Fiat Chrysler Workers to Get Better Health Care, Bigger Bonus Checks
December 04 2019 - 5:21PM
Dow Jones News
By Nora Naughton
A new labor agreement at Fiat Chrysler Automobiles NV offers
blue-collar workers better pay and health care for new hires and
bigger profit-sharing checks, endangering the company's long-held
labor cost advantage over its two Detroit rivals.
Under the new contract proposal, workers hired within the last
eight years will get the same health care benefits as veteran
employees and will advance to the top pay rate in about half the
time that it took them previously, according to details released
Wednesday.
The new terms on health care will bring Fiat Chrysler's benefits
closer to what General Motors Co. and Ford Motor Co. offer their
less-senior employees, a change they both made in 2015.
Fiat Chrysler has also agreed to change the profit-sharing
formula for its unionized workforce, bringing it closer to what is
provided to workers at GM and Ford, the details show. The tentative
agreement covers about 47,000 workers at Fiat Chrysler's U.S.
factories and facilities who are represented by the United Auto
Workers union.
For years, Fiat Chrysler benefited from lower labor costs
compared with GM and Ford, a difference that became the focus of a
lawsuit filed last month by GM accusing company executives of
bribing union officials to gain more favorable contract terms.
Fiat Chrysler has said it plans to fight the lawsuit, which it
says is without merit.
The rest of the new labor deal largely mirrors terms struck in
earlier agreements with GM and Ford, including providing temporary
workers with a path for gaining full-time employment.
Fiat Chrysler's UAW-represented workers must still vote on the
new contract proposal, a process that will begin Friday and is
scheduled to wrap up Wednesday, the union said.
The changes to new-hire pay are expected to hit Fiat Chrysler's
labor costs much harder than at its two crosstown competitors
because it has a higher percentage of workers still making less
than the top pay rate of about $30 an hour. Those workers will get
bigger raises during the contract period than under the previous
labor agreement.
Fiat Chrysler also uses more low-cost temporary workers, so
committing to hire more of them as full-time employees is likely to
inflate labor costs further, industry analysts say.
Heading into contract talks this summer, Fiat Chrysler's labor
costs were about $55 an hour, compared with $63 at GM and $61 at
Ford, according to the Center for Automotive Research.
"The gap will close somewhat with the other two," said Kristin
Dziczek, a labor expert at the center.
The proposed labor contract is the last of three secured by the
UAW since bargaining officially began in July and marks the final
stretch of contract talks in Detroit, which included a 40-day
strike at GM's U.S. factories. This round of negotiations fell
against the backdrop of a widening federal investigation into union
corruption that has ensnared top union officials and led to the
resignation last month of UAW President Gary Jones.
In a surprising move last month, GM filed a civil racketeering
lawsuit against Fiat Chrysler, alleging former CEO Sergio
Marchionne led a bribery scheme to pay off UAW leaders and corrupt
the bargaining process in 2011 and 2015. Mr. Marchionne died last
year.
In the suit, GM alleges Fiat Chrysler forged an alliance with
UAW officials to ensure it got special benefits over its two
Detroit competitors, including more flexibility to hire full-time
workers on the lower-rung of the pay scale and fewer limits on
using less-expensive temps. That led it to lower its overall
workforce expenses, giving it a competitive advantage over GM, the
lawsuit charges.
The UAW has said 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.
Fiat Chrysler, in its latest labor deal, has also promised $4.5
billion in new plant investment to create about 1,400 new jobs over
the next four years. If the contract is ratified, UAW-represented
workers will also receive a $9,000 signing bonus.
The Italian-American auto maker, which has spent several years
looking for a merger partner, is attempting to forge a $50 billion
tie-up with France's PSA Group to create one of the world's largest
car companies.
The UAW said that in addition to secure new jobs, its new
tentative agreement with Fiat Chrysler preserves provisions built
into previous contracts that require the union to review any
changes in corporate structure and mergers, and any new owners to
accept the UAW contract.
--Ben Foldy contributed to this article.
(END) Dow Jones Newswires
December 04, 2019 17:06 ET (22:06 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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