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Tough FCA-UAW Talks Kick Off

by Bill Cawthon on

Contract negotiations opened today with smiles and handshakes at the UAW-Chrysler National Training Center on East Jefferson Avenue in Detroit.

The smiles will probably disappear quickly as Fiat Chrysler and the United Auto Workers face off in what is likely to be a major confrontation in this year’s automaker-union talks.

FCA-UAW-Players-Web

The UAW is seeking the first raise in nearly ten years for its senior (Tier 1) members, and to close the pay gap between Tier 1 and Tier 2 workers (hired after October 2007). The union also likely wants to restore the cap on Tier 2 employees.

Fiat Chrysler has the lowest hourly labor cost of any of the Detroit 3 and a strong desire to keep it that way, which would include a permanent waiver on Tier 2 maximums.

As with Ford and General Motors, Fiat Chrysler prefers to augment pay with bonuses and profit-sharing rather than raising fixed costs.

Last month, Arthur R. Schwartz, a former GM negotiator who now leads Labor and Economic Associates of Ann Arbor, Michigan, said  that union workers make more money under this system than through the typical 3% annual raise.

While Dr. Schwartz’s figures are mostly valid for workers at Ford and GM, they are not valid for workers in Chrysler plants. Even though FCA’s UAW workers did get higher lump-sum payments than their counterparts at the other companies, they had a much lower signing bonus and FCA profit-sharing was less than a third of that at Ford and GM.

UAW TIER 1 COMPENSATION
Description FCA Ford GM
Signing Bonus $3,500 $6,000 $5,000
Lump-Sum Payments $8,300 $7,000 $4,000
Profit Sharing $9,000 $30,200 $30,250
Total $20,800 $43,200 $39,250
Per-hour over four years $2.50 $5.19 $4.72
Standard Wage $28.31 $28.31 $28.31
Total Hourly Compensation $30.81 $33.50 $33.03
Pay after 3% adjustments $31.86 $31.86 $31.86
Hourly Difference -$1.05 $1.64 $1.17
Annual Difference -$2,184 $3,416 $2,429
Data Sources: Labor and Economic Associates, FCA US, UAW

Not surprisingly, FCA workers want to see their pay more in line with that of their fellow union members at Ford and GM. However, FCA isn’t as profitable.

This puts both Glenn Shagena and Norwood Jewell between a rock and a hard place, and their jobs are complicated by the involvement of both FCA boss Sergio Marchionne and UAW president Dennis Williams. Adding to their problems, Michigan has new “right-to-work” laws.

A new contract without a significant rise in compensation is going to be hard to get ratified. The last contract barely made it through, getting only 55% of the total votes. It was rejected outright by some UAW locals, including Local 1268 at the Belvidere Assembly Plant.

With all the obstacles facing negotiators, FCA is the most likely of the Big Three to get hit with a strike.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.


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