UAW, Fiat Chrysler reach tentative labor pact

A tentative contract agreement reached Tuesday between the United Auto Workers and Fiat Chrysler addresses pay and health care issues, but neither side would give specifics about the pact.

The Italian-American company and union announced the accord covering about 40,000 workers nationwide after a nearly continuous 48 hours of bargaining. It will serve as a template for Fiat Chrysler's Detroit counterparts, General Motors and Ford Motor Co., both of which are operating on contract extensions.

But UAW President Dennis Williams made it clear that he would treat the other two differently because they are more prosperous.

Union officials still must be briefed on the four-year package, then the full membership will vote on it.

At a hastily called news conference after the deal was announced Tuesday evening, Williams said the agreement meets the union's goals but still keeps Fiat Chrysler competitive with other automakers. He told reporters he had three goals for the contract: giving entry-level workers a path to higher pay, rewarding members for sacrifices they made while Fiat Chrysler struggled financially, and dealing with escalating health care costs.

“We believe that we have met those goals, but ultimately our membership will make the final decision,” Williams said.

John Beck, associate professor in Michigan State University’s school of human resources and labor relations, told the Detroit News that the biggest challenge will be getting the rank and file to ratify a deal.

“The UAW has attempted as much as it can to solidify good jobs for American workers,” he said. “It’s hard to know if it will be ratified in the current environment where a good job is hard to find.”

The union was seeking hourly pay raises for longtime workers who haven't had one in a decade, although over the past four years, FCA workers have gotten annual profit-sharing checks totaling $9,000 per worker.

The union also wanted to narrow or close the wage gap for new hires. Under the old contract, recently hired union workers are paid a top wage of $19.28 an hour, while veterans earn $28 an hour.

The UAW agreed to the two tiers of pay when then-Chrysler was near bankruptcy in 2007. But Fiat Chrysler CEO Sergio Marchionne agreed with the UAW that tiered wages were unfair to workers.

Marchionne said negotiators came up with a carefully crafted agreement “whereby that issue will go away.” Analysts expect raises for UAW members at both levels, but the new pay rates were not disclosed.

“Expectations are very high for raises for everyone,” Kristin Dziczek, labor analyst with the Center for Automotive Research, said Tuesday before the agreement was announced. She said she expected the agreement to raise pay for new hires into the mid-$20 an hour range, and offer a 50 cent-an-hour raise to veteran workers.

At FCA, about 45 percent of the hourly UAW workers earn lower-tier wages.

Winning pay hikes could help revive the UAW's sputtering effort to organize non-union auto plants in the southern United States, and possibly embolden workers in other industries.

“The stakes go well beyond Detroit and the automotive industry,” said Harley Shaiken, a labor expert at the University of California-Berkeley.

The UAW and began bargaining in July with Ford, GM and Fiat Chrysler. Contracts with all three companies — which cover around 140,000 U.S. hourly workers — expired Monday night but were extended while talks continued.

The union is also seeking guarantees from all three automakers that new vehicles will be built in U.S. factories and not in Mexico, where companies have been moving some of their production.

To fund some of the union demands, Williams has proposed a giant health care pool to save money for the union and the three companies. Currently a union-run trust pays most health insurance costs for about 600,000 retirees and their spouses, and the companies fund health care for about 551,000 hourly and salaried workers and their families.

Neither would say if they agreed to set up a health care pool, but Marchionne said there are inefficiencies in the way they now run health care.

“We have an obligation to find a better way to manage this cost,” he said.

Wire services