Bill Pugliano, Getty Images
A Chrysler coming off the line

UAW, FCA Reach Tentative Deal

Sept. 16, 2015
The United Auto Workers and Fiat Chrysler worked overtime, extending their deadline hour by hour before agreeing on a new four-year contract that will be used as a template for deals with Ford and GM.

DETROIT — The United Auto Workers announced late Tuesday night that it had reached a tentative agreement with the U.S. subsidiary of Fiat Chrysler Automobiles for a new four-year labor contract.

The deal will serve as a template for the UAW’s contracts with two other major U.S. automakers, General Motors and Ford, which are also up for renewal.

UAW president Dennis Williams said the union achieved its primary objectives: getting workers a raise, gradually eliminating a two-tier wage system in which newer hires are paid significantly less and containing health care costs.

“We believe we have met those goals,” Williams said. “But ultimately that’s up to the members to decide.”

Neither the union nor FCA US would release any details of the deal. “I’m not going to talk about the negotiations or the details of the contract until our leadership has an opportunity to review it,” Williams said.

The announcement came about 19 hours after the union and FCA US agreed to extend the existing four-year contract beyond its original deadline on an “hour-by-hour” basis in order to finalize negotiations. The UAW offered indefinite contract extensions to GM and Ford while it focused on reaching a deal with FCA US.

The union has historically ensured that the Detroit Three automakers do not face competitive disadvantages by negotiating similar four-year contracts with each company.

The contract must still be approved by FCA’s approximately 40,000 unionized members. Ratification votes won’t begin until next week at the earliest, Williams said.

The union was looking to claw back some of the major concessions made in order to help the Detroit Three survive the economic crisis. All three carmakers are now posting massive profits and the industry is booming.

Sharing the Wealth

Williams praised FCA for acknowledging that income inequality is an issue that has to be addressed at the bargaining table. 

“If you don’t share the wealth, you don’t have a strong society. These guys get that,” he said at a jovial press conference held in a Detroit union hall after the deal was announced.

FCA CEO Sergio Marchionne returned the praise, and said he hopes workers understand that the “philosophical approach this house wants to have going forward” recognizes the “alignment of interest that exists between us as managers of this business and of our workforce.”

“I’ve dealt with three different UAW presidents over the past six years and I believe you’re seeing a new maturity in the union’s relationships with the companies,” Marchionne said as he sat next to Williams on a stage crowded with union members.

The agreement reached “makes crystal clear that labor is not the problem in this industry,” he said. The real problem is the intense capital costs involved that require enormous economies of scale in order for a carmaker to be profitable, said Marchionne, who has spoken frequently of his desire to find a suitable merger partner for FCA.

UAW negotiators have already resumed working on reaching agreements with GM and Ford. Williams emphasized that while the FCA contract will be used as a template, the union’s demands are not “identical.”

“I don’t want people to think for a minute that I’m not looking at the other companies and the amount of money they’ve made and the uniqueness of their structure because they are different in many cases,” he said.

GM has 50,000 employees who are UAW members and Ford has 52,000 unionized workers.

It was unclear how long it would take for FCA to phase out the much-maligned two-tier wage system. Roughly 43% of FCA’s unionized employees earn about $16.50 per hour, while workers with seniority earn $30 per hour wages.

The union was also looking for a raise for workers with seniority, who have not seen a wage increase since 2006 and have lost roughly 4% of their purchasing power to inflation.

The union gave up automatic cost-of-living adjustments — which increase wages to match inflation — during the 2009 bankruptcies of Chrysler and GM.

by Joe Szczesny

Copyright Agence France-Presse, 2015

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