Chrysler workers barely approved their new contract.

Members of the United Auto Workers Union have ratified their new four-year labor agreement with Chrysler Group LLC but also opened the door to protests inside the company that union leaders could find difficult to control.

The new agreement covers approximately 26,000 hourly and salaried workers employed by Chrysler in the U.S.

The vote tally was released barely a week after Ford workers approved their own contract by a two-to-one majority.  At Chrysler the results were significantly closer, the “Yes” vote totaling only 55%.  And even then, the union had to resort to a procedural maneuver after skilled tradesmen voted down their portion of the contract by 69 percent to 31 percent.

“Because a majority of UAW skilled trades members voted against the tentative hourly agreement, under the UAW Constitution, the UAW International Executive Board (IEB) investigated the reasons skilled members voted against the proposed agreement and determined that these reasons were predominantly economic and not unique to skilled trades members.  Accordingly, the IEB declared the agreements ratified under the UAW Constitution,” the union said in a statement.

The procedural move was unprecedented, union leaders having never imposed a contract with the Big Three on its members in the past.

The ruling is certain to trigger a backlash amongst skilled tradesmen who also were upset over changes in jobs classifications and work rules and could be challenged in court.

Union officials tried to put the best face on the contested outcome, UAW Vice President General Holiefield insisting that, “With this agreement, we have made significant progress in times of economic uncertainty.”

“We were able to make headway in bridging the gap between the New Hire pay and that of the existing workforce, return some of the benefits that members previously gave up to help the company survive, and win new jobs and investment in UAW plants,” he said.

The agreement at Chrysler parallels the contracts with General Motors and Ford Motor Co. which included pay increases for new workers and bonuses for long-serving employees to compensate for their giving up cost of living adjustments and automatic pay increases.

Economic improvements in the tentative agreement include a $3,500 ratification bonus and $1,000 in annual bonuses for performance and quality, in addition to a new, more transparent profit sharing program and “Upside Bonus” that will begin paying at the point Chrysler achieves financial stability. But the payouts were notably less than at GM and Ford, where the signing bonuses were $5,000 and $6,000 respectively.
One of the critical – and most controversial – issues during the now-concluded contract talks was the fate of so-called Tier-Two workers.  They were making roughly half as much as veteran union employees and in their bid to reduce labor costs all three Detroit makers wanted the ability to bring all new employees in at the lower level. The UAW, on the other hand, hoped to eliminate the second tier but ultimately had to settle for modest wage increases for the newly-hired employees.

At Chrysler, which employs the largest percentage of Tier-Two workers, wages will rise significantly to $19.28 over the term of the agreement. New hire workers will be eligible for tuition assistance programs, unlimited $25 co-pays for doctor’s office visits, life insurance and other benefits. The tentative agreement returns to all workers the Tuition Assistance Program they gave up during the economic downturn.

UAW president Bob King said the Chrysler pact will lead to the creation of 2,100 new jobs and includes $4.5 billion of investment to produce new models and upgraded vehicles and components by 2015 all of which will be invested directly into retooling and upgrading plants,

“Less than three years ago, Chrysler was teetering on the edge of bankruptcy as our nation was thrown into the worst economic crisis since the Great Depression,” said King.  “This tentative agreement builds on the momentum of job creation and our efforts to rebuild America by adding 2,100 new jobs by the end of the agreement in 2015 to communities left in turmoil in the wake of the country’s economic collapse.” King said,

Overall, noted King, the Detroit Big Three agreed to add about 21,000 new union jobs as a result of the new contracts.  That doesn’t include the spin-off effect that will have on suppliers and corporate venders.

“Together with the jobs created in suppliers and other businesses supported by auto manufacturing, a total of 180,000 jobs will be added to the country’s battered economy. Through collective bargaining and working together with the domestic automakers, we have shown that cooperation and collective bargaining work,” King added.

Chrysler is believed to have emerged from the contract talks with the lowest total labor costs of any of the Big Three, around $50 an hour compared to an estimated $58 for Ford, with GM somewhere in-between, according to various analysts.  That is expected to help the smallest and weakest of the Detroit makers improve its shaky finances,

Chrysler has turned the corner and with this agreement will continue to move (it) forward. It’s a new day at Chrysler,” Holiefield said.

The Chrysler loans from the U.S. Government were paid in full, six years before they were due, he noted during a UAW news conference. The loans, part of a multi-billion-dollar bailout of the domestic auto industry, provided the foundation for the company’s turnaround.