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FCA strike threat grows as UAW contract falters

One deficiency in the agreement was the absence of a product plan detailing where and when future vehicles and engines would be built.

The specter of a UAW strike looms at Fiat Chrysler after the company’s 40,000 hourly workers rejected a four-year labor deal covering wages and benefits.

UAW local leaders at FCA plants are scheduled to meet Thursday in suburban Detroit to determine next steps.

The UAW could strike, return to the bargaining table with FCA or pause negotiations and move on to bargaining with Ford Motor Co. or General Motors -- each of which awaits intense negotiations.

The 137,000 UAW-represented workers at the Detroit 3 have been working under an extension of their existing contracts since they expired Sept. 14.

In another development, the UAW announced Tuesday that it might strike Ford’s Kansas City assembly plant, where popular F-150 pickups are built, over local issues such as safety and work schedules.

The prospect of a strike rose with the FCA contract rejection, said Kristin Dziczek, director of the labor and industry group at the Center for Automotive Research in Ann Arbor, Mich.

“The probability of a strike is higher today than it was yesterday,” she said.

The union could shut about 75 percent of profitable Jeep and Ram pickup production by simply striking FCA’s giant Kokomo transmission operations without a general strike that would hurt all production workers, Dziczek said.

FCA workers not striking but idled by a strike at one plant would be eligible for unemployment and supplemental benefits that yield laid-off workers almost full pay during the time they are idled.

A general strike of FCA could easily cost the carmaker $500 million a week in lost vehicle production, about half of the amount a weeklong strike would cost GM or Ford, said a source familiar with Detroit 3 production.

FCA spokeswoman Jodi Tinson declined to comment. The UAW also declined to comment.

The FCA contract failed to meet rank-and-file expectations on multiple fronts.

Two-tier wages

Workers wanted an end to the divisive two-tier wage system that pays entry-level workers far less than legacy workers, said Dave Cole, chairman emeritus of the Center for Automotive Research.

Instead, what they got in the agreement was a substantial raise for Tier 2 workers but no pathway to Tier 1, he said. The agreement raised the maximum Tier 2 wage over four years from $19 an hour today to $25, in a series of annual steps. 

But that was still $5 an hour short of what longtime workers were set to earn in wages by the contract’s end.

Expectations were particularly high because FCA CEO Sergio Marchionne said himself that he found separate wages for like work to be unethical and counterproductive to shop-floor morale, Cole said.

The UAW and FCA also declined to cap at 25 percent the total FCA work force that could be Tier 2. Today, about 45 percent of FCA’s work force is Tier 2, with the remainder Tier 1.

At Ford, about 865 Tier 2 workers were promoted to Tier 1 after the carmaker exceeded its Tier 2 cap.

No product plans

Another deficiency in the agreement was the absence of a product plan detailing where and when future vehicles and engines would be built, Dziczek said. FCA’s 2011 contract with the UAW included such a plan, and previous ones at GM and Ford also included them, boosting job security as workers were readying to vote on the agreements.

FCA workers on social media and elsewhere also complained that this year’s agreement had a signing bonus of $3,000 vs. $3,500 in 2011.

Additionally, it failed to adequately address an alternative work schedule at many plants forcing employees to regularly change the days and start times they worked each week.

In the end, FCA workers were expecting a far-better effort from both FCA and UAW leadership, Dziczek said.

“They may need an outlet [strike] to get that anger out,” she said.

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

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