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Published: Saturday, 10/29/2011

Chrysler wants end of 2-tier wage setup

Marchionne: System divides work force

Chrysler CEO Sergio Marchionne says two-tier wage system creates a divide between blue collar workers. Chrysler CEO Sergio Marchionne says two-tier wage system creates a divide between blue collar workers.

The head of Chrysler Group LLC said Friday the carmaker’s two-tier wage system has to go, potentially setting the stage for a fight over wages when all three U.S. automakers and their largest union head back to negotiating tables in 2015.

Sergio Marchionne said Chrysler needs to transition to a one-wage structure and wants to make that happen in its next contract with the United Auto Workers union.

The current system creates two classes of workers, which as more bottom-tier workers are hired will only serve to divide the automaker’s blue-collar ranks, he said. New workers in the bottom tier make about half as much money as longtime UAW members.

“When you’ve got this kind of economic disparity between people on the line, it’s not something that can go on for a long period of time,” Mr. Marchionne told analysts and reporters in a conference call following the release of Chrysler’s quarterly results.

Currently, about 13 percent of Auburn Hills, Mich.-based Chrysler’s UAW work force falls into the bottom wage tier and their numbers are expected to swell to about 25 percent of hourly workers by the time the automakers start up negotiations again four years from now, he said.

Mr. Marchionne didn’t say how he would create a new structure. But it’s likely he will try to reduce top-tier pay. General Motors Co. and Ford Motor Co. could follow suit, and pay could be cut for most of the UAW’s 112,000 members.

Fiat took over Chrysler in 2009 as part of a U.S. government-based deal that lifted Chrysler out of bankruptcy protection. Mr. Marchionne, who also leads Fiat, has been driving integration of the businesses ever since. He announced a new leadership structure in September.

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