AUBURN - Union employees at Auburn's TRW Automotive manufacturing plant on Wednesday refused to accept a pay cut in their new contract as long as the company's top five executives are still scheduled to receive bonuses.

With the members voting down the contract 129-11, Sue Parker, president of Local 192C of the International Chemical Workers Union Council, said the two sides have until May 7 to come up with a new proposal.

Those concessions were supposed to save the company $3 million throughout the next three years by asking the union workers to take a $1.35 an hour pay reduction in addition to accepting cuts in health care and the loss of a paid holiday.

According to the contract, wages would range from $11.71 an hour for an electronic systems assembler to $19.05 an hour for a level 1 employee in the tool room department.

Only about 21 out of 146 union employees make more than $11.71, Parker said.

“The corporate side is not giving up anything,” Parker said. “They are asking us to take pay cuts, insurance cuts and incentive cuts when they already have it all. It may not seem like a lot, but when you make as much as some of these people do, it is a lot.”

With the recession hurting the auto industry, TRW Automotive spokesman John Wilkerson said the company, which makes vehicle safety devices, has asked for the concessions in order to reduce production costs.

“We wouldn't be suggesting these concessions unless we felt it was a good part for our future,” Wilkerson said. “We have to be competitive enough to win contracts and to keep our plants' products competitive globally. It's as simple as that.”

At the close of 2008's fourth quarter, TRW reported a net loss of $946 million. Despite a 2 percent increase in total sales between 2007 and 2008, the company still had a net loss of $779 million last year.

The economic impact is also evident in TRW's stock price, which were $3.37 a share at the close of the New York Stock Exchange Wednesday. That was down from $29.56 a share a year ago.

According to an annual report filed with the U.S. Securities and Exchange Commission, in order to offset some of those losses, the company laid off nearly 9,900 workers last year, or 13 percent of its work force. Those layoffs included both union and corporate employees.

Adding to the company's financial burden, it also owes $4.28 billion, contract obligations and leases, according to that same annual report.

While General Motors and Chrysler have received a $24.7 billion federal bailout package in addition to another $5 billion that has been given to their auto suppliers, TRW has not received any of that money.

Instead, Wilkerson said the company has pursued other avenues to stay afloat.

“There have been lots of cost containment for salaried workers as well as hourly workers,” Wilkerson said. “We have had longer shutdown periods on holidays and we have had layoffs on both sides.”

But with no pay cuts coming on the corporate side, assembly worker Sharon Ross said it was unfair for the company to ask the union to take one.

“They want to take our money, but you can't make a living on $11.71 an hour,” Ross said. “Other stuff like the health insurance, maybe I can live without it, but that is just a little bit over minimum wage.”

Because the plant is operating under the state's shared work program, many union employees such as Jeff Murray are only working three to four days a week while collecting partial unemployment on the fourth and fifth days.

With those same employees struggling to support their families while paying their bills, Murray said they can not afford to lose any more money.

“Leave our pay alone, that's the biggest thing,” Murray said. “People think we make $50 to $60,000 a year but we don't. We don't even make $30,000 a year and they want to cut our wages.”

Further enraging some union employees is that some of the company's executives are still going to receive bonuses when TRW is asking its union members to take a pay cut.

According to paperwork filed with the SEC, the company's board of directors compensation committee agreed on Feb. 18 to approve bonuses for their top five executives.

Those payments include $9.9 million for a retention bonus that will be divided amongst the executives if they remain with the company for the next three years. Those same executives and the board of directors will also be eligible for another bonus under the cash incentives reward program, which is tied into how successful the company is.

The committee also agreed to adjust the three factors that comprise the executives' annual non-equity incentive plan for 2009 due to the economic crisis. Those changes include decreasing the weight of the company's cash flow while increasing the weight of the discretionary factors.

With the union rejecting the contract, Parker said the next step is to come up with a new proposal before the current contract expires May 7. If the two sides do not come to an agreement by then, the company could agree to extend the current contract while negotiations continue or the workers could strike.

With many employees worried about fairness, Parker said she believes a successful contract will incorporate concessions on both sides.

“Hopefully we can go back to the bargaining table and hammer out something better,” Parker said. “I don't know what that will be, but we will put that proposal up for another vote. All we can do right now is wait and see what happens.”

Staff writer Nate Robson can be reached at 253-5311 ext. 248 or nathan.robson@lee.net