That Fiat Chrysler jumped to the head of the line to negotiate first with the UAW is classic Sergio Marchionne. The company was identified as the bargaining target Sunday.
The FCA boss wasn’t about to let either of his counterparts at Ford or General Motors negotiate a richer deal that FCA might not be able to afford.
Besides, Marchionne and UAW President Dennis Williams have known each other for years through Williams’ role in negotiating union contracts with Fiat’s agricultural and farm equipment business, CNH Industrial (Case and New Holland).
Recall that Marchionne wanted to go first with the UAW four years ago. That blew up when Marchionne thought then-President Bob King would come to his office to finalize a deal, but King was at a meeting with GM and never made it to Marchionne’s office.
What I most remember about those talks was not the miscommunication with King, but FCA managers insisting before bargaining began that they would tolerate no net increase in labor costs over the four-year contract regardless of what GM and Ford approved.
And sure enough, they were good to their word. FCA’s labor costs, thanks to the huge use of entry-level Tier 2 workers, have barely budged over the past four years even though FCA ended up being the last contract signed with the UAW after the King dust-up.
Which brings us to this year’s negotiations. FCA remains far smaller and far less profitable than GM and Ford. FCA cannot afford to pay its workers as much as the other two.
So Marchionne is intent on making a difference on a subject that he and rank-and-file want solved. Specifically, how to bring pay equity to those Tier 2 workers who receive roughly half the pay and benefits of veteran workers for doing the same work.
If Marchionne, Williams and their negotiating teams can find a path to full pay for what now is about half of FCA’s hourly work force, they’ll go a long way to presenting the rank-and-file with a contract that can be ratified.
Marchionne knows what he can afford. And by slaying Tier 2, he just might get FCA workers to accept a contract that in the end is a little less lucrative than the ones eventually bargained at Ford and GM.
But he’ll have gone first. He’ll have gotten his contract.
And he’ll be able to turn to the other very vexing problems that FCA faces, namely, how to flourish without a global operating footprint and how to meet insatiable consumer demands for ever-better, more fuel-efficient vehicles.