The FCA-UAW deal gives less-experienced hourly workers the same health care coverage as veteran employees, raises profit-sharing payouts and lets new hires earn top wages four years sooner. Almost two-thirds of FCA's hourly workers were hired recently enough that they didn't get top pay and the best health benefits under the old contract.
GM, in the racketeering lawsuit it filed last month, argues that FCA tipped the playing field in its favor by corrupting the union's previous two contracts. The legal wrangling could take years to play out, but FCA's edge over its domestic rivals — improperly attained or not — could be largely negated by expensive concessions the company designed to win support from distrustful workers.
It's the only one of the new Detroit 3 labor contracts to meaningfully increase bonuses and health benefits. Still, there's no guarantee it will pass.
FCA workers learned four years ago that they could get a better deal by rejecting the first one offered to them, but the gains in the agreement could be hard for some to pass up. A Warren Truck Assembly Plant worker, Ken Mefford, said the big checks workers would get this month alone — $9,000 for ratifying the deal, plus a 4 percent bonus — should be enough to make the contract sail through.
Art Wheaton, a labor expert at Cornell University, said FCA had little choice but to absorb extra expenses to reduce the risk of a contract rejection as it attempts to merge with France's PSA Group. He said the cost gap FCA has enjoyed is shrinking.
"They need to make sure they're keeping pretty close to the pattern," Wheaton told Automotive News, "or you risk not ratifying it, and what is the cost in the PSA merger for not getting an agreement?"
FCA has had an $8-an-hour edge over GM over the past four years, compared with a $5.35 disadvantage for Chrysler in 2006.
"A lot of that is related to the level of in-progression employees, and FCA has quite a few more than GM and Ford," said Colin Lightbody, a former FCA negotiator who is president of consulting firm HR & Labor Guru. "By reducing the wage progression period to four years from eight, that will quickly close that gap."