Fiat Chrysler, auto union reach tentative deal on contract

The United Auto Workers and Fiat Chrysler reached a tentative agreement Saturday on a new four-year contract, which includes a total of $9 billion in investments but still needs final approval from workers.   

Both sides declined to offer details on the deal, but it includes a $9,000 bonus for workers when the agreement is ratified, a promise not to close any factories where vehicles are assembled for the next four years, and a commitment to keep making vehicles at a plant in Belvidere, Illinois, according to a person briefed on the matter. The person spoke on condition of anonymity because the talks are confidential.   

The UAW-FCA national council will meet Dec. 4 to go over the details of the tentative deal. If adopted, it would go to Fiat Chrysler Automobiles' 47,000 union workers, and a vote by hourly and salary workers could begin on Dec. 6.   

Fiat Chrysler is the last company to settle on a new contract with the union. GM settled Oct. 31 after a bitter 40-day strike that paralyzed the company's U.S. factories, but Ford reached a deal quickly and settled in mid-November.   

Talks have focused on Fiat Chrysler for almost two weeks, and both sides negotiated into the early morning hours last week before taking a break for the Thanksgiving holiday.   

The Illinois factory west of Chicago now makes the Jeep Cherokee small SUV and employs about 3,700 union workers on two shifts.    

Of the $9 billion in total investments included in the deal, half were newly announced Saturday, and the other $4.5 billion are investments announced earlier this year.   

The $9,000 ratification bonus isn't as much as the $11,000 that GM workers got, but it's equal to the money paid to Ford workers. Both companies gave workers a mix of pay raises and lump-sum payments, ratification bonuses, an end to a two-tier pay scale for full-time workers and a clear path for temporary workers to go full-time.    

The union also got commitments for new vehicles to be built at several GM and Ford factories. 

Ratification not guaranteed

Even if union leaders approve the deal, ratification isn't guaranteed. In 2015, workers voted down the first deal reached with Fiat Chrysler but approved a second one.   

Fiat Chrysler apparently is agreeing to the "pattern" agreement reached with GM and Ford even though the company's CEO said earlier this month that all of the companies are in different labour circumstances. Following the same deal would cost Fiat Chrysler more because the makeup of its workforce is different. FCA has more temporary workers than either GM or Ford, and it also has more so-called "second tier" workers hired after 2007 who now make less than longtime workers.   

The deal with Ford and GM gives pay raises to workers hired after 2007, so they reach top UAW production wages of more than $32 per hour within four years. It also gives temporary workers a path to full-time jobs within three years.   

Ford has about 18,500 workers hired after 2007 who will get big pay raises with the new contract, compared with GM's 17,000. Fiat Chrysler has over 20,000 union employees hired after 2007.   

In addition, about 11 per cent of Fiat Chrysler's UAW workforce is temporary, while Ford has a cap at 8 per cent and GM is around 7 per cent.   

Fiat Chrysler in past years has enjoyed a labour-cost advantage compared with Ford and GM. FCA's labour costs, including wages and benefits, amounted to $55 per hour going into the contract talks, while they were $61 at Ford and $63 at GM, according to the Center for Automotive Research, an industry think-tank . That compares with an average of $50 per hour at U.S. plants owned by foreign-based automakers.   

General Motors last week filed a federal racketeering lawsuit against FCA, alleging that the company bribed UAW officials to get more favourable contract terms than GM. Fiat Chrysler has called the lawsuit "meritless."    

General Motors alleges that the move, which it contends cost it billions of dollars, was aimed at forcing a merger with Fiat Chrysler that was desperately sought by FCA CEO Sergio Marchionne, who died in 2018. Last month, Fiat Chrysler announced plans to merge with France's PSA, which will create the world's fourth-largest auto company worth $50 billion.   

Ongoing embezzlement investigation

The Fiat Chrysler talks could be complicated by an ongoing federal bribery and embezzlement investigation into some of the UAW's leadership, which started at Fiat Chrysler. Many workers at the company have been suspicious of the union's leadership since the scandal became public in 2017.    

Union president Gary Jones, whose home was raided by federal agents and is implicated in the scandal, resigned from the union last week. He has not been charged but has been linked to a plot to embezzle union conference funds to buy expensive cigars, wines, rounds of golf and stays at exclusive villas. Jones's lawyer J. Bruce Maffeo says all the expenses were reported in detail and never questioned by the union's accounting department or executive board.

Vice president Rory Gamble, who negotiated the contract with Ford, is now acting president.