Fiat Chrysler's UAW Members Poised to Reject Proposed Contract

  • Deal would provide raises to all members, narrow wage gap
  • Workers uncertain on health-care changes, wanted tiers ended

Fiat Chrysler Automobiles NV employees represented by the United Auto Workers are on the verge of rejecting a new four-year agreement that would provide raises for all its members and narrow the pay gap for second-tier workers.

About two-thirds of the 40,000 Fiat Chrysler workers represented by the union have voted. Workers at the large Jefferson North plant in Detroit that makes the Jeep Grand Cherokee, the Toledo, Ohio, Jeep factory and the Sterling Heights plant near Detroit have rejected the deal, the Detroit Free Press has reported, citing unnamed people. The Belvidere, Illinois, facility that makes the Dodge Dart votes Wednesday. 

Sergio Marchionne
Sergio Marchionne
Photographer: Gianluca Colla/Bloomberg

Turning down the accord, reached Sept. 16, would stall UAW President Dennis Williams’s efforts to move on to winning tentative contracts with General Motors Co. and Ford Motor Co. Williams, who wanted the ratification by Sept. 28, sought to use that deal reached with Fiat Chrysler’s Sergio Marchionne to negotiate similar but more lucrative pacts from the other two companies. Rejection, which now appears assured, may lead to a less favorable contract for the union, said Art Wheaton, a professor of labor at Cornell University.

“A rejection says to the bargaining committee that we no longer have faith in you,” Wheaton said in an interview. “It hurts their power at the negotiating table with Marchionne. It says you don’t even know your members. And remember: Going back to get more doesn’t mean you get more. Frequently it means you get less.”

Jodi Tinson, a Fiat Chrysler spokeswoman, declined to comment on the voting.

The Fiat Chrysler agreement would increase hourly base wages over the contract term to $29.76 at the senior tier and as much as $25.35 for the second tier, according to the UAW. The ratification bonus would be $3,000. The automaker also pledged to invest as much as $5.3 billion in the U.S.

Workers wanted the tier system eliminated, more information about a new health-care cooperative and clarity about the company’s investment plans, Wheaton said.

Seeking Payback

The UAW has made it clear that it expects to be paid back for wage and benefits concessions that helped the companies survive lean times and two automaker bankruptcies. Union leaders have said that the companies’ strong sales mean they can afford contract improvements.

Getting raises for both tiers of assembly workers has been a key goal for Williams in the negotiations. Senior workers at Fiat Chrysler haven’t had a raise in nine years, while their counterparts at Ford and GM haven’t had one for a decade.

The UAW leadership didn’t set expectations well, Wheaton said. Fiat Chrysler is one of the weakest of the major automakers, and the new contact would be a “significant improvement” over the past three or four, he said.

“Their expectations have been vastly overstated,” he said. “You can’t both give a raise to legacy workers and bring the second tier up to the new, bigger standard. It’s too big of a jump for FCA. No automaker is more in trouble than Fiat. They are just big trucks and SUVs and nothing else. All it takes it small bump in gas prices and they’re devastated.”

Warning Ford

On Tuesday, UAW Vice President Jimmy Settles gave Ford a five-day notice of intention to strike at a factory that makes the profitable F-150 full-size pickup, according to a Facebook post by the union official.

The second-largest U.S. automaker hasn’t negotiated in good faith at the local level, Settles said. He said he has requested and received authorization to strike from Williams and Region 5 Director Gary Jones.

Wheaton said Settles’s move is a sign that the Fiat Chrysler agreement will be rejected and that the union may focus negotiations on Ford next.

The Fiat Chrysler agreement also includes an improved profit-sharing formula, according to the UAW. Workers would get $800 for each 1 percent of North American profit margin. Under the 2011 contract, they got $1,000 for every $1 billion of profit in the region. Second-tier workers would receive extra profit sharing when the margin exceeds 8 percent.

The contract also includes retirement incentives, Williams told reporters Sept. 18 in Detroit. Encouraging senior workers to retire can help eliminate the problem of UAW members doing the same job for different pay.

The Fiat Chrysler ratification bonus would be smaller than the payout workers received for approving the previous contract four years ago. For the 2011 contract, Fiat Chrysler workers were paid $3,500, while UAW members at GM got $5,000 and those at Ford received $6,000.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE