Fiat Chrysler Labor Contract in Doubt
September 28 2015 - 6:20PM
Dow Jones News
Workers at several of Fiat Chrysler Automobiles NV factories
have rejected a proposed labor contract, indicating the
Italian-U.S. auto maker is having a tough time selling a four-year
deal that raises wages but falls short of expectations.
United Auto Workers members began voting on the new pact last
week, and a majority of union locals have turned the proposal down
thus far. They are citing concerns about medical benefits, a lack
of clarity on a two-tier wage structure, and the auto maker's plan
to move production of key products to Mexico as reasons for
disapproval. Voting will continue through Wednesday.
A UAW spokesman and Fiat Chrysler officials declined to comment
on the results.
While many votes are yet to be cast, the lukewarm initial
reception raises the possibility that UAW officials may need to
revisit the bargaining table with Fiat Chrysler Chief Executive
Sergio Marchionne, or move on to Ford Motor Co. or General Motors
Co. and return to Fiat Chrysler later. Workers could call a strike,
but that appears unlikely given comments UAW President Dennis
Williams made suggesting a walkout would be the last resort.
UAW officials could face tough talks at GM and Ford. Both aim to
lower their costs to bring them more in line with Fiat Chrysler,
which has hourly labor costs about $10 less than GM and Ford.
The union's president has said he expects more from GM and Ford
because they are more profitable.
Mr. Williams presented contract details to 36,000 U.S. Fiat
Chrysler workers two weeks ago at a news conference in Detroit,
saying entry-level workers and longer-tenured employees would get
raises. Many workers expected the eradication of two pay tiers in
the near term, but the new contract doesn't stipulate when that
would happen.
Mr. Williams's message that his negotiators secured a good deal
is having trouble gaining traction.
"There are a lot of fired-up people," said Ryan Nearhood, a
30-year-old Fiat Chrysler worker in Toledo, Ohio. "A lot of us
members could turn this contract down," he said, referring to a
local vote taking place near a Jeep plant on Tuesday.
Mr. Nearhood said he attended an informational meeting hosted by
UAW leadership over the weekend where opposition to the pact was so
heated that officials from the Toledo local had to calm members
down. "It was very disheartening," he said.
Workers at several major facilities—including the 4,400-worker
Jefferson North factory in Detroit and employee at transmission
plants in Indiana—have turned down the deal. An engine plant in
Dundee, Mich., was one of the few to pledge support.
While the local unions organize the votes at each plant, the end
result is tallied based on the entire body of Fiat Chrysler hourly
workers. If a majority approve, then the contract passes. Norwood
Jewell, the UAW's lead bargainer for Fiat Chrysler, said the deal
could pass because a number of local unions haven't voted yet,
according to comments made to The Detroit News over the
weekend.
In addition to concerns about pay, a plan to restructure
health-care benefits to lower the company's costs is fueling
concerns that benefits will be cut. Workers are also upset about
the lack of job commitments amid a wider plan to outsource
production work.
"There are people saying 'vote no to Sergio,'" said Bill Parker,
a 63-year-old worker at the company's Sterling Heights, Mich.,
factory. Mr. Parker's local will vote Tuesday, and he said workers
are angry with Mr. Marchionne for not doing more to give back to
workers now that the company is healthier.
Fiat Chrysler has committed to rich profit-sharing bonuses that
get more lucrative as the company's margins near 10%. The auto
maker's U.S. division reported a 4% profit margin last year and is
paying far less than GM and Ford in bonuses.
Still, Fiat Chrysler's new labor pact likely lifts the company's
compensation costs by at least 10%, from $48 an hour to a range of
$53 an hour to $54 an hour, labor experts said. That is just short
of the rate paid at GM and Ford.
Write to Christina Rogers at christina.rogers@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 28, 2015 18:05 ET (22:05 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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