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FCA, workers on contract rejection

by Bill Cawthon on

Fiat Chrysler has just released the following statement regarding the rejection of the proposed contract with the United Auto Workers union:

FCA US is disappointed that UAW members voted not to ratify the tentative agreement.

The bargaining teams on both sides worked hard, for many days and nights, to craft a transformational agreement that would adequately reward the commitment of our workforce while ensuring the Company’s continued success and competitiveness. Striking the right balance in these two objectives has been the most difficult thing to accomplish in these negotiations, but after many hours of dialogue and debate between the UAW and FCA US leadership, the Company felt that a just and equitable compromise had been reached.

FCA-UAW-Toast-Web

The memories of our near-death experience in 2009 are vivid to this day in the minds of most of us at FCA. A large number of new employees have been brought into the Group since then who, thankfully, did not have to endure the pain and sacrifices that were required of the workforce then.

But it is that knowledge and those memories that continuously reinforce the FCA leadership’s resolve to never let those events repeat.

While significant progress has been made since the events of less than seven years ago, much more work remains to be done and challenges remain while new, significant ones surface. The cyclical nature of the automotive business demands that while we must recognize the need for rewarding employees during times of prosperity, we must also protect against the inevitable market downturn. This agreement accomplished both of these objectives….

The Company will make decisions, as always, based on achieving our industrial objectives, and looks forward to continuing a dialogue with the UAW.

 

Based on social media posts made by union members, the key stumbling blocks were the two-tier wage system, the failure to restore the 25% cap on Tier 2 employees, the lack of new product commitments and the undefined health care program. There were also some comments about the failure to resolve the controversial rotating production shift scheduling at some plants.

There were numerous comments about the personal relationship between Fiat Chrysler CEO Sergio Marchionne and UAW President Dennis Williams. Members felt that the friendship between the two  prevented a better deal for union workers.

While the contract included the first raise for senior union members in nearly ten years, as well as a new bonus plan, the proposed raise failed to restore the purchasing power lost during the wage freeze. The aggregate value of the average hourly production worker’s paycheck dropped by about $43,000 during the freeze.

The press has reported on Mr. Jewell’s comment that he was unable to find a mention of the cap in the 2011 agreement, except for a  mention in the summary. That’s because the waiver on the caps was spelled out in the 2009 contract between Chrysler LLC and the UAW before the bankruptcy; it specified that the waiver expired on September 14, 2015, at which time Tier 2 workers in excess of 25% of the total hourly wage workforce would be elevated to full union wage.

This was a key issue among union members commenting on the contract. The progression of workers hired since 2007 to full UAW status is missing from the proposed contract.

FCA-UAW-agreement-Web

The proposed health care co-op drew riticism, although without Ford and GM signing on to the idea, neither FCA nor the union could provide detailed information. The co-op is one of Williams’ pet ideas, and union members were critical of what they regarded as a blank check to be given to FCA.

The lack of defined product assignments was a special concern to workers in Toledo, who were uneasy with the pending loss of the Jeep Cherokee.  87% of Toledo’s production workers and 80% of skilled trades employees opposed the new contract, one of the highest margins of any UAW Chrysler local.

A few mentioned Marchionne’s huge 2014 compensation package, but it wasn’t a hot button issue for most members. American workers may have become accustomed to outsized CEO packages.

Sergio Marchionne in Tipton

As the union’s leadership considers its next steps, some experts are concerned that Mr. Marchionne could play hardball and the union could end up with a less favorable deal. On the other hand, a strike at the engine or transmission plant could paralyze production of Jeeps and Rams and cost FCA as much as $500 million per week.

UAW President Dennis Williams wrote:

What I love about our organization most of all is that no matter what we do, what action we take, the ultimate decision and the power of the union is our members and they make the final decision… That is the design of our constitution and who we are.

We will gather the issues together; notify FCA that further discussions are needed.

We don’t consider this a setback; we consider the membership vote a part of the process we respect.

Marchionne-Reuther-Web

One labor expert was concerned that this rejection could bring back the days of Walter Reuther and the militant union. That may be what the rank-and-file would like to see.

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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