UAW, Chrysler Reach Labor Agreement

Chrysler Group LLC after numerous weeks of intense negotiation with the United Auto Workers union has finally reached a worker agreement that will span the next four years.

The UAW said on Wednesday that the terms agreed by Chrysler will pay smaller bonuses to unionized workers than what is being offered by Ford Motor Co. (NYSE:F) and General Motors Co. (NYSE:GM). This is the first contract after 2009, during which the 3^rd biggest U.S. automaker went bankrupt and had came under the control of the government. The government handed over the reigns of Chrysler to Fiat SpA (PINK:FIATY)of Italy and all the 26,000 workers working there.

Once the contract comes into play, the workers who sign the contract will receive a bonus of $1,750 as intial signing bonus, along with an identical bonus when the company reached its vital financial goals. The full terms of the agreement have not been disclosed by Chrysler and UAW.

According to the goal reaching bonus terms, a bonus of $1,250 will be paid to every worker when the $1.25 billion profit is made by the company, which could grow as big as $12,000 if the company reaches a profit of $12 billion. The automaker also agreed to pay increases for entry level workers by up to $19.24 per hour, which is equal to the raise announced by Ford and General Motors in their contracts.

The shares of Chrysler’s parent company, Fiat rose by 7.8 percent on Wednesday following the completion of the negotiation  process, which was threatening to go nowhere. Workers unions were planning to halt production and go on strike if a new contract is not signed.

Bob king, the UAW President said that the new contract agreed with Chrysler will create more than 2,000 jobs and also assures that the company will invest around $4.5 billion in vehicle production.

The contract agreed with General Motors last month has already been ratified and the contract negotiated with Ford is in the process of approval from the workers. The GM employee contract received a 66 percent approval, while early reports from Ford show that the contract has 50 percent approval. Rejection from the workers will mean that the negotiators will have to go back to the drawing board again to revise the agreement terms.

Chrysler unlike GM came out of the bankruptcy with a huge debt. It refinanced around $7.6 billion of this debt in May this year. Chrysler has been the only major U.S. car maker to report a loss in its quarterly financial earnings.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.