Although the UAW is currently regrouping its efforts, there is a real possibility that FCA employees will strike, the first in decades. Following Thursday’s announcement, union leaders met with 300 UAW shop representatives throughout the night, yielding discussions, but no tangible solution to the impasse. Williams hinted that a return to the bargaining table in the near future could be possible, saying in a statement that the union will “gather the issues; notify FCA that further discussions are needed.” Williams added, “We don’t consider this a setback; we consider the membership vote a part of the process we respect.”
For the first time in 33 years, members of the United Auto Workers (UAW) union have voted down an agreed-upon proposed contract from one of Detroit’s big-three automakers. The 40,000 unionized workers employed at Fiat-Chrysler’s (FCA) 37 plants soundly rejected the compromise offering between UAW President Dennis Williams and FCA management by a 65 to 35 margin, UAW leaders announced on Thursday. Although the UAW is currently regrouping its efforts, there is a real possibility that FCA employees will strike, the first in decades. Following Thursday’s announcement, union leaders met with 300 UAW shop representatives throughout the night, yielding discussions, but no tangible solution to the impasse. Williams hinted that a return to the bargaining table in the near future could be possible, saying in a statement that the union will “gather the issues; notify FCA that further discussions are needed.” Williams added, “We don’t consider this a setback; we consider the membership vote a part of the process we respect.” FCA defended the contract, stating that it was “disappointed” in the union’s vote. The company wrote, “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.”
One of the major points of disagreement between the union and FCA is that vast difference in pay-scale for newer hires. Although the entry-level assembly line wage would be increased a dollar per hour to $17, the new system slows the pay progression and tops out at $25 per hour. Veteran employees that already have more than eight years experience would be placed in a different, higher-tiered pay system, with workers hired before 2007 earning base wages of $28 per hour. Local 685 President Carl Greenwood, representing a Kokomo, Indiana transmission plant spoke for many people’s concern that “if you and I work on the line and you get $28 and I get $16 and we do the same job, there is nothing fair about that. I wanted to see the second tier have a road map to get to traditional wages and I don’t mean over eight to 10 years, but in this contract.” 45 percent of FCA workers are in the second, lower tier, the largest proportion of the three automakers. The UAW was aiming for 25 percent of its workers in the lower tier. Also causing dissatisfaction among workers is the restructuring plan proposed by FCA President Sergio Marchionne, relocating much of the auto manufacturing operations to Mexico, while increasing truck and SUV production in its place. Workers also have concerns with the contract’s lack of clarity towards health care costs, which are scheduled to rise dramatically due to an increased federal tax on premium healthcare beginning in 2018.
Detroit’s other two automakers are watching the negotiations carefully, as the FCA negotiations were supposed to be a prelude to impending negotiations with General Motors and Ford as well. GM president Marry Barra told investors and analysts at a Thursday conference that “It’s their choice how they resolve where they go next” Barra added, “We’re going to continue to understand what the issues are and look for creative solutions that meet both the needs of the company to remain competitive and meet the needs of the workforce and the UAW. We’re going to continue to have that dialogue. It doesn’t change through this period of negotiations.” Despite the seemingly indifferent response, the negotiations will have a significant impact on GM, as the upcoming contract will be the first time GM (and FCA) workers have the opportunity to strike since 2007. A condition of the 2009 government bailout of both companies was that workers were prohibited to strike during the 2011 negotiations. Given the massive $900 federal penalty on top of billions in civil liability stemming from its deadly ignition-switch, and coming off of a bankruptcy, a ripple effect from an FCA strike could spell even more turmoil for the company moving forward.
Ford responded to the impasse as well saying in a statement, “We look forward to negotiating a fair and competitive labor agreement that enables us to continue providing jobs and investment here in the U.S., and that ensures a prosperous future for the company, our employees and our communities.” Although Ford has not dealt with the same kind of financial turmoil or the degree of scrutiny over its product safety as General Motors, the company may be affected even more than GM by the FCA negotiations. The company is already facing the imminent threat of a strike due to discontent over a local contract at a Kansas City assembly plant. The UAW’s lead negotiator for Ford said on Tuesday that workers at the plant could strike as early as Sunday. Workers and union leaders could use FCA negotiations as a justification for their own dissatisfaction. The Kansas City plant produces the highly popular and profitable F-150 pickup truck.
Sources:
Reuters – Bernie Woodall
The Detroit News – Michael Wayland and Melissa Burden
Wall Street Journal – Jeff Bennett and Christina Rogers
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