2-TIER PAY IS TOP ISSUE IN NEGOTIATIONS

In a move that surprised many observers, the United Autoworkers Union (UAW) has selected Fiat Chrysler Automobiles US (FCA) as the lead company for creating an industry-standard contract—in other words, the strike target if the union and management can’t come to terms. The UAW’s current contracts with FCA, General Motors and Ford were all set to expire at midnight last night. Whether there was to be an immediate strike likely depended on the progress being achieved in negotiations. The Detroit Free Press noted that a tentative deal with GM as the target company was reached in 2011 two days after the contract deadline—and negotiations had stretched into November back in 2007.

“All three companies are working hard toward a collective bargaining agreement,” said UAW President Dennis Williams in announcing that FCA had been selected as the target. The UAW had previously announced strike authorization votes by its members at all three companies. The UAW had temporarily given up the right to strike Chrysler and GM in 2011 under their bankruptcy reorganizations.

FCA is the smallest of the Detroit Three and has the lowest profit margins. That could make it more difficult for FCA to agree to wage hikes and move toward eliminating the two-tiered wage structure which pays more recently-hired UAW workers considerably less than their senior colleagues. FCA has the highest percentage of workers on the lower tier and Ford the lowest percentage. However, FCA CEO Sergio Marchionne has expressed support for ending the two-tiered system—without indicating how he thinks it should be done or how quickly.