Revised FCA contract deal boosts newer workers to top-wage status in 8 years

A new tentative agreement between Fiat Chrysler and the UAW provides a wage progression that will get lower-paid Tier 2 workers to the same rate of pay -- $30 an hour -- as Tier 1 workers after 8 years on the job.

Details of the agreement were released today by the UAW after its Chrysler Council recommended the four-year contract to the 40,000 UAW members at FCA for ratification.

A previous tentative agreement between the UAW and FCA US was voted down by UAW members almost 2-to-1. The new pact was announced shortly after midnight Thursday after the union had issued a strike notice.

UAW President Dennis Williams said the bargaining team sought to “address members’ concerns about their jobs and their futures” in the updated agreement.

The primary issues members cited in rejecting the last tentative agreement were improved job security and the elimination of the two-tier wage system. Both were addressed and improved in the new tentative agreement, union leaders said.

Among the improvements, according to a union highlighter of the proposed agreement:

• Lower-paid Tier 2 workers would be placed on a progression that would ultimately see their top hourly wage increase from $19.28 an hour to up to $30 an hour over an eight-year period. The new agreement also doesn’t segregate workers at MOPAR into a different sub-category, as the previous tentative agreement did.
• A commitment from FCA to “fully utilize and invest in US facilities,” and what the highlighter calls a “moratorium on outsourcing.” The highlighter provides some of the company’s future plans for each facility and their effects on employment levels, though most specifics -- such as which vehicle programs are being discussed -- are missing.
• An agreement to allow locals and the international UAW to deal with alternative work schedule issues in plants where it is a sore point with members.
• Improved formula that bases profit sharing on an employee’s uncapped hours, meaning that the more an employee works, the larger the share of profit. In the rejected agreement, the amount that an individual worker could get was capped.
• A $3,000 signing bonus for Tier 2 workers remains in place from the previous agreement. Tier 1 workers, if the deal is approved, would get a $4,000 signing bonus -- the previous agreement called for a $3,000 bonus.
• Tier 2 workers, who don’t have defined-benefit pensions, will receive an increased 401(k) match up to 6.4 percent. Previously, the match was 4 percent.

The company declined to comment on the tentative contract.

Among the product changes, workforce increases are planned at Belvidere Assembly in Illinois and Sterling Heights Assembly in Michigan. Automotive News first reported that the Jeep Cherokee is moving from Toledo Assembly to Belvidere and the Ram 1500 pickup from Warren Truck to Sterling Heights. The product plan specifically guarantees current employment levels at the Toledo Assembly Complex, assuaging local concerns about the loss of the Cherokee.

The highlighter says the largest job reductions -- 2,406 jobs -- will come at Warren Truck as production of the Ram 1500 shifts to nearby Sterling Heights. Overall, the net effect of the changes is just 103 new planned production jobs.

'I was a little naïve'

On a conference call today with reporters, Williams said the latest agreement is what his members asked for: “A clear and defined path to a fair pay and a decent standard of living.”

Williams said the previous tentative agreement with FCA was turned down, in part, because “the membership was a little ahead of us. Our thought process has always been to bridge the gap. The membership wanted a clear path. They don’t want to be considered second-class citizens.”

He said it was his fault that his members were confused about a planned health care co-op with the three Detroit automakers and UAW retirees that he believes will help control costs for everybody.

“I was a little naïve,” Williams said. “I really thought everybody understood it. I should have educated people a little more on it.”

Asked about what had prompted the UAW’s strike deadline at midnight Thursday, Williams said it was made “to put pressure on both of us. Strikes are serious. I’ve lived through too many of them.”

Ratificaction chances

Arthur Schwartz, a labor consultant and former General Motors negotiator, said this proposal is richer and that he will be "stunned" if it is not ratified. 

"If (UAW members) don't vote for this, then their expectations are too unrealistic and I don't know if they can get a contract at Chrysler," Schwartz said after the highlights of the new deal were released.

When UAW leaders sent the previous proposal to worker vote last month, Schwartz said it would have a difficult time passing.

Reuters contributed to this report.