Chrysler to give 26,200 workers nationwide an early $1,750 bonus payment as part of negotiated contract

Chrysler announced Friday it would pay a $1,750 bonus to approximately 26,200 employees nationwide, including about 3,150 workers in the Toledo area and southeast Michigan.

Chrysler Group LLC’s UAW-represented workers will get an early present for the holidays.

The automaker plans to give workers the second half of their negotiated contract ratification bonus earlier than anticipated — putting some unexpected cash in their hands just a few days before Christmas.

Chrysler announced Friday it would pay a $1,750 bonus to approximately 26,200 employees nationwide, including about 3,150 workers in the Toledo area and southeast Michigan.

The bonuses will mean a total payment of more than $5.5 million to employees at the Toledo Assembly Complex, the Toledo Machining plant in Perrysburg, and the Dundee Engine Plant in Dundee, Mich.

Dan Henneman, Jeep unit chairman for UAW Local 12, praised his work force at the Toledo Assembly Complex, and said they were pleased to hear the news. The bonus will be appreciated especially by the 800 employees who have been laid off since August when the Jeep Liberty line went silent for plant upgrades, he said.

“It’s nice for my laid-off people who are out on unemployment and [substitution] pay and not getting overtime,” Mr. Henneman said. “It’ll work out nice for them just prior to the holiday.”

The payment is the second half of a $3,500 ratification bonus Chrysler’s union-represented employees negotiated in the company’s national contract with the United Auto Workers approved in October, 2011.

The deal was structured so workers received half the money up front and the remainder after certain financial goals were met for four consecutive quarters. Chrysler has hit that target in each of the year’s first three quarters, and officials said Friday they decided to waive the fourth-quarter requirement and pay the second half of the bonus after just three quarters.

In a letter to employees, Chrysler Group Chief Executive Sergio Marchionne said it was a recognition of the “tremendous contribution” employees had made toward Chrysler’s revival.

“You have made extraordinary efforts to meet our production needs in order to satisfy the steadily increasing consumer demand for our products,” he said. “You have also demonstrated a great level of commitment and cooperation in building a solid future for our company, bringing the weight of your professional and personal qualities to the achievement of our goals.”

Mr. Henneman said the decision to pay the bonus early shines a favorable light on the employees’ role in Chrysler’s recent string of successes.

“I think it’s got a lot to do with the work force,” Mr. Henneman said. “They all work hard, they’re dedicated to building quality vehicles, and if it wasn’t for the quality of vehicles we build and the numbers of cars we build and the commitment to World Class Manufacturing, I don’t think those goals would have been reached.”

The bonus will be paid Dec. 21.

Kristin Dziczek, director of the Labor & Industry Group at the Center for Automotive Research in Ann Arbor, said Chrysler has posted good financial results so far this year and has done well holding and even gaining market share. She said the company’s decision to pay the bonus early points to a strong future as well.

“It’s an indication they think this quarter’s going fairly well for them,” she said. “It’s nice to put money in people’s pockets before Christmas and the holidays, and that might play a role in it.”

The ratification bonus is on top of bonuses Chrysler employees already were expecting in December.

All Chrysler employees will get at least a $500 quality bonus on Dec. 7.

But the deal is sweeter for those at the Toledo Assembly Complex and the Dundee Engine Plant. Because those plants have received bronze certification on their path to implementing the World Class Manufacturing process, all workers there get an extra $125, bringing their quality bonus total to $625. The certification is done by Fiat SpA, which controls Chrysler.

Including those payments, Chrysler will pay bonuses of $7.4 million to workers in the region.

That will have some effect on the local economy, said Ken Mayland, an economist with ClearView Economics in Cleveland.

“People are going to spend a little bit more as we go into the holiday season, but it’s going to be probably a bit less than you think,” he said.

Mr. Mayland said that is because workers getting a one-time bonus are less likely to change their spending behavior than those who receive a permanent change. He also thinks the looming uncertainty over the so-called fiscal cliff may cause some people to save more than they spend.

However, he thinks the autoworkers may be getting a better deal by having the payment this year than next year, when he expects tax rates to be slightly higher.

“There’s a lot of people, a lot of companies accelerating income from next year into this year to get it into the lower rates. So that’s to the good of the recipients. It’s a very nice gesture,” he said. “If you’re going to pay out the same amount, why shouldn’t more of it go to your workers as opposed to the government?”

Matt Faltys, vice president and director of portfolio management for Fifth Third Bank, said he expects the bonuses to be a “modest plus” for the local economy. More importantly, he said, is the recognition by the company of how far they’ve come and the good will it can create.

“When the bigwigs say thank you, that means a lot to the people who did the work,” Mr. Faltys said.

Contact Tyrel Linkhorn at: tlinkhorn@theblade.com or 419-724-6134.