UAW, Fiat Chrysler Reach Accord -- WSJ
December 02 2019 - 3:02AM
Dow Jones News
By Nora Naughton
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 2, 2019).
The United Auto Workers said Saturday it has reached a new
tentative labor deal with Fiat Chrysler Automobiles NV, an
important step toward ending a grueling round of labor talks in
Detroit.
The proposed deal, which must be ratified by Fiat Chrysler's
workers, is the last of three new labor contracts the UAW has
negotiated with the Detroit car companies. The agreement, covering
about 47,000 union-represented factory workers at the company's
U.S. factories, includes $4.5 billion in new plant investments and
1,400 previously unannounced new jobs, said Cindy Estrada, UAW vice
president and lead negotiator with Fiat Chrysler. The new
investment adds to the $4.5 billion Fiat Chrysler said earlier this
year it would spend on its U.S. plants as part of a plan to build a
new Jeep plant in Detroit.
Fiat Chrysler confirmed in a statement that it had reached a
tentative agreement with the UAW but declined to provide
details.
The union didn't further disclose terms, though its leaders have
said a tentative agreement at the Italian-American auto maker would
be closely modeled after labor pacts struck earlier at Ford Motor
Co. and General Motors Co., as is typical in what is known as
pattern bargaining.
Company and union negotiators have been trying to secure a new
labor deal at Fiat Chrysler as a federal investigation into alleged
corruption pierces the UAW's top ranks. A culture of bribes and
kickbacks has tainted the bargaining process in years past,
according to prosecutors.
The criminal probe, which became public in 2017, formed the
basis for GM to sue Fiat Chrysler last week in a civil racketeering
case, alleging that the company gained a labor-cost advantage by
paying off UAW officials to give it more favorable contract
terms.
Fiat Chrysler plans to fight the lawsuit, which it says is
without merit. The UAW has said that it is taking steps to prevent
misconduct from occurring again and that it is confident labor
contracts negotiated over the past decade weren't compromised.
The company, meanwhile, is attempting to forge a $50 billion
merger with France's PSA Group to create one of the largest global
auto companies -- a proposed tie-up that UAW Acting President Rory
Gamble has said will be a consideration at the bargaining
table.
GM was the first auto maker to reach a contract deal with the
UAW in October, following a bruising 40-day strike that brought the
company's U.S. factories to a standstill. The UAW next pivoted to
Ford, where bargaining moved swiftly, concluding the negotiation
and ratification process within weeks. In both the GM and Ford
contracts, the UAW won wage increases, better pay for new hires and
a path to full-time employment for temporary workers.
But negotiators at Fiat Chrysler faced a tougher set of
issues.
The company has a higher percentage of temporary workers and
employees not yet earning the top wage, making it more costly for
Fiat Chrysler to replicate some of the terms reached at GM and
Ford.
The UAW was also recently rocked by the departure of its
president, Gary Jones, who took a paid leave of absence shortly
before talks turned to Fiat Chrysler and resigned last week after
the union's governing board began taking procedural steps to oust
him from office.
The UAW said it had uncovered evidence of Mr. Jones allegedly
falsifying expense reports and concealing the misconduct. Mr. Jones
hasn't been charged with a crime, and his lawyer said the former
president made the decision to resign before learning of the
board's accusations against him.
GM's lawsuit makes it harder for Fiat Chrysler to avoid the
costly pattern set by its larger Detroit rivals, especially on
new-hire wages, said Art Wheaton, a labor-studies professor at
Cornell University.
In the suit, GM argues that a bribery scheme run by then-Chief
Executive Officer Sergio Marchionne corrupted the bargaining
process in 2011 and 2015 and resulted in contracts that took Fiat
Chrysler's labor costs well below its larger competitor -- a
difference that hurt GM's business. Mr. Marchionne died in
2018.
As Fiat Chrysler headed into contract talks this summer, its
labor costs, including wages and benefits, averaged about $55 an
hour, about $8 an hour less than at GM, according to the Center for
Automotive Research.
"This weakens Fiat Chrysler's hand in negotiations because GM
has shone a very bright, white spotlight on how they have not been
following the pattern," Mr. Wheaton said.
(END) Dow Jones Newswires
December 02, 2019 02:47 ET (07:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Fiat Chrysler Automobile... (NYSE:FCAU)
Historical Stock Chart
From Aug 2024 to Sep 2024
Fiat Chrysler Automobile... (NYSE:FCAU)
Historical Stock Chart
From Sep 2023 to Sep 2024