By on October 28, 2011

Chrysler CEO Sergio Marchionne wants an end of what he called “two classes” of employees represented by the United Auto Workers union. The two-tiered system “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 Reuters. He continued:

“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 hopes the matter can be settled during the next round of contract talks in 2015.

Knowing Marchionne, his idea of parity won’t be to upgrade everybody to First. He probably wants everybody to fly Economy.


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20 Comments on “Marchionne Wants End Of Two Class System...”

  • avatar

    Marchionne said it, but the brass at Ford and GM want it too.

  • avatar

    I’m shocked that it’s taken this long for someone to stand up. I didn’t think it would’ve been an executive but the system is inherently unstable and unfair. It needs to be fixed ASAP.

  • avatar

    Super Sergio has no plans to raise all wages to the top tier. Note that he also said that all Chrysler workers need to “share in the downside” when economic cycles deplete the company coffers.”

    His solution, IMO, will be to drag the top rate down and bring the bottom rate up to a minimum baseline wage for everyone. When things are good, wages will be increased. When things are bad, wages remain at the minimum baseline. So when things are good, everyone makes roughly today’s top tier wage. When they’re not, everyone makes less.

    He can never sell such an idea, but you know SM, BS trumps reality every time.

    • 0 avatar

      You’re right, the UAW would never accept your solution.

      Because your idea is logical and fair.

      • 0 avatar

        GM has started this with wage freeze through 2015. At the end of the contract effect wage when adjusted for inflation will be about $7/hour less than today.

      • 0 avatar

        @ Rob…Who would accept that solution? When times are tough “everyone” makes less. The nasty UAW just might reject such an idea.

        Thousands of union and non union autoworkers lost thier jobs in 2008/ 2009. The US, and Canadian, taxpayers had to bailout GM Chrysler. So how did it work out for Red ink Rick,and Fritz, and Mister Home Depot? Where was the shared sacrifice? Rick W got a 22 million buy out, and a guaranteed pension. The Chyrsler dude ain,t hurtin neither.

        I’ve personally seen a 25 percent cut back on hourly people. At the same time not ONE salary head cut.

        I don’t see any logic and fairness there. Do you?

      • 0 avatar

        Who would accept that solution?

        Rob Finfrock strongly believes in significant pay cuts for those whom Rob Finfrock dislikes.

        Naturally, Rob Finfrock is not on Rob’s list of those whose pay should be cut. That exclusion seems quite reasonable to Rob Finfrock, of course.

      • 0 avatar

        So… what, was that a Bob Dole riff, Pch? You’re so clever, have a cookie.

        Of course I’m not on “my” list — I’m not an assembly line drone being paid extravagant wages for essentially mindless, repetitive labor. I have to show up to play at my job; I don’t have a corrupt union to protect me if I slack off. (And though you’ll likely choose not to believe it, I really wouldn’t have it any other way. It’s called pride, something the automatons have obviously given up on by staying with the UAW.)

        Meanwhile, those same jobs are available at much, much lower cost — and with, arguably, a much greater sense of pride in the workforce — south of the border. For some reason, the UAW seems hellbent on pushing its own industry out of the country. Fine with me.

      • 0 avatar

        Rob, you’ve taken every conceivable opportunity to make gratuitous posts on this site bashing unions, even when they had nothing to do with the article you were posting under.

        Accordingly, I can’t exactly act shocked by this one.

      • 0 avatar

        So… what, was that a Bob Dole riff, Pch?

        No, I was mocking you for your resentnik attitude that you drag around like a ball and chain, as well as your fixation on yourself and your alleged enemies list. You’ve got a pretty limited repertoire, with a predictable beat.

        Here’s a thought — if you want to swagger around pretending that you’ve achieved some level of workplace greatness, then you could at least start by having something to brag about. As far as I can tell, you’re some sort of second-rate cubicle warrior with a pretty mundane gig that will probably be worth outsourcing abroad eventually when your bosses bother to get around to it. (And I’m sure that you’ll cry like a little girl when that does happen, blaming The Evil Left for the disappearance of your paycheck because nothing is ever your fault.)

        The fact that you spend your days working a mouse instead of a wrench doesn’t make you a superior human being. In any case, the world needs people who can build and create things; manufacturing bile isn’t a particularly valuable service.

      • 0 avatar

        The fact that you spend your days working a mouse instead of a wrench doesn’t make you a superior human being.

        Wow Pch, I stand in quiet awe of your ability to completely miss the point here. It’s not that I think I’m superior to anyone; it’s that no employee should consider themselves superior to their employer. We’re all drones; I choose not to be offended by that fact, unlike some.

        I happen to do that “pretty mundane gig” very well, but I know there’s always going to be someone outside the door waiting for the opportunity to do it better, and for less. That’s a very powerful incentive for me to do that job the best way I know how; from there, the cards will fall as they may.

        That simple bit of knowledge and awareness seems to be utterly lacking when unions get involved. Instead the argument becomes all about what you think the company should do for you.

        Think of it this way — how many times do we refer to “our” jobs? Each and every time we do so, we’re completely incorrect. It isn’t YOUR job, unless you own the company. It is your employer’s job, of which you are only the current placeholder and nothing more.

        No one is “entitled” to a job. No one is entitled to anything. It’s all about personal responsibility, and taking ownership of abilities and decisions. Someone who chooses to run across a busy freeway is not entitled to expect me to swerve out of the way to avoid hitting them.

