UAW chooses Fiat Chrysler as target in contract talks

“The reality is there are many ways to reducing two tiers”.

Contract talks continue between the United Auto Workers and Fiat Chrysler as the two sides have yet to agree on a new deal.

The union has historically ensured that the Detroit Three automakers do not face competitive disadvantages by negotiating similar four-year contracts with each.

Fiat Chrysler was selected by the union on Sunday as the lead – or target – company to set the pattern for negotiations and important issues.

Companies and the union have kept a tight lid on details of the talks, but have said that they are discussing a cost-saving healthcare collective that would pool all 142,000 active UAW members at the Detroit 3 companies into a single plan. New hires start at $15.78 per hour and top out at $19.28 per hour after four years. FCA is the only one of the Detroit Three whose U.S. labor 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. FCA benefited greatly from the move.

Whatever wage increases workers might get would be more than chewed up by the higher health care copays and premiums that would result from the UAW’s proposal to take over the provision of medical care for active workers.

It is feared that the workers might resort to strikes and other measures, if the labor talks settle on a no-strike agreement during the negotiation rounds. Pay for those workers tops out at about $20 an hour.

Marchionne’s reference to higher paid workers as a “dying class” is no mere slip.

A big issue in the talks is a two-tier classification of workers that was put in place nearly a decade ago when the industry was on the verge of collapse.

Unifor Local 444 president Dino Chiodo is pictured in this 2015 file photo.

The Detroit Three hope to keep hiring entry-level workers at less than the $28 an hour that their senior workers earn. But the cost of labor is less and less important to a vehicle’s overall cost, according to economist Sean McAlinden of the Center for Automotive Research.

If the two sides can’t reach a deal, a strike is possible, but most expect any walkout to be very short.

“Every company likes to be the one who goes first”.

In a statement General Motors said, “We remain committed to working with the UAW to develop an agreement that benefits employees and strengthens GM’s long-term competitiveness”. The terms of GM and Chrysler’s 2009 bankruptcies prevented the union from going on strike during the 2011 negotiations. A work stoppage at FCA plants across the border would likely have an impact on the automaker’s assembly operations in Canada.