UAW’s New Chrysler Contract (Sort of) Follows Pattern

David Moberg

A Chrysler factory in Detroit, Mich. One section of the new contract stipulates that the company must invest $4.5 billion into UAW-represented factories.

The new, tentative contract between the United Auto Workers and Chrysler — the last of the Detroit Three negotiations this fall — fits a pattern of sorts, though hardly like the pattern bargaining of the golden age of the UAW and the auto industry. 

The basic framework remains very similar. For example, under the new contract, Ford, GM, and Chrysler can hire new workers under certain circumstances at much below — currently a bit more than half — the wage rate for incumbent, first-tier workers. But by 2015 these reduced-rate employees will be limited to a quarter of the workforce. 

In the meantime, rates at all three companies for these new hires,” the new Chrysler contract terminology for the second tier, will rise to $19.28. Over the four-year contract, base wage rates for long-time workers, which have not increased from approximately $28 an hour since 2003

Announcing the agreement on Wednesday, UAW president Bob King said that a core principle of the UAW is equal pay for equal work. We had to deviate from that in order to save the companies.” Although it might take two or three rounds of contracts, he said, the union aims to return to that standard, even though the current contract provides no clearly defined avenue for second-tier workers to reach the standard wage.

All three contracts do increase pay over the life of the contract. But the pay increases come in the form of various bonuses as well as profit-sharing or other payouts related to performance. Also, although there is no automatic cost-of-living adjustment as in the past, at least Ford and GM contracts include lump sum payments designated as inflation compensation. 

As a result of this shift to one-time bonuses, pension payments for future retirees do not automatically increase as they do when base wages rise, but most important, companies do not face growing fixed wage expenses when sales drop, and workers’ incomes fluctuate with the fortunes of their employer.

As in the Ford and GM contracts, the UAW emphasized commitments that Chrysler is making to jobs and investment in the U.S. The union says Chrysler will invest $4.5 billion into UAW-represented factories, protect existing jobs, and add 2,100 new jobs over the life of the contract. Many of the investments had been announced previously.

Despite — or rather as a result of — these similarities in how compensation is calculated, the value of the contract to each auto worker varies dramatically. 

For example, the Ford contract offered $6,000 as a bonus for ratifying the contract, GM $5,000 and Chrysler $3,500. Chrysler workers also would not receive any inflation protection payouts. That difference reflects the union’s accommodation — though far from what CEO’s like Fiat-owned Chrysler’s Sergio Marchionne wanted — to the different economic conditions at the companies: GM and Chrysler both declared bankruptcy, but Chrysler has not returned to profitability, even though Ford and GM are making record profits (which GM said would hardly be affected by the new contract).

But Chrysler and other auto companies cannot expect such individually tailored adjustments when they negotiate contracts covering Canadian auto workers, said Canadian Auto Workers union president Ken Lewenza.

GM workers approved their contract by a 2‑to‑1 margin, but as votes are coming in on the Ford contract, two big locals reported strong majorities in opposition. Chrysler workers, whose jobs have seemed much less secure, may not be so feisty. One Chrysler union leader, a frequent critic of the union’s direction, said he was disappointed with the pattern overall: no restoration of COLA (cost-of-living adjustment), no restoration of overtime after eight hours work, continuation of two-tier wages, and effectively getting back nothing of what workers gave up in 2007 and the bankruptcy, except for tuition reimbursement. But he thought the contract may provide the minimum necessary for ratification.

King portrayed the contracts as a victory for jobs, for the greater public good, for a union voice on issues like quality and productivity, and for prospects to reach out to nonunion workers at foreign-owned auto plants. But despite holding off corporate demands for deeper cuts or even less in lump-sum payments, the 2011 contracts still reflect a fundamental weakness that, as King recognizes, ultimately requires success in that effort to re-organize the auto industry.

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David Moberg, a senior editor of In These Times, has been on the staff of the magazine since it began publishing in 1976. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He has received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy.

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