Chrysler Corp. and the United Auto Workers announced tentative agreement yesterday on an unprecedented three-year contract that would provide the troubled company with a large infusion of union cash, and in return give a seat on the board of directors to union President Douglas Fraser.
For the first time in 40 years of bargaining with the three largest auto- mobile manufacturers, Chrysler will not meet the economic terms of agreements worked out earlier at the rival Ford Motor Co. and General Motors Corp. Those agreements provided essentially a 30 percent boost in hourly wages over three years, assuming an 8 percent annual inflation rate.
The decision to place Fraser on Chrysler's board also is the first time in American history that a labor representative has been selected a director of a major corporation.
"I sincerely believe that the voice of the worker will be heard in the highest echelons of the Chrysler Corp.," Fraser said in Detroit yesterday, announcing what he termed "significant concessions from the econmic pattern set earlier at General Motors and Ford."
Another substantial breakthrough in the contract announced yesterday would give the union a voice in investment decisions for Chrysler's pension funds.
Meanwhile, General Motors and Ford both announced a substantial decline in third-quarter profits. GM's earnings plummeted to $22 million from $528 million a year ago, which the firm attributed to a sharp shift to smaller cars.
Union spokesmen said yesterday that their proposed contract with Chrysler would provide the ailing company with additional cash of about $403 million over the next two years, after which the automaker has projected a return to profitability, assuming government assistance.
On wages, accounting for $203 million of the lower Chrysler cost, the UAW will defer the effective date of two annual 3 percent increases in basic wages. The first will be postponed until next March and the second until January 1981. But when the third annual increase goes into effect two years from now, Chrysler workers are to achieve parity with their Ford and GM counterparts.
Cost-of-living increases will be in line with the contracts at Chrylser's competitors.
In addition, the UAW agreed to fewer paid days off -- "personal holidays" which are in addition to traditional national holidays. The UAW's strategy has been to build up the number of these days each year as part of a long-term goal of a four-day work week.
Union retirees will receive initial pension boost equal to about 70 percent of the gains in the Ford and Gm contracts. But periodic increases will bring the benefits up to industry levels in the third year.
A spokesman for Fraser emphasized that the decision to accept lower basic wage increases over two years was made in light of Chrysler management promises to make the firm profitable after two years.
"We fashioned this contract to make concessions . . . but to return to parity for wage levels and benefits by the third year, so that when we go back to the bargaining table in three years all workers will be equal," the spokesman said.
The other $200 million of cash aid to Chrysler will come from a previously reported agreement by the UAW to permit Chrysler's deferment of payments into the pension fund. Such a delay must be approved by the federal government, which is considering a Chrysler request for $750 million or more of guaranteees for loans to the firm.
Chrysler has estimated that it will suffer losses of $1.5 million this year and next, in the wake of a sharp downturn in car sales after the gas shortages earlier this year.
In exchange for allowing Chrysler to defer pension payments, the UAW won a significant voice in investment decisions by trustees of the pension fund.
The UAW will join an advisory committee and have the "absolute right" to blacklist from pension fund holdings five companies judged to be in violation of human rights standards in their activities in South Africa.
In addition, the UAW will advise the trustees where to invest in residential mortgages, and 10 percent of new money will be set aside for mortgages in communities with a large number of union members.
The latter provision requires that residential investments be made for housing units lower than the average sales price prevailing in those neighborhoods, to make certain that no mortgages are approved for $300,000 homes, a spokesman said.
In addition, these funds could be used for such nonprofit residential institutions as nursing homes, nursery schools and health maintenance groups.
Chrysler has 110,000 production workers in the United States and Canada, of which close to 30,000 are on layoff. Their wages had been equal to those of GM and Ford workers for 40 years. Under the earlier contracts with the larger automakers the hourly wage of an assembler will increase from $8.67 to $11.32 in 1982.