Fiat Chrysler, UAW extend contract as bargaining continues

Both sides agree to extend deadline on hourly basis
By Tom Krisher and Dee-Ann Durbin/The Associated Pres
||Last Updated: 09/15/2015

DETROIT (AP) — Many of the negotiators in contract talks between the United Auto Workers and Fiat Chrysler took a break Tuesday morning after bargaining through the night.

The union's contract with the Italian-American automaker officially expired at 11:59 p.m. EDT Monday, but both sides agreed to extend it on an hour-by-hour basis while talks continued toward a new four-year agreement.

Fiat Chrysler was picked as the lead company in the talks this year, making it the focus of bargaining and a potential strike target if talks hit a snag. Also Monday, General Motors and Ford extended their contracts with the UAW indefinitely as bargaining continues.

The main issue in the talks appears to be pay raises, with the union seeking hourly increases for longtime workers who haven't had one in a decade. It also wants to close the wage gap for entry-level workers, who start at about half the $29 hourly wage of veteran employees. The wage gap benefits FCA the most, since 45 per cent of its hourly workers make entry-level wages. Only around 20 per cent of workers at Ford and GM make the lower wage.

FCA CEO Sergio Marchionne has been outspoken about wanting to eliminate the wage gap. But he has indicated the top wages should come down in favour of fatter profit-sharing checks. All three companies also want to stick with profit-sharing instead of increasing hourly labour costs. Over the past four years, FCA workers have gotten annual profit-sharing checks totalling $9,000 per worker.

The union also will seek guarantees that new vehicles will be built in U.S. factories and not in Mexico, where companies have been moving some of their production.

But automakers, especially GM and Ford, want to cut labour costs to stay competitive. FCA is the only one of the Detroit Three whose U.S. labour costs are lower than foreign competitors like Toyota; Ford and GM think that's an unfair advantage and want to be on par with FCA.

To fund some of the union demands, UAW President Dennis Williams has proposed a giant health care pool to save money for the union and the three companies. Currently a union-run trust pays most health insurance costs for about 600,000 retirees and their spouses, and the companies fund health care for about 551,000 hourly and salaried workers and their families.

At mid-morning Tuesday, more than half the parking spaces at the Fiat Chrysler-UAW training centre building near downtown Detroit where the talks are taking place were still empty. Full talks were expected to resume later in the day.

Marchionne cancelled plans to attend the Frankfurt International Motor Show in Germany Tuesday and instead stayed in the U.S., a strong sign that a deal was near.

The UAW announced Sunday that it had picked Fiat Chrysler as its target company, meaning a deal with FCA could set a general pattern for contracts at GM and Ford. FCA could also be hit with a strike if negotiations stall, although workers at several FCA factories said Monday they had not been told of any strike plans.

All three companies officially kicked off bargaining for new four-year contracts in July. The contracts cover around 140,000 U.S. factory workers.

Williams and Marchionne, who greeted each other with a hug as the negotiations began in July, have both said they would consider it a failure if they can't reach an agreement and workers strike. Workers at FCA — known as Chrysler before its 2009 merger with Fiat — went on a seven-hour strike during contract negotiations in 2007 but were prohibited from striking in 2011 under terms of a government-funded bankruptcy.

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