Chrysler, UAW reach tentative labor pact

DETROIT (Reuters) - The United Auto Workers and Chrysler Group LLC reached 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, the union said on Wednesday.

The labor deal is the first for 26,000 UAW-represented Chrysler workers since its 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.

UAW Vice President General Holiefield, who handles Chrysler relations for the union, said he expects the workers to complete ratification votes within two weeks.

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 following news of the Chrysler agreement.

UAW President Bob King said the Chrysler contract will create 2,100 U.S. jobs and commit the company to a $4.5 billion investment in vehicle production.

"I'm confident that we'll get positive ratification for all three companies," King 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 performance bonuses.

Chrysler, unlike GM and Ford, will not offer buyout incentives to veteran workers, said Holiefield. 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 at a press briefing. "We understand that these companies are in different stages of making a comeback."

Earlier, Holiefield said, "Chrysler has turned the corner and with this agreement will continue to move forward," he said. "It's a new day at Chrysler."

The GM contract was ratified by workers late last month, and Ford workers are in the process of voting on their pact. While the GM contract was ratified by a nearly 2-to-1 margin, early returns from Ford local union halls show essentially a 50-50 split. The voting at Ford continues through October 18.

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 2003.

ORGANIZING FOREIGN PLANTS

King said the UAW was pressing to organize auto plants mainly in the southern United States run by Japanese, Korean and German automakers.

"There's a lot of activity going on," King said, adding that he was not sure the union would meet its goal of organizing the workers at a non-U.S. automaker by the end of this year.

The 2009 U.S. rescue saddled Chrysler with an outsized debt load, in contrast to 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.

By contrast, 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 both 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 concessions than its Detroit rivals got.

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 employees.

(Reporting by Bernie Woodall; Editing by Derek Caney, John Wallace and Matthew Lewis)