Chrysler CEO wants one wage rate for UAW workers

By Deepa Seetharaman


Chief Executive Officer Sergio Marchionne said on Friday that he would like to create a single wage rate to avoid having what he called "two classes" of employees represented by the United Auto Workers union at the plants.

"It creates the kind of environment that ... doesn't appear to work in the same direction that we've been trying to use to establish the new basis of Chrysler," Marchionne told reporters and analysts on a call to discuss third-quarter earnings that were released Thursday.

The UAW agreed to the split wage system in 2007 to help the Detroit automakers lower their labor costs and compete more effectively against foreign automakers such as Toyota Motor Co <7203.T>.

In this wage structure, new hires receive starting wages that are slightly more than half those of a veteran worker. About 13 percent of Chrysler's 26,000 UAW-represented workers are getting entry-level wages.

Marchionne said the issue could not be resolved quickly in the most recent discussions with the United Auto Workers union, but he hoped a long-term solution would emerge by the next round of contract talks.

"The whole notion of trying to get this organization to work in unison when you've got this kind of economic disparity between the people on the line is not something that can go on forever," Marchionne said during the conference call.

Chrysler, which is majority owned by Italian automaker Fiat SpA <FIA.MI>, was the last of the three Detroit automakers to reach a labor pact with the UAW.

About 55 percent of Chrysler workers ratified a four-year deal earlier this week. In a rare twist, the company's skilled trade workers decided to vote down the deal, objecting to a contract that is weaker than those at General Motors Co <GM.N> and Ford Motor Co <F.N>.

Chrysler's labor costs average $51 an hour per worker, competitive with those at foreign automakers, the company said in a slide presentation.

(Reporting by Deepa Seetharaman)