Fiat Chrysler is surprise lead company in UAW talks – Detroit Free Press
The UAW selected Fiat Chrysler Automobiles as the lead company for its contract talks with the Detroit Three on Sunday, just one day before its contracts with all three automakers are set to expire, in a move that surprised most analysts and those that are watching the negotiations closely.
The news of the unlikely lead company comes after an antsy weekend for 141,000 unionized employees who remain in the dark on the terms of their future employment.
It is a surprising choice in the eyes of many because Fiat Chrysler is the smallest of the three companies, with the lowest profit margins, and the highest percentage of lower-paid entry-level workers seeking higher wages. That could make it more difficult for the UAW to win big pay raises for its workers and big signing bonuses. And it is why the former Chrysler is seen as the company most likely to strike.
CEO Sergio Marchionne is also seen as the toughest negotiator and most unpredictable corporate chief to deal with. Marchionne also has been trying to find a merger partner for Fiat Chrysler and pressuring General Motors to consider a merger deal, casting some doubt on what the company will look like four years from now.
Since 1955, Ford has been the lead company nine times, compared with seven times for GM. Chrysler has set the pattern only four times.
All companies want to be the target, or lead company, to shape a contact that best meets their needs. The UAW typically uses the first agreement as a pattern for the other two automakers.
“All three companies are working hard toward a collective bargaining agreement. At this time, the UAW has selected FCA US LLC to be the lead bargaining company,” UAW President Dennis Williams said in a statement. “All three companies have been working with UAW bargaining teams toward a collective bargaining agreement and continue to do so.”
The Auburn Hills automaker, in a statement, said it “confirms that it has been selected as the Company to set pattern on a collective bargaining agreement with the UAW. As negotiations are ongoing, the Company can offer no further comment at this time.”
With smaller staffs and fewer resources on both sides of the table, it will now be a tall order for the UAW and Fiat Chrysler to reach a new master agreement before the contract expires Monday at 11:59 p.m.
Williams has said he expects to reach agreements in a timely manner and he views a strike as a failure. As of Sunday, Marchionne had not changed plans to be in Frankfurt for the auto show on Tuesday.
Williams has known Marchionne for a number of years and has appeared to be very comfortable with the mercurial CEO in public. Williams, who rose up the ranks from UAW Region 4 has a history of negotiating deals with John Deere, Caterpillar and, importantly, CNH Industrial where Marchionne is CEO. The manufacturer of agricultural equipment was previously part of the Fiat Group before it was spun off into a separate company.
In July, Marchionne hugged Williams when the union and the automaker officially kicked off contract talks.
The selection of Fiat Chrysler as the lead company came after the bargaining teams at all three automakers worked through the weekend in talks marked by a disciplined business-like approach.
The UAW plans to continue negotiating with all three companies and there have not been any extensions of the contracts at this point, UAW spokesman Brian Rothenberg said Sunday.
In 2011, a tentative deal with GM was reached two days after the deadline and it took about a month to reach all three agreements. In 2007 negotiations stretched into November.
“We will continue working with our UAW partners on issues we can resolve before they turn their focus to FCA,” GM said in statement. “We remain committed to obtaining an agreement that benefits employees and strengthens GM’s long-term competitiveness.”
“Ford Motor Company still is negotiating with the UAW regarding the 2015 labor contract,” the company said in a statement. “Our represented facilities will continue to operate under the 2011 UAW-Ford contract until further notice.”
FCA will take the lead in negotiating the big monetary issues including wages, bonuses, profit sharing, benefits and potentially a new coalition to help bring down health care costs so members do not see their costs increase.
Tacking the issues is a big job, especially because the UAW is determined to win raises for senior employees, some of whom have not had an increase in a decade, and also bridge the wage gap for entry-level workers who earn half as much for performing the same work. Conversely, even though labor represents less than 7% of the cost of a new vehicle, the companies are determined to remain competitive with foreign automakers who can make vehicles for less.
Marchionne has been an ally in that he has repeatedly said there is a need to get rid of a two-tier structure — although the solutions envisioned by the two sides could differ. FCA has the greatest number of entry-level workers, and thus faces the biggest potential cost if their wages are increased.
About 43%, or 15,300 of Fiat Chrysler’s workers were hired at the lower wage. That’s a much higher percentage than the 29%, or 15,100 Ford workers hired at that wage or the 19%, or 9,500 at GM.