        Just today, we have in the news a wonderful example of what can happen when an uppity workforce fails to see this reality. You seem to be a fan of using Google to research others. Do a search for “Qantas.”

  • avatar

    Not too sure about the US but in Canada non unionized auto manufacturers have been doing this for years. Hiring contract workers for a long period of time (a few years), paying much less money with no benefits for the exact same work and often letting them go at the end of the contract. I think I would rather start at a UAW/CAW shop these days if I actually had some job security.

  • avatar

    The only thing is, Chrysler won’t raise wages when things are “good”. They will only want to reduce wages going forward, and maybe have a bonus now and then. Bonuses are easier to pay out and are one-time costs versus weekly overhead.

    2015 should be interesting. I wonder if he will still be around, or will he grab a golden parachute?

  • avatar

    Just look at the non union auto shops in other states, this is what I guess will be what Marchione would want to do if he had no union to deal with.

    I know that it’s easy to say, he doesn’t want to pay what his employees are worth, but I guess to keep competitive, he has to at least fall in with what the non union shops are paying, which is a good, but realistic income to the workers, enough so that they are happy and are so far, telling the UAW to shove it.

  • avatar

    All those workers with no other company in America to work for. How could this be?

  • avatar

    It is stupid bad P.R. for SM to propose this right after the new contract has been adopted. It’s like telling the UAW, F.U., we’re really going after you next time. It’s deliberately rude and offensive.

  • avatar

    As a worker, you are only worth the demand for you. Let the UAW fail!

  • avatar
    DC Bruce

    Speaking as a person who took a 50% “pay” cut in ’10 over ’09 and previous years and who won’t do much better this year, it probably would be better if everybody felt the effects of the market, to some degree. The big, private industry unions are relics of an earlier time in America when most major U.S. industries were oligoloploistic cartels. One of the hallmarks of FDR’s New Deal response to collapsing prices across the board was the establishment of cartels with the stated and express purpose of reducing competition (and raising prices). Under those circumstances it was only fair that those industries have “workers cartels” (i.e. unions) as well, so that everyone would get a piece of the pie.

    However, like the U.S. steel industry, the U.S. auto industry lost its oligopoly to foreign competition sometime in the late 1960s or early 1970s. The Nixon administration’s 1971 decision to let the U.S. dollar “float” on foreign exchange markets only made the problem worse, as the value of the U.S. dollar fell against the currencies of Japan and the major industrialized countries of Europe. Nevertheless, the leadership of the auto industry and its union continued to pretend that the foreign competition wasn’t there . . . the industry by not improving product quality and by ceding parts of the market (small cars) and the unions by demanding ever-sweeter compensation packages.

    What was not “visible” under the old system was the union’s (and its members’) vested interest in the success of the industry in which it worked. Only with the bankruptcies of GM and Chrysler was it painfully obvious that the workers were also stakeholders in the success of their employers. As it was, by strong-arming an abrogation of bankruptcy laws, the administration shielded the union from the full consequences of the bankruptcy . . . if you want to know what “full consequences” means, take a look at the consequences to the unions of the bankruptcies of various major airlines, such as Delta and United. Pretty ugly.

    So, it would be good to eliminate the two-tier pay structure (which I assume must piss off younger workers no end) and replace it with a pay + bonus structure, with the bonus tied to some sort of objective benchmarks of the company’s financial performance. Then all of the incentives are lined up correctly.

    As for the excessive compensation of the people in the executive suite, yes, it needs to be fixed, but it’s a red herring. There are only a handful affected. That’s really a corporate governance problem and a problem driven the by tax code, which strongly penalizes “deferred compensation.” Ideally, you would say to the CEO: “You’re hired under a 5-year contract. You get paid X. At the end of the contract, you will get paid Y in bonus, the amount of Y being determined by various financial performance benchmarks met or not met during your term of office.” The problem with that plan is that the tax code sees that as an income tax deferral device and the tax code doesn’t like people to be able to defer paying income tax, so it’s strongly penalized. The best surrogate for that is stock options, but the problem is the value of the options (or the stock) does not correlate directly with the financial performance of the company. It’s subject to a lot of external factors.

    As far as healthcare goes, one of the many objections to Obamacare is that it didn’t solve one of the basic problems with healthcare in the U.S., which is that health insurance is tied to employment. When you think about that, it makes no sense. Again, the tax code is at fault. Traditionally, the value of health insurance has been a non-taxable fringe benefit to the recipient. So, it’s better for the employer to provide the employe with health insurance that costs, say, $2,000 a month rather than to bump up the employee’s salary so that the employee can have $2,000 a month to buy health insurance. The reason it’s better is that the money given to the employee is taxable as income, so in order to give the employee $2,000 to buy health insurance, the employer would have to pay the employee $2,000 plus the taxes on $2,000.

    As a second consequence, the costs of employee benefits (mostly health insurance) is going up, so the cost of each employee is going up, even though the employee doesn’t see a pay raise in his check. That makes for unhappiness and lack of trust all around.

    In many, many business relationships the parties are simultaneously adversaries and partners, yet somehow they make it all work. For the good of everyone, it’s time that attitude spread to the unionized part of the U.S. auto industry. Otherwise, they’re all — workers and employers alike — circling the drain.

  • avatar

    SM should know that 2 tier wages aren’t going away in one contract. Maybe in two or three contracts the lower paid workers will catch up – assuming tier 1 workers agree to zero increases.

    The real battle SM should be fighting is over certain plant’s work rules. These rules are the productivity killers when comparisons are made to the transplants.

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