United Auto Workers members at a major Chrysler LLC assembly plant in St. Louis have overwhelmingly rejected a proposed contract with Chrysler, delivering a setback to union leadership in early voting on the four-year deal.
A smaller local at the Chrysler engine plant in Kenosha, Wisconsin, approved the contract by 82 percent, the union local president said on Friday. That plant, represented by UAW Local 72, employs about 850 workers.
There were some individuals that had some concerns, but we are happy with the outcome, UAW Local 72 President Dan Kirk said.
Chrysler workers at UAW Local 136 representing St. Louis North Assembly plant rejected the contract by an 80 percent margin late on Thursday, union local officials said.
The St. Louis North plant, which makes the Dodge Ram truck, employs 2,330 workers and is Chrysler's third-largest U.S. facility.
Nearly 8,000 more workers, including those at Chrysler's St. Louis South minivan plant, were scheduled to vote on Friday, according to union locals.
A majority of Chrysler's almost 49,000 UAW-represented factory workers must ratify the contract, which has come under fire from critics within the union.
A four-year contract with General Motors Corp (GM.N: Quote, Profile, Research), which was unanimously backed by union leadership, was approved by 66 percent of GM factory workers.
UAW President Ron Gettelfinger, who is waiting to negotiate a contract with Ford Motor Co (F.N: Quote, Profile, Research), had set a target of Sunday for concluding the Chrysler vote, but that looked certain to be changed to next Wednesday when the last UAW local is scheduled to vote.
Union dissidents, including some UAW local leaders, argue that the contract should be rejected because it would allow Chrysler to hire lower-wage workers at half the current wages without guaranteeing new investment in U.S. factories.
Shawn Fain, a member of the bargaining committee at UAW Local 1166, told Reuters the two-tier wage system made it impossible for the union to organize workers at U.S. plants of Japanese automakers. How can you go to Toyota now when they are making $25 an hour and half of us are making $14? Fain said.
He said officials at his union got a letter from General Holiefield, the union's chief bargainer in the Chrysler talks, lobbying for the contract. All the union leaders were asked to sign a petition supporting the contract, Fain said.
Dissidents also object to a plan to create a trust fund to pay for health care for Chrysler retirees, saying it would be underfunded compared with Chrysler's $19 billion obligation.
The automaker's owner, Cerberus Capital Management (CBS.UL: Quote, Profile, Research), promised the UAW that to fund the trust, Chrysler would issue a warrant worth up to $605 million, according to a UAW briefing book distributed to members before the ratification votes.
Dissidents also have concerns about job security.
In a separate development, Chrysler said on Thursday it plans to cut more than 1,110 contract workers and 1,000 salaried jobs, according to a person briefed on the plan.
Chrysler's current restructuring plan, announced in February at the time the automaker was put up for sale by Daimler, included cuts of 13,000 jobs, including 2,000 salaried jobs, as part of a bid to return to profitability by 2009.