The entry level, or second tier, was adopted by the UAW in its 2007 contract talks with the Detroit Three as the companies scrambled to close a $30 per hour cost gap on total wages and benefits with Asian rivals. The new wage tier was unpopular from the start.The UAW has historically been an advocate for the idea of equal pay for equal work and now wants to find a way to eliminate the separate wage structures.
In July, Marchionne said there is about a 50/50 chance that the two-tier wage structure could be eliminated.
“We are going to try our darnedest to close it up,” Marchionne said at the time. “We need to design a career path for people who come into this business that tells them that if they work hard they can get there.”
Williams also has said he wants to establish a path to the top wage for entry level workers.
“Their future seems somewhat bleak, because they have no path (to full pay) … and for many of them they feel like second-class citizens,” Williams said in July.
Even though the choice of Fiat Chrysler is a surprise in some ways, there is some sound logic to it, said Kristin Dziczek, director of the labor and industry Group at the Center for Automotive Research in Ann Arbor.
Crafting an agreement with the company widely viewed as the most difficult with first allows the UAW to potentially pursue better deals from GM and Ford after FCA members have already ratified their deal, she said.
“Fiat Chrysler also has the most entry level workers of the three, so whatever the UAW does to solve the entry level issue can then be taken to GM and Ford,” Dziczek said.
Also, UAW-FCA Vice President Norwood Jewell has had the union’s bargaining team moving quickly since talks formally started in July. In August, the Free Press was the first to report that Jewell had instructed all of the union’s local units to complete their local contract negotiations as part of the national contract talks.
While that practice is not unusual at Ford and GM, it wasn’t done that way in 2011 at Chrysler.
“Our Team has done a great job of scouring through our current collective bargaining agreements. To date, there has been hundreds of carry over language identified and tentatively agreed to,” Jewell told UAW members in an update on Aug. 28.
Jewell was chosen to lead union talks with Fiat Chrysler last year even though he spent his career representing GM workers. With a straightforward, plain-spoken style, Jewell made an effort last year to blaze a trail across the country over a period of several months to get to know workers and local elected leaders. Jewell also has tried to improve the morale of workers, who have been getting smaller profit sharing checks each year than autoworkers at GM or Ford.
This is the first year since the 2007 negotiations that the UAW has the ability to call a strike at Fiat Chrysler or GM because the union gave up that right in its 2011 talks as part of the bankruptcy restructuring agreements with the automakers.
Williams has repeatedly said he views a strike as a failure. But if drastic measures are called for, members at all three companies have given their leadership almost unanimous authorization to call a strike.
And nervous employees at the plants are making their strike preparations.
Going into the weekend, local UAW leaders and workers across the nation at Fiat Chrysler, Ford and General motors were on edge, waiting and watching for any news about the lead company or the status of discussions.
George Maus, president of UAW Local 1302 in Kokomo, Ind. expressed confidence in the UAW’s leadership and said his members are ready to go on strike if that becomes necessary. “I have been comparing our status to our nation’s DEFCON status,” said Maus, whose local represents workers at Fiat Chrysler’s transmission plants. “As of Saturday early AM, my feeling is that we are at DEFCON 2 with DEFCON 1 being on Strike. We are at High Readiness.” (The U.S. military uses the term DEFCON, which means “defense condition,” to define how alert the nation’s military is at any given time.)
Maus said he was encouraged last week when Teamsters President James P. Hoffa promised his union would support the UAW’s picket lines if a national strike was called. “President Dennis Williams will make the right call at the right time and is quite aware that we are all prepared to follow his leadership,” Maus said.
Scott Houldieson, vice president of UAW Local 551 in Chicago, said union leaders are making strike preparations at Ford’s Chicago plant. The union has mapped out all of the entrances to the plant and selected strike captains for each gate. “We are prepared if the international UAW decides to call a strike,” Houldieson said.
Negotiations with Ford and GM may slow down now until the UAW reaches a tentative agreement with Fiat Chrysler, but workers at GM and Ford plants will continue to monitor every piece of news about negotiations.
History has shown anything can happen. In 2011, Marchionne was prepared to finalize an agreement but when then-UAW president Bob King did not show up for a meeting, the Chrysler CEO wrote a searing letter to the union, made it public, and broke off talks. The union moved on to the next company.
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Why the UAW’s selection of Fiat Chrysler as the lead company makes sense:
Four key issues in UAW contract talks (with all three automakers)