnson said Ford could see immediate benefits from the union approval with a ratings upgrade, which would help lower its borrowing costs.

Shares of Ford rose 6 cents to $11.84 in afternoon trading Wednesday.

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AP Business Writer Colleen Barry in Turin, Italy, contributed to this report.