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Vague factory plan may cut labor costs

by Bill Cawthon on

Analysis. The UAW wanted product commitments from Fiat Chrysler in the new contract, but it didn’t get them.

Instead, the company provided staffing plans for its U.S. plants. At first glance, it appears that 103 new jobs will be created over the next four years, but that doesn’t account for the Conner Avenue plant, which will most likely close after the 2017 buildout of the Viper. [One source is staunchly saying that Viper will be replaced, but other sources have predicted the end of Viper and Conner Avenue for some time.]

Marchiovelli-Web

Still, everyone’s job is assured and there will be a small number of opportunities for new hiring.

Or not.

The Warren Truck plant and the state of Michigan take the biggest hits. Nearly 60% of Warren’s hourly workforce will be cut when the plant shifts from the Ram pickup to the Jeep Grand Wagoneer (and possibly another product). This was expected as soon as the announcement of the product shift was made, since the volume to justify 4,267 hourly workers won’t be there: in 2014, the Warren Truck plant produced three times as many Ram pickups as the total production of the best-selling large SUV, the Chevrolet Tahoe.

Normally, most of the workers from the Warren Plant would go to the Sterling Heights Assembly Plant; based on UAW seniority rules, Tier 1 employees should have the first shot at those jobs.

There is still a net loss of 716 jobs in Detroit, assuming that Conner Avenue is shuttered — but there are 585 new openings in Belvidere, Illinois, which is about 357 miles from the Motor City.

That may not be how it will work out.

Belvidere Assembly

According to Sergio Marchionne, the Belvidere Plant will swap out the Dart for the Cherokee in 2016-2017. No mention has been made of any other products that will be assigned to Belvidere.

Sterling Heights will have to updated for the Ram, even as Warren Truck keeps building Rams to keep the pipeline filled. Sterling Heights’ changeover is in the years 2017 to 2018, and Warren Truck isn’t scheduled to build the Wagoneer until 2019.

Thus, workers from Warren will probably fill the slots at Sterling Heights, but positions in Belvidere will already have been filled, most likely with new hires.

That leaves 716 union workers twisting in the wind. Considering seniority, most of those should be Tier 2 workers. However, this would have the effect of increasing labor costs at Sterling Heights. Tier 1 workers may get tempting early retirement offers, opening up the positions for relatively new hires. [While Tier 2 workers currently get substantially lower pay, they can rise to parity with Tier 1 employees over eight years, based on the individual worker’s hire date. — ed.]

By refusing to be specific, Marchionne has crafted a plan to cut labor costs even as he has opened a path for Tier 2 workers to advance. It’s downright “Marchiovellian.”

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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