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Chrysler Contract Rejected by Indiana Plants

Two Chrysler plants in Indiana voted on Tuesday to reject a proposed contract for the No. 3 U.S. automaker, marking the latest and most serious setback to a tentative four-year deal negotiated by the United Auto Workers union.

The pair of votes by the two Indiana UAW locals, which represent more than 4,000 workers, push the vote against the contract to a slight majority, according to a plant-by-plant tally of votes in the closely watched ratification battle.

About a third of Chrysler's UAW-represented workers at plants in Michigan and Illinois will vote on the proposed contract on Wednesday and Friday. Local officials in both states have been prominent in a grassroots campaign to kill the deal and send union negotiators back to the bargaining table.

A UAW local official in Kokomo, Indiana, said a Chrysler casting plant there had rejected the proposed contract by a 79 percent margin while a nearby transmission plant had rejected the deal by a 72 percent margin.

A total of 2,855 votes were cast against the contract at the two plants compared with 1,053 for the deal, the local officials said.

Including Tuesday night's results from Indiana, eight UAW locals representing more than 15,000 Chrysler workers have voted to reject the proposed contract, which critics within the union have blasted as offering unacceptably deep concessions.

Like an earlier deal with General Motors , the proposed Chrysler deal would set a $14 starting wage for non-production workers -- roughly half of current average wages -- and shift the cost of retiree health care to a union-aligned trust fund.

But while GM promised to build future models at 16 U.S. plants, Chrysler under its new private equity owner, Cerberus Capital Management, offered no such pledge beyond the four-year term of the proposed contract.

Heading for Defeat?

Union dissidents said the grassroots campaign to scuttle the deal had momentum heading into crucial votes this week.

Buzz Hargrove, president of the Canadian Auto Workers union, which faces its own round of talks with automakers next year, said the Chrysler contract appeared headed for defeat.

"To me, it means that UAW and the companies will have to go back to the bargaining table and try to find a solution to the issues that the workers are finding most offensive," Hargrove told reporters in Ottawa.

The deal must be approved by a majority of the more than 45,000 UAW-represented Chrysler workers. The remaining major plants to vote -- including Sterling Heights, Michigan, and Belvidere, Illinois -- hold the balance in the unexpectedly close ratification battle.

The Belvidere plant, which has emerged as a flashpoint in the debate over creating a second tier of union-represented workers, will not vote until Friday, almost a full week after UAW leadership had initially hoped to wrap up the balloting.

UAW President Ron Gettelfinger has said he wanted to wrap up a contract with Chrysler before beginning talks with Ford Motor , which is seeking its own deep concessions. That timetable would be complicated if the Chrysler deal were rejected -- a development that would also mark the first such setback for UAW leadership in 25 years.

In September 1982, Chrysler workers voted to reject a proposed contract by a more than two-to-one margin, delaying a settlement for more than three months.

"I would suspect that Ford will be delayed, that Chrysler and UAW will get back together if the results Wednesday continue to show that the agreement is rejected," Hargrove said.

The final Chrysler vote is at Belvidere, which employs about 3,800, including some 600 temporary workers. Those workers were hired last year under a concession by the UAW so that Chrysler could add a third shift at the plant, which makes the Dodge Caliber, Jeep Compass and Jeep Patriot.

Many UAW workers in Belvidere say the presence of the temporary hires has been a major source of tension on the factory floor at a plant Chrysler considers its flagship for the kind of lean manufacturing pioneered by Japanese rivals.

Some UAW workers who oppose the deal have also expressed concern that a generation of lower-paid workers would not vote in future contract rounds to protect pension and health care benefits for retirees who made far more during their careers.

Others worry that by sanctioning wages as low as $14 per hour, the UAW would lose any remaining chance of unionizing factories run in the United States by Toyota Motor, where the average hourly wage is closer to $28.

Cerberus took Chrysler private in a $7.4 billion deal that closed in August. Former parent Daimler maintains a nearly 20 percent stake.

Under Cerberus, Chrysler has been actively looking for overseas partners that could allow it to expand its lineup and sales in new markets at a lower cost than if it built facilities on its own.

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