UAW Moves on to GM After Fiat Chrysler Workers Ratify Contract

  • Union members got `substantial wage gains,' VP Jewell says
  • Approval lets union turn to talks with other automakers

Workers exit during a shift change at the Fiat Chrysler Automobiles truck assembly plant in Warren, Michigan.

Photographer: Jeff Kowalsky/Bloomberg

The United Auto Workers said it will negotiate a contract with General Motors Co., after Fiat Chrysler Automobiles NV workers approved an enhanced four-year agreement that won across-the-board raises and a path to senior-level pay for entry-level workers.

The Fiat Chrysler vote was about 77 percent in favor of the proposal, the union said in an e-mailed statement Thursday. Fiat Chrysler and the UAW reached the accord Oct. 7, shortly before a strike might have shut down most of the company’s U.S. production. The workers rejected an earlier deal almost 2-to-1 largely because it left the two levels of pay in place.

“The vote is a very solid endorsement and it reflects a good contract for the members today, but also a framework for future investment tomorrow,” said Harley Shaiken, a labor professor at the University of California at Berkeley. “No one is ever fully satisfied in collective bargaining, but the genius of the system is it resolves differences.”

The approval at Fiat Chrysler lets the union move on to getting tentative contracts with GM and Ford Motor Co. UAW President Dennis Williams is seeking similar but more lucrative deals with the other two automakers. The union said it will continue talks with Ford while pursuing a contract with GM.

GM and Ford are financially stronger than Fiat Chrysler, so the next agreement likely will be different, Shaiken said.

“Expectations are higher among UAW members and the financial reality at the other companies is different,” he said. “But this is the basis. There’s little doubt about that.”

Hourly Raises

The Fiat Chrysler pact calls for hourly base wages to increase over the contract term from a high of $19.28 to more than $29 for the lower-tier workers, according to a UAW document. Senior workers get their first raises in nine years. The ratification bonus is $3,000 at the lower level and $4,000 for the senior members. The automaker also agreed to invest as much as $5.3 billion in the U.S.

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

“UAW members at FCA have obtained a strong agreement that provides substantial wage gains, fairness in the workplace, and job security,” union Vice President Norwood Jewell said in the statement. Fiat Chrysler said the contract “represents an investment in our U.S. workforce and recognizes its contributions to the company’s growth over the past six years.”

Payback Time

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. GM on Wednesday reported a record quarter of adjusted earnings before interest and taxes.

Getting raises for both tiers of assembly workers has been a key goal for Williams in the negotiations. Senior workers at Fiat Chrysler hadn’t had a raise in nine years, while their counterparts at Ford and GM haven’t had one for a decade. The earlier contract proposal was reached Sept. 15 and the UAW confirmed on Oct. 1 that members had voted it down.

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, 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. Encouraging senior workers to retire can help eliminate the problem of UAW members doing the same job for different compensation.

For the junior workers, the Fiat Chrysler ratification bonus is 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.

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