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It’s official: what is in the UAW contracts

by Bill Cawthon on

The United Auto Workers union has released a summary of the details of the proposed contract with Fiat Chrysler Automobiles.

The contract is being sent to union locals for a vote next week. Among the highlights are raises for all workers, guaranteed bonuses, the ability to take vacations a day at a time, a healthcare pool, and an extra paid holiday.

FCA-UAW-Deal-Web

Tier 1 employees, which the UAW calls “traditional,” will get two 3% raises, the first since 2007, with one immediate increase and one in the third year. By the end, a Tier 1 hourly assembler will make $29.76/hour, an increase of $1.71/hour over the current rate of $28.05. A skilled-trades employee will go from $32.71/hour to $34.70/hour, up $1.99 from the $32.71 paid now. The actual dollar amount of the raises depend on each individual employee’s current wage rate and the union provided a table of increases for each range. (This was reported earlier, in less detail, by Automotive News.)

Tier 1 workers get a $3,000 bonus when the new contract is ratified. There are also two 4% lump sum bonuses, one each in the second and fourth years of the contract. There are other bonuses based on quality metrics, World Class Manufacturing skilled trades metrics, and productivity audit scores. Potential payments range from $4,000 to $13,000 per employee.

Profit-sharing for Tier 1 workers kicks in when FCA’s North American profit margin hits 2%. Workers will get $800 for every 1% profit beyond 2%.

Union president Williams noted that there are “targeted” early retirement incentives in the new deal. This is in keeping with Sergio Marchionne’s desire to lower total labor costs by squeezing out the higher-paid Tier 1 workers. Marchionne’s timetable for advancing the Tier 2 workers to the full union scale is never, even though that was the intent when the UAW agreed to the second tier in 2007.

Those in Tier 2, “transitional” according to the UAW, do far better. New hires go from $15.78 hourly in the 2011 contract to $17.00, a 7.7% increase. Those at the top of the range get a 31.5% increase, from a maximum of $19.28 to a top hourly wage of $25.35. In dollars and cents, a Tier 2 employee at the top rate gets a raise of $12,265 per year.

The new pay scales cut the gap between the tiers from 31.3% in 2011 to 14.8% by the end of the new contract. In addition, for the first time, Tier 2 workers also will be eligible for the bonuses.

Tier 2 profit sharing doesn’t start until FCA North American profit margins exceed 8%. From 8.0% to 8.9%, workers get $1,000; from 9.0% to 9.9%, the payout is $2,000. If FCA hits a 10% profit margin in North America, the check will be for $4,000.

The healthcare program is being changed to a co-op system that includes incentives for workers to maintain healthy lifestyles and use selected providers. If the new program looks like it will be taxed, FCA and the union will look into ways of restructuring the plan to avoid taxes.

Double-time pay for Sunday will be restored and the Monday after Easter has been added back in to the paid holiday schedule that will grow to 16 days per year. Also, for the first time, union members can schedule vacation one day at a time.

The scholarship program for dependent children has been returned and will pay $1,500 per year for each dependent enrolled in a college or university.

The alternative, rotating shift schedule was a point of contention. Some adjustments were made, requiring workers scheduled on Saturdays to be paid 1.25% of their regular pay and limiting the number of consecutive weekend days that can be required.

FCA has also agreed to a $5.3 billion investment in U.S. facilities and a moratorium on outsourcing work for the full term of the contract. According to the union, the assembly division gets $3.4 billion; the powertrain division is allocated $1.5 billion; the stamping division receives $315 million and Mopar Parts Distribution Center Operations gets $34 million.

While Williams expects ratification, there may be some issues and objections.

Tier 1 employees’ new pay scales are less than they would be if FCA simply adjusted their 2007 wage (it was unchanged in the 2011 contract) for inflation. That would have raised the new pay scale for assemblers to $32.54/hour and for skilled trades to $39.88. Most of the hourly workers are Tier 1, so approval or rejection could depend on the mix of Tier 1 and Tier 2 in each local.

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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