Chrysler said to be pushing for smaller signing bonus

9/20/2011

DETROIT — As details emerge from the tentative agreement between General Motors Co. and the United Auto Workers, people familiar with negotiations between Chrysler Group LLC and the union say the second car maker is pushing for a smaller signing bonus.

Chrysler, which hasn’t turned an annual profit since its 2009 bankruptcy, wants the bonus to be about $3,500, said two people who asked not to be identified because the negotiations are private. GM agreed to pay $5,000 to each UAW member after the accord is ratified, published reports have said.

The UAW negotiated its four-year agreement with GM intending for it to serve as a framework for new contracts at Chrysler and Ford Motor Co., said Harley Shaiken, labor professor at the University of California at Berkeley. Chrysler has a higher percentage of workers paid at entry-level wages, which GM agreed to boost by $2 to $3 an hour, people said.

“It’s not unusual for the second company to raise a different set of demands, and that’s why these are never pro forma negotiations,” he said.

Sergio Marchionne, chief executive of both Chrysler and majority owner Fiat SpA, said he will return to the United States on Tuesday and is confident a deal will be reached quickly. He declined to elaborate on the talks.

Chrysler, after a net loss of $652 million last year, aims to turn a profit this year of $200 million to $500 million, excluding certain costs. It reported a first-quarter profit of $116 million and a $370 million loss in the second quarter, including losses from paying off U.S. and Canadian government loans early.

Meanwhile, GM’s agreement, to be presented Tuesday to UAW leaders nationwide at a meeting in Detroit, is to bring only a minimal increase in recurring costs for the automaker, people familiar with the contract say.

The agreement, reached Friday and to be voted upon by the company’s 48,500 hourly employees in the next week or so, includes the possibility of sweeter profit-sharing checks. The firm agreed to boost wages for new workers to $16 an hour from $14 and rise to a maximum of about $19 from $16 in the previous contract, two people familiar with the matter have said.

Fewer than 3 percent of GM’s hourly employees make second-tier wages. Including benefits, those workers cost $30 an hour, compared with $56 an hour for veteran assemblers whose wage is about $28 an hour.

Chrysler, with about 25,500 UAW-represented workers, said it has about 12 percent to 14 percent of its workers at the entry-level rate.

Because fixed costs were contained, GM will be able to break even in a depressed U.S. auto sales market of around 10.5 million, said a person familiar with the pact who asked not to be identified because deal terms haven’t been released to union members. GM had $6.17 billion in profit last year and $6.36 billion in the first half of this year.

Also, published reports indicate a former Tennessee Saturn assembly plant will be reopened under the deal and new products have been promised to plants in Michigan and Missouri. A plant in Wisconsin, which stopped producing trucks in 2009, will remain idled but won’t close.

Citi analyst Itay Michaeli wrote to investors that the deal appears to fall in line with earlier expectations and shouldn’t meaningfully affect GM’s stock price.