UAW president expects FCA members to ratify contract

Michael Wayland, Melissa Burden and Michael Martinez
The Detroit News

The head of the United Auto Workers said he is confident members will ratify a tentative four-year deal between the union and Fiat Chrysler Automobiles NV that doesn’t eliminate the hotly contested two-tier pay system, but would narrow the gap between veteran and newer hires, and give workers significant profit-sharing and bonuses.

“Once the membership looks at it, hears the explanation for it, I think they’ll ratify it,” UAW President Dennis Williams said Friday in Detroit after the tentative agreement received the support of union leadership. “I think that they’ll see that it’s a very balanced and thoughtful agreement.”

The proposed deal must be now ratified by a majority of the union’s 40,000 Fiat Chrysler members, including 36,600 hourly employees. The process is expected to be completed by Sept. 28, Williams said.

The deal’s summary, known as a “highlighter,” confirms $3,000 ratification bonuses; a new health care co-op with the company; new profit-sharing formula; and wage increases for all workers — including tier-two workers, now known as “in-progression” workers.

Fiat Chrysler’s tier-two workers — which make up 45 percent of its work force — would start at $17 an hour, up about $1 per hour; their top wage would be up to $25.35, an increase from $19.28. They also would receive an improved 6.4 percent 401(k) contribution.

Traditional, or tier-one employees, as reported by The News on Thursday, would receive 3 percent general wage increases in the first and third year, plus 4 percent lump sums of about $2,400 for assembly workers in the second and fourth year. Total guaranteed compensation is $19,000 in start-time earnings for the veteran workers. Williams said the deal also includes “targeted” early retirement incentives, but didn’t provide details.

All workers would be capable of earning “other bonuses” between $4,000 and $12,000. They would receive 64 paid holidays over the four-year agreement, with the Monday after Easter restored as a holiday. For the first time, employees would be “permitted to use vacation in one-day increments.” Some bonuses and awards are attached to the company’s World Class Manufacturing program or quality metrics — as they are now.

For profit sharing, as The News previously reported, all workers would receive $800 for every 1 percent of profit margin from North American-based operations after a 2 percent margin is reached. Second-tier workers would receive additional money if the margin exceeds 8 percent to help “bridge the gap” with veteran workers: $1,000 for 8 percent; $2,000 for 9 percent; and $4,000 for 10 percent.

Under the last contract, profit-sharing checks were based on 85 percent of FCA US’s operating profit. That percentage represents North American operations for the company, formerly known as Chrysler Group LLC.

Some leaders such as Peter Raith, shop chairman at UAW Local 75 in Milwaukee, which represents Mopar parts division workers, expect the contract will be ratified. “There’s definitely some good,” he said. “It’s nice to see the second tier will be coming up a bit.”

Greg Lopez of UAW Local 1649 in Orlando said he liked some parts of the contract, but still had questions surrounding health care and attendance policy details. “I think there’s a very good chance it could be ratified,” he said.

The ratification process can take weeks, but it’s extremely rare for the membership to completely reject a national agreement. If members aren’t happy with the Fiat Chrysler deal, union negotiators could have to return to the bargaining table.

Art Wheaton, labor expert with the Worker Institute at Cornell University, said the economics of the deal should appease members, but he is unsure how easy membership ratification will be.

“I don’t believe Fiat Chrysler was in a financial position to give what the membership was expecting,” he said. “I think they should be pleased that this is a good step in the right direction.”

During the last round of negotiations in 2011, 58 percent of Chrysler production workers voted to ratify the contract. Union rules require contracts to be ratified by both skilled trades and production workers. Only 44 percent of the company’s skilled trades workers voted for the contract. UAW leaders in closed session voted to overturn that veto and sign the agreement.

The UAW will move onto either General Motors Co. or Ford Motor Co. next to land tentative agreements. Both companies have extended their contracts while waiting on Fiat Chrysler. Williams earlier this week indicated he would seek more from GM and Ford, because the companies are more profitable than Fiat Chrysler. Some labor experts say a pattern deal would be more expensive for Ford and GM because they have higher percentages of tier-one workers and have much higher profit margins than Fiat Chrysler does.

Here are some details from the highlighter:

Investments: The summary mentions but doesn’t detail product plans under a $5.3 billion investment in U.S. plants that would move nearly all domestic car production to Mexico; voids left on American assembly lines would be filled with more-profitable SUVs and pickups.

The investments include: $3.4 billion in assembly; $1.5 billion in powertrain; $315 million in stamping; and $34 million in Mopar parts distribution centers.

The tentative deal does not list any new jobs associated with the investments. Williams said it is up to the company to make those announcements “once all the alignments get in place.” Jewell added the contract provides job protection for its current 40,000 workers, as well as future growth.

Plant investments under the four-year proposed deal involve at least five vehicles and four U.S. assembly plants. The investments, like the pay hikes, are contingent on ratification.

The tentative deal also includes a moratorium on outsourcing — “including agreed upon core and processed work” — through the entirety of the four-year contract and a new classification system that brings in allows members to bid on other higher-paying jobs, Williams said.

It commits to in-source work currently being done by third-party suppliers to FCA employees “upon expiration of the applicable commercial agreement.” The automaker uses third-party suppliers at Trenton Engine and Dundee Engine for work that is done by FCA employees at other plants. It also includes language to allow for in-sourcing specific work before contract expiration if “no operational or financial barriers” are present.

Health care co-op: A health care co-op would be established, with indications that it would include Ford and GM. It would focus on “improving health care benefits in a manner that increases quality, lowers cost, produces less waste, and provides better patient care and outcomes.”

Jewell said under the health care co-op, “there is no increase” in cost for members. He said there would be minor beneficial changes involving emergency room visits for entry-level workers.

Williams said it would be up to each company to decide whether to lump salaried employees in with the co-op pool, but he doesn’t understand why they wouldn’t want them in it.

The highlighter says programs in the co-op could be educational or provide incentives to use certain providers, health care sites, prescription drugs or benefits that “does not diminish overall benefit levels or impose additional costs or any other barriers to clinically-appropriate care.”

■Alternative work schedules: Workers also may see some relief from heavily contested alternative work schedules. Employees who are regularly scheduled to work Saturdays would be paid time-and-one-quarter for Saturday hours. Those working four, 10-hour days also would see the number of consecutive Fridays they have to work limited.

Many members have been unhappy with the work schedules that include 10-hour or longer shifts and make it harder for plant workers to receive overtime. “Double time” on Sundays also is restored under the tentative deal.

Retirees: The only mentions of retirees in the summary is a $1,000 car voucher and the ability to use the new legal services plan.

Other changes: The proposed deal also includes a new wellness program and restores legal service benefits for members, with the company paying $2.2 million a year for the services. It reinstates scholarship program for active employees’ dependent children to $1,500 a year.

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