Why did the UAW pick Fiat Chrysler?

DETROIT -- The UAW decided Sunday that it would target Fiat Chrysler US as the lead automaker to bargain economic issues and set the pattern for tens of thousands of workers at Ford Motor Co. and General Motors.

Though the union hasn’t revealed its thinking behind its choice of FCA as the target, its reasoning likely flows from just one fact: only FCA’s leadership has continuously spoken against the two-tiered wage system that has so benefited the three automakers since 2007.

Of the three Detroit automakers, FCA has the highest percentage of Tier 2 workers at 45 percent of its 37,000 UAW-represented hourly employees. FCA is also the only one of the three with a Tier 2 percentage that is not capped -- a contract proviso that forced Ford earlier this year to move hundreds of its UAW workers from Tier 2 to the higher Tier 1 wage. That has translated into a significant savings for FCA as it has rebounded from Chrysler’s 2009 bankruptcy and fired its factories up to capacity.

Yet FCA CEO Sergio Marchionne has spoken out repeatedly against the two tier system as destructive to morale and even immoral -- arguing that it was unconscionable to pay two employees standing side-by-side different wages for doing the same work.

In that sense, Marchionne’s message varied little from the rallying cry of hundreds of UAW members who packed a bargaining convention in Detroit earlier this year to demand an end to two-tier wages.

Here’s a little secret: automakers generally want to be the UAW’s initial bargaining target. Being the target allows a company to negotiate terms that are most favorable to itself, and at the same time a company can plant little bombs that are designed to weaken their cross-town competitors.

The choice of FCA can also be seen as tactical. FCA is considerably poorer than either Ford or GM. It’s the only major automaker with more debt on its books than cash on hand. If the union chose GM or Ford and reached favorable terms with either of those two larger automakers, it’s likely FCA wouldn’t be able to afford the same economic package, making ratification of an FCA agreement that much harder.

By selecting FCA, the UAW is planting its flag in the place most likely to find a solution to its own divisive two-tier wage structure.

Even if it means leaving some money on the table at Ford and GM.

You can reach Larry P. Vellequette at lvellequette@autonews.com -- Follow Larry P. on Twitter: https://twitter.com/LarryVellequett

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