NEWS ANALYSIS

The UAW-FCA deal: A bridge too short

At the UAW national bargaining convention in March, rank-and-file delegates sent clear marching orders to UAW President Dennis Williams: Use the Detroit 3 negotiations to fix a two-tier wage system damaging to shop-floor solidarity.

Williams heard them and joined them in vowing to bridge the pay gap between entry-level Tier 2 workers and traditional hourly employees.

But while he fetched a big raise for Tier 2 workers in a pending deal with Fiat Chrysler, he failed on the make-or-break item to deliver a pathway for Tier 2 workers to achieve full, Tier 1 pay.

Consequently, the deal is being rejected by FCA US’s nearly 40,000 hourly workers by a wide margin. And short of a miracle rally at the handful of plants still to vote, the agreement is about to crash and burn.

At best, that means Williams and the bargaining team return to the FCA negotiating table for major renovations. And the specter of a strike at FCA just got more pronounced.

Contract talks with General Motors and Ford Motor Co. are still to come.

So specifically where did the FCA agreement fall short with the rank and file?

Fundamentally, it addressed the wage disparity between traditional and Tier 2 workers without resolving it.

The UAW also sent the proposed pact to a vote without disclosing FCA’s plans that detail where future vehicles and engines will be built. Those plans had been mainstays in previous contracts because they mean job security for ratifying workers.

On Tier 2, the union and FCA tried to get by on half-measures when workers expected a fully completed bridge from entry level to Tier 1. Workers oppose Tier 2 because it pays entry-level workers far less than traditional workers for doing the same jobs.

Today, legacy workers, who comprise 55 percent of FCA’s hourly workforce, earn wages of $28 an hour vs. a range of $16 to $19 an hour for Tier 2 employees. The vast majority of Tier 2 workers hired in after 2011.

In the tentative deal, FCA agreed to raise Tier 2 wages to a new range of $17 to $25 an hour, with progressive, annual raises assured over the term of the four-year agreement. But that maximum is still $5 an hour short of the $30 an hour legacy workers are pegged to earn at the agreement’s end.

What workers wanted, short of an instant elimination of Tier 2, was a complete ladder or grow-in to the top wage, similar to what the Detroit 3 provide to Canadian workers through the union Unifor (formerly the Canadian Auto Workers).

The Unifor ladder starts with low wages and takes workers 10 years to grow into full wages. But it provides a pathway that the UAW failed to obtain from FCA.

The UAW also agreed not to reinstate Tier 2 caps at FCA, which was another, though less desirable, route to Tier 1.

A 25 percent cap in entry-level hiring that is being enforced at Ford Motor Co. requires the carmaker to promote Tier 2 workers to Tier 1 once it exceeds the cap. About 865 workers have made it to Tier 1 over the past year because of that limit on Tier 2 hiring (the promotions occurred at 29 percent because of cap exemptions).

At the moment, it’s difficult to estimate how much more it would cost FCA to extend its grow-in period to ensure that all Tier 2 workers can eventually achieve full pay. But FCA clearly has experience with that approach in Canada.

Publishing the product map also would help assuage worker job-security concerns.

FCA has shared most of its plant-by-plant product commitment plan with UAW leadership as part of bargaining. But it was not included in a contract summary booklet or full agreement that rank-and-file members use to determine whether they will ratify an agreement.

That’s not to say the plan is still under wraps. Automotive News has detailed FCA’s future build plan based on information provided by anonymous sources.

Among the highlights were FCA plans to move all car production to Mexico and fill U.S. plants with more popular and higher-priced pickups, SUVs and crossovers.

In previous UAW contracts, a detailed product plan has been the difference between achieving ratification of a contract and not.

In 2007, General Motors workers struck for two days over a concessionary contract until the carmaker sweetened the deal with a laundry list of product commitments for specific plants.

Those concessions included the advent of the Tier 2 system and the shifting by GM of retiree health care from the carmaker to a UAW-designed independent trust known as a Voluntary Employees’ Beneficiary Association, or VEBA. Ford and Chrysler also received those concessions.

In 2011, FCA detailed its product road map in its four-year contract with the UAW with 58 percent of production workers approving the agreement.

You can reach David Barkholz at dbarkholz@crain.com -- Follow David on Twitter: @barkholzatan

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