The ratification by Chryslers 26,000 U.S. hourly workers resulted from two days of voting. The contract requires the UAW to accept Chrysler equity for half the $10.6 billion obligation that the automaker owes a retiree health-care trust that the union will administer.
The agreement will give the UAW 55 percent of the ownership in a proposed new Chrysler-Fiat partnership. (See box below.)
"Today's vote enables us to continue our work to meet the conditions laid out by the U. S. Treasury Department," Chrysler President Tom LaSorda said in a statement.
Even with the concessions, it remains unclear whether Chrysler can avoid filing for bankruptcy protection.
The Obama administration has set a midnight deadline on Thursday for Chrysler to show it can become viable through an alliance with Fiat S.p.A. Chrysler needs the Fiat deal and concessions from workers and creditors to qualify for as much as $6 billion in rescue loans on top of $4 billion received already.
Terms of the concessionary contract allow Chrysler to hire as many new workers as it can at a wage and benefit rate roughly half that paid to veteran UAW workers. The new terms eliminate until 2015 a 20 percent cap on the number of these lower-paid workers in the Chrysler U.S. work force.
The rank-and-file also gave up cost-of-living allowances, bonuses and some break time.
The UAW agreement follows a concessionary package approved Sunday by the Canadian Auto Workers. That deal will save Chrysler about C$240 million ($200.2 million) annually.
Four New York banks have also agreed to reduce the secured debt owed them by Chrysler. The banks, which represent about 70 percent of $6.9 billion in secured loans, said they would take $2 billion in cash for their holdings.
Another 40 banks and hedge funds holding the balance of that debt must still approve the change.
President Obama, in an evening news conference before the UAW vote was released, said it is still too early to tell if Chrysler can reorganize without a bankruptcy filing. If one is necessary, he said it could be done quickly.
Said Obama: Im actually very hopeful, more hopeful than I was 30 days ago, that we can see a resolution that maintains a viable Chrysler.