Advertisement
Business

Fiat Chrysler and autoworkers union reach tentative contract deal

Fiat logo
Fiat Chrysler and the United Auto Workers have reached a tentative agreement on a new contract, which still needs final approval from workers.
(Bob Edme / Associated Press)

The United Auto Workers and Fiat Chrysler reached a tentative agreement Saturday on a new four-year contract that includes a total of $9 billion in investments but still needs final approval from workers.

Both sides declined to offer details on the deal, but it includes a $9,000 signing bonus, a promise not to close any factories for the next four years and a commitment to keep making vehicles at a plant in Belvidere, Ill., according to a person briefed on the matter who spoke on condition of anonymity because the talks are confidential.

The UAW-FCA national council will meet Wednesday to go over the details of the tentative deal. If adopted, it would go to Fiat Chrysler Automobiles’ 47,000 union workers, and a vote by hourly and salary workers could begin on Friday.

Fiat Chrysler is the last company to settle on a new contract with the union. GM settled Oct. 31 after a bitter 40-day strike that paralyzed the company’s U.S. factories, but Ford reached a deal quickly and settled in mid-November.

Advertisement

Talks have focused on Fiat Chrysler for almost two weeks, and the two sides negotiated into the early morning hours earlier this week before taking a break for the Thanksgiving holiday.

The Illinois factory west of Chicago now makes the Jeep Cherokee small SUV and employs about 3,700 union workers on two shifts.

The $9,000 signing bonus isn’t as much as the $11,000 that GM workers got, but it’s equal to the money paid to Ford workers. Both companies gave workers a mix of pay raises and lump-sum payments, signing bonuses, an end to a two-tier pay scale for full-time workers and a clear path for temporary workers to go full-time.

The union also got commitments for new vehicles to be built at several GM and Ford factories.

Advertisement

Even if union leaders approve the deal, ratification isn’t guaranteed. In 2015, workers voted down the first deal reached with Fiat Chrysler but approved a second one.

Fiat Chrysler apparently is agreeing to the same “pattern” of term as GM and Ford, even though the company’s chief executive said earlier this month that all of the companies are in different labor circumstances. Following the same deal would cost Fiat Chrysler more because the makeup of its workforce is different. FCA has more temporary workers than either GM or Ford, and it also has more so-called second tier, workers hired after 2007, who now make less than workers with more service.

The deal with Ford and GM gives pay raises to workers hired after 2007 so they reach top UAW production wages of more than $32 per hour within four years. It also gives temporary workers a path to full-time jobs within three years.

Ford has about 18,500 workers hired after 2007 who will get big pay raises with the new contract, compared with GM’s 17,000. Fiat Chrysler has over 20,000 union employees hired after 2007.

In addition, about 11% of Fiat Chrysler’s UAW workforce is temporary, while Ford has a cap at 8% and GM is around 7%.

Fiat Chrysler in past years has enjoyed a labor-cost advantage compared with Ford and GM. FCA’s labor costs, including wages and benefits, amounted to $55 per hour going into the contract talks, while they were $61 at Ford and $63 at GM, according to the Center for Automotive Research, an industry think tank. That compares with an average of $50 per hour at U.S. plants owned by foreign-based automakers.

General Motors last week filed a federal racketeering lawsuit against FCA, alleging that the company bribed UAW officials to get more favorable contract terms than GM. Fiat Chrysler has called the lawsuit “meritless.”

Advertisement


Newsletter
Get our weekly California Inc. newsletter
Advertisement