Fiat Chrysler Union Reaches Tentative Agreement with United Auto Workers

Today’s bounce puts Fiat up 19.4% over the last five trading sessions to stand above where it traded before the Volkswagen emissions scandal broke.

UAW announced the agreement just after 11:59 p.m. Wednesday, which was the deadline the union had set to reach a new deal or possibly go on strike.

United Auto Workers officials have reached another tentative agreement with Fiat Chrysler Automobiles after threatening to strike.

Roughly 43 percent of the workforce now collects second-tier wages, and critics said that should be reduced to 25 percent under a contract provision negotiated in 2011.

There’s no cap on the number of second-tier workers, the people said.

The company committed $5.3 billion in new investment under the previous deal but a summary presented to workers didn’t detail where the money would be allocated or whether it would lead to new work, causing many workers to fret about job security. “We’ve reached a proposed Tentative Agreement that I believe addresses our members’ principal concerns about their jobs and their futures”.

The pay proposals for the first-tier of UAW Fiat Chrysler workers remained the same as in the recently rejected contract, which is 3 percent raises in years one, and 3- and 4-percent lump sum payments in years two and four, the sources said.

The second-tier workers were hired during the 2008-2009 recession, when FCA’s predecessor, the Chrysler Group, went bankrupt and required a federal bailout to stay in business.

The new agreement would reportedly bring Tier 2 workers closer to their Tier 1 counterparts. Automakers book revenue when they ship vehicles to dealers, and 18 of the company’s 28 North American facilities are in the U.S. At the end of September, Fiat Chrysler said it had a 76-day supply of vehicles, or about 590,503 cars and trucks. A contract was rejected last month by vote.

UAW, which represents around 40,000 FCA factory workers at 23 US plants, said in a post on its website that its bargaining committee had “secured significant gains”.

Bill Parker, a worker at FCA’s Sterling Heights assembly plant said the first agreement might have passed ratification if it simply said that after eight years everyone hired after October 2007 would be paid as a traditional UAW employee.