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UAW, FCA labor talks continue as contract is extended

FCA CEO Sergio Marchionne, left, with UAW President Dennis Williams earlier this summer.

UPDATED: 9/15/15 12:15 am ET - adds extension

DETROIT (Reuters) -- Negotiators for Fiat Chrysler Automobiles and the UAW continued bargaining after their current contract was extended on an hour-by-hour basis past a 12:01 a.m. ET Tuesday deadline.

The union made the announcement on Twitter.

At issue are proposals to overhaul a two-tier pay system the UAW wants eliminated and to restructure company health plans to curb rising costs, people familiar with the process said. Veteran UAW workers also are demanding base wage increases. 

The UAW has at least three options if the contract expires without a settlement. It could call a companywide strike, or stage limited walkouts that could cripple the company's operations without forcing hefty payments to workers from union strike funds. The union could also opt to further extend the current contract and allow more time for a settlement.

The terms of any FCA deal would be used to set the pattern for subsequent labor agreements at General Motors and Ford Motor Co,, the UAW has said.

Those contracts were extended earlier Monday, according to the UAW and the companies.

FCA CEO Sergio Marchionne canceled a scheduled appearance at the Frankfurt auto show this week to try to seal a deal with the union and its president, Dennis Williams.

Labor expert Arthur Schwartz said on Monday that FCA must offer a raise to veteran first-tier workers who have not seen one in a decade to get workers to ratify any tentative deal the negotiators produce. First-tier workers make about $28 per hour while the second tier tops out at $19.28 per hour.

Schwartz said FCA workers would not ratify a contract without a pay hike for more senior workers earning the top wage scale.

Marchionne has said he wants to eliminate the two-tier wage system, but he has suggested he wants to set base wages lower than the current top tier, and offer union workers more in the form of profit sharing or bonuses when the company's profits are high.

At FCA, about 45 percent of the company's hourly UAW workers earn lower-tier wages. That gives FCA's U.S. operations an $8 to $10 an hour labor cost advantage over Ford, where 28 percent of the UAW workers are in the lower-tier wage group, and GM, where 20 percent of workers are in the lower-wage tier.

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