DETROIT -- Chrysler Group CEO Sergio Marchionne said the automaker's two-tier wage structure with the UAW is not viable over the long run, and he hinted that the automaker will seek to end the practice in the next round of contract talks in 2015.
"The two-tier wage structure, in and by itself, is not a viable structure upon which to build our industrial footprint," Marchionne said. "It creates two classes of workers within the plant."
His comments came two days after the UAW narrowly ratified a new four-year contract with Chrysler and one day after Chrysler said it swung into the black in the third quarter and predicted its first full-year net profit since 2005. Chrysler now forecasts adjusted net income of $600 million for all of 2011, up from previous estimates of $200 million to $500 million.
Marchionne said the two-tier wage structure is undermining efforts by Chrysler and Fiat to "get this organization to work in unison."
Detroit automakers, seeking to become more competitive with Asian and European automakers with U.S. factories, won the right to pay new hires lower wages and reduced benefits in 2007. Starting pay for those workers was $14 an hour, roughly half that of regular UAW workers.
Under the contract just negotiated, the maximum wage for Chrysler's second-tier workers will climb to $19.28 an hour. Longtime workers will earn $51 an hour, including wages and benefits, but they were not given annual pay raises or cost-of-living adjustments.
Marchionne said Tier 2 workers represent roughly 13 percent of Chrysler's blue-collar work force, but he said that number will increase to 25 percent by 2015, when the new four-year contract expires. Chrysler has about 23,000 unionized workers.