UAW reaches another tentative contract with Fiat Chrysler

Posted at 5:28 AM, Oct 08, 2015

NEW YORK (CNNMoney) — The United Auto Workers union bargaining committee has reached a tentative agreement with Fiat Chrysler, a last-minute deal that could avert a strike by 40,000 workers. The union said the UAW Chrysler Council will meet Friday to discuss and vote on the new agreement.

“We’ve reached a proposed tentative agreement that I believe addresses our members’ principal concerns about their jobs and their futures. We have made real gains and I look forward to a full discussion of the terms with our membership,” UAW President Dennis Williams said in a statement.

The union said it will make the agreement’s details available if the UAW Chrysler Council agrees to the terms.

On Wednesday, negotiators for the union and Fiat Chrysler were back at the table with hours to go before a possible strike.

The union notified the automaker Tuesday that its 40,000 members would walk off the job at 11:59 p.m. Wednesday without a new deal. It would have been the industry’s first strike since 2007.

Union leadership had reached a tentative deal with the company for a four-year pact on Sept. 15. But workers rejected that plan by a nearly two-to-one margin last week.

At issue is Fiat Chrysle’s two-tier wage system, which gives U.S. factory workers who were hired after 2007 significantly lower pay and fewer benefits than senior workers.

The newer employees make up 45% of workers and earn between $17 to $24 an hour, while veteran autoworkers earn an average of $28 an hour.

The rejected deal would have given union workers a 3% raise — their first pay hike in a decade — and then another 3% raise in two years. It also called for a variety of bonuses and profit sharing payments.

While the rejected deal would have narrowed the wage gap, it would not have eliminated it. Nor did it call for any limits on how many workers could be paid at the lower tier. Union contracts at General Motor and For both limit the second tier to 25% of their workforce.

That cap gives lower wage workers the chance to move into the top tier. For instance, earlier this year Ford hired so many new workers that it went over that cap, so it had to move about 800 workers from the second tier up to the first tier.

Management at Fiat Chrysler said that the two-tier wage system is not something that can continue forever, but that it can’t afford to eliminate it faster. It said in a statement that it needs a contract that would keep the company competitive. Fiat Chrysler was formed in 2009 after Chrysler went through bankruptcy and received a federal bailout at least partly caused by having higher labor costs than nonunion automakers.

Still, some labor experts say that the union’s leaders set a strike deadline in order to get the message through to the rank and file that they need to make a deal.

Clark University labor professor Gary Chaison notes that about 45% of Chrysler’s factory workers at Chrysler were hired after the last strike took place.

“With a strike deadline or actual strike, [union leaders] are showing the membership this is best we can get,” said Chaison. He said he believes if there is a strike, it’ll last only a day or two. The 2007 strike at Chrysler lasted less than seven hours.

“It’ll be a theatrical strike rather than one that would inflict harm,” he said.

Art Schwartz, a former chief labor negotiator at GM and now a labor relations consultant, adds that the UAW didn’t do a good job of managing workers’ expectations.

“Maybe you need a strike to calm people’s expectations down a little bit,” he said.