Cliff Banks - The Banks Report

UAW Agrees to 2nd Tentative Deal with FCA

October 8, 2015 — The United Auto Workers Union reached a second tentative agreement with Fiat Chrysler Automobiles late last night minutes after a midnight strike deadline had passed. Not much yet is known about the terms of the new deal that still has be voted on by FCA’s 40,000 factory employees but UAW head Dennis Williams called it one of the biggest ever negotiated.

Williams’ first contract that he negotiated with FCA executives was voted down by a two to one margin by the automaker’s rank and file. A strike would have cost the company a significant amount of money and most likely would have ended its 66 straight months of sales increases.

UAW local chapter leaders are scheduled to meet in Detroit this Friday to vote on the new agreement before sending it to FCA’s nearly 40,000 unionized workers for a vote.

According to other media outlets, the new agreement appears to provide a much stronger path for the automaker’s tier-two level employees to obtain at least the same base pay of $29 an hour as tier-one workers receive — up from the maximum $19 an hour that tier-two workers are paid now . One possible challenge, though, is that the increase will occur over an eight-year period — which likely will be too long for some employees.

The new agreement also will have to be more transparent about possible production moves FCA will make in the near future.

There’s no word yet on when workers will vote, but it should happen over the next several days.

In addition to whether it will be ratified, there are questions about how much in production costs will increase because of the deal. Financially, FCA is the weakest of the Big Three automakers. And it is the most exposed with nearly 48% of its workers classified as tier-two, compared with Ford and General Motors, which both have less than 25% of their labor force in the tier-two category. They’ll have much less of a hit financially with a new contract than does FCA.

Even though headlines are favorable toward FCA because of its astounding streak of 66 straight months of sales increases, the automaker has significant challenges ahead — More analysis is available for The Banks Report premium subscribers:

Tough Times Ahead for Chrysler Dealers

Fiat Chrysler’s Big Vegas Show — A Lot of Hype.


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