Ohio tax incentives to help Chrysler hire, retain workers

Ohio tax incentives to help Chrysler hire, retain workers

November 12th, 2011 by BRENT SNAVELY DETROIT FREE PRESS in Carscruisin

Chrysler Group LLC plans to announce that it will hire 1,105 workers in Toledo, Ohio, just three weeks after hourly workers narrowly approved a new labor contract with the United Auto Workers union.

Chrysler and the United Auto Workers have reached a deal on a contract that creates 2,100 new jobs.

Chrysler and the United Auto Workers have reached...

The Auburn Hills, Mich., automaker will receive tax incentives from Ohio that pave the way for a $365 million investment to create the jobs and retain 900 others at its Toledo Assembly Complex, where workers build the Dodge Nitro, Jeep Wrangler and Jeep Liberty.

U.S. Rep. Marcy Kaptur, a Democrat from Toledo, will attend Chrysler's event in Toledo next Wednesday, a spokesman said. Ohio Gov. John Kasich is expected to be in Toledo the same day.

Chrysler pledged to invest $4.5 billion and add 2,100 jobs in U.S. factories as part of a four-year labor agreement ratified Oct. 26. That is fewer new jobs than either General Motors or Ford promised. But the UAW didn't provide details of the Toledo jobs before workers voted on the contract. By 2013, Chrysler plans to fill the new Toledo jobs with entry-level workers who eventually will earn $19.28 per hour.

Chrysler wanted to raise entry-level wages to $22 per hour by 2020, with no limit on the percentage of entry-level workers it can hire after 2015, said a person familiar with the negotiations. The UAW chose not to eliminate a 25 percent limit on entry-level hires.

Chrysler's entry-level workers will easily surpass 25 percent of the company's hourly U.S. work force over the next four years, a person familiar with the company's hiring plans said Tuesday.

But starting in 2015, Chrysler's UAW contract requires the automaker to bump some workers into a higher tier of pay so the entry- level work force doesn't exceed 25 percent.

That's why Chrysler sought to eliminate that cap in its latest round of contract talks with the UAW. Now, Chrysler wants to deal with that issue in the next round of contract talks.

On Oct. 28 - just two days after UAW workers narrowly ratified the new agreement - Chrysler and Fiat CEO Sergio Marchionne shocked auto industry observers and workers when he said the two-tier wage system is unsustainable.

"Trying to get this whole organization to work in unison when you've got this kind of economic disparity between people on the line is not something that can go on for a long period of time," Marchionne said.

Chrysler currently employs about 23,000 hourly workers. About 12 percent, or 2,800, of those workers were hired at an entry-level wage of about $14.65.

That puts Chrysler on a faster course to bump into the 25 percent cap than either Ford or General Motors, which have fewer than 5 percent of their workers making the lower wage.

Under a four-year contract ratified by UAW workers on Oct. 26, Chrysler's entry- level workers will earn $19.28 per hour by the end of the agreement.

That's still about $10 per hour less than UAW production workers hired before 2007.

Within the UAW, the twotier wage structure is controversial because the union has long believed in the concept of equal pay for equal work.

During labor negotiations, Marchionne proposed paying entry-level workers $22 per hour or more within eight to 10 years. But he did not ask that workers hired before 2007, who earn about $28 per hour, take a wage cut.