Chrysler sees more buyouts after alliance

Although Chrysler’s U.S. employee levels are the lowest they have been in 74 years, the company will be looking at more buyouts for hourly employees after the Detroit automaker emerges from bankruptcy and its alliance with Fiat is finalized.

In a letter to UAW Vice President General Holiefield, Chrysler said special attrition programs to be designed with union cooperation should help achieve 3,500 voluntary separations. New hires brought in to replace those workers would be classified as lower-tier employees, making a reduced hourly wage and receiving few benefits.

The company also plans to eliminate 318 union-appointed representatives and compel the union to submit to arbitration if the two sides can not reach a settlement otherwise. Future wages and benefits will be governed by Chrysler maintaining a competitive labor cost structure compared to other automakers, including transplants.

Some of the terms were imposed by the government as a condition for receiving low-cost, government-backed loans. There has been no official response from the United Auto Workers’ leadership.

Chrysler reportedly has found a way to circumvent the $500,000 cap on executive pay that was also a condition of the federal loan program. According to court documents, managers would be considered Fiat employees on loan to Chrysler, making them exempt from the limits. Compensation beyond the cap would be paid by Fiat.