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FCA = strike target

by David Zatz on

While just days ago many analysts were certain that FCA US (most of the former Chrysler Corporation) would not be the UAW’s strike target, yesterday FCA itself said it would be.

If the United Auto Workers union, which represents most hourly workers for Chrysler brands in the US, cannot reach an agreement with the company, the union can go on strike at any time now that the contract has expired.

The first contract reached is usually a pattern for the other two major UAW-represented automakers.


Analysts had claimed that GM was the most likely target and FCA the least likely, based on cash reserves. However, FCA has the largest percentage of “Tier 2” workers with lower salaries, a sore spot with the union. It is also in the process of siting production of new cars, and the UAW may believe it can influence those decisions through the threat of a strike.

FCA has 37,000 hourly employees and, according to the Center for Automotive Research, 45% are Tier 2.

FCA may use the carrot of new investments and busier U.S. plants, along with higher profit-sharing, with the stick of being able to move production to Canada, Mexico, and Europe, and the threat of FCA being unable to continue to invest in cars, technology, and facilities if labor costs climb too far, too quickly.

In addition to not making product in the US, FCA could see their cash immediately cut as the Teamsters Union pledged to respect UAW picket lines and not deliver new vehicles. That would also block delivery of Canadian and Mexican vehicles.

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