Fiat Chrysler-UAW New Proposed Contract Boosts Pay, Bonuses

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  • Senior members to receive $4,000 if accord is ratified
  • Revised deal drops plan to form health-care cooperative

Fiat Chrysler Automobiles NV is offering to boost the ratification bonus for veteran U.S. workers and provide a way to equal pay for those receiving second-tier wages, under a new proposed four-year contract with the United Auto Workers, the union said.

Veteran workers would get a $4,000 bonus if the deal is approved, up from $3,000 under the earlier accord that was rejected almost 2-to-1, according to a UAW summary of the new agreement. Second-tier workers would be brought up to the hourly wage rate of the veteran members after eight years of service. The lower-tier maximum of $19.28 an hour would jump to more than $29.

Ratification would let UAW President Dennis Williams move on to seek similar but more lucrative agreements with General Motors Co. and Ford Motor Co. The revised pact has a good chance of passing because it creates equality on the shop floor by giving entry-level workers a road to what the UAW believes is a middle-class wage, said Art Wheaton, a labor professor at Cornell University. Having two classes of workers was the biggest complaint from union members, he said.

“You’re talking almost a $10 jump in pay for some of these folks,” Wheaton said. “That’s a pretty amazing increase and I’m surprised Fiat went for it.”

The UAW’s National Chrysler Council, made up of local leaders, on Friday approved sending the new agreement to rank-and-file members for a ratification vote. The accord, reached late Wednesday, avoided a strike by 40,000 union members. The earlier contract proposal was reached Sept. 15 and the UAW confirmed on Oct. 1 that members had voted it down.

‘Clear Path’

Williams told reporters on Friday that looking back, he should have allowed members more time to vote on the earlier accord. The rejection of that deal pushed the leadership to do more to bridge the gap between factory pay levels.

“It think the membership was a little ahead of us,” Williams said. “Membership wanted a clear path. They don’t want to be considered second-class citizens.”

The revised pact also drops language about forming a health-care cooperative to try to lower costs for all employees at the three Detroit automakers, a suggestion many members expressed concerns about.

Williams said the union will create a brochure to explain the co-op concept to members.

“I was a little naïve,” Williams said on a call with reporters. “I really thought everybody understood it. It’s my fault. I should have educated people more.”

Even with the changes to respond to members’ concerns, the vote probably will be close because of the large margin against the earlier agreement, said Kristin Dziczek, director of the Industry & Labor Group at the Center for Automotive Research in Ann Arbor, Michigan.

‘Tight’ Vote

“It’s too close to call,” Dziczek said in a phone interview. “Everyone got more but it will be tight.”

Fiat Chrysler has declined to discuss specifics while the agreement faces a ratification vote.

The agreement keeps the veteran workers’ pay raises and bonuses from the earlier deal, which called for their hourly rate to climb to $29.76 over the contract term, from $28.05. The rejected proposal would have pushed the second-tier top rate to $25.35.

The new accord also has an improved profit-sharing formula from the last proposal, according to the UAW document. Workers would get $800 for each 1 percent of North American profit margin once a 2 percent margin is achieved. Under the 2011 contract, they got $1,000 for every $1 billion of profit in the region.

The contract also includes retirement incentives for workers.