UAW strike deadline stokes anxiety at FCA
As the 11:59 p.m. Wednesday strike deadline loomed, thousands of United Auto Workers members anxiously waited to find out if they should head to a picket line or to a Fiat Chrysler assembly line Thursday morning.
Late Wednesday there was little from the union or automaker about the probability of a tentative deal or a strike by the union-imposed deadline — just that the two sides continued to talk.
A national or targeted strike against Fiat Chrysler Automobiles NV would essentially pit UAW President Dennis Williams and his members’ pocketbooks against the company’s balance sheet and CEO Sergio Marchionne, a shrewd negotiator.
“Nobody wants a strike, but that’s the only option you have to force them to do what you want them to do,” said Lamont Carr, a veteran worker at the Mopar plant in Center Line. “They’re not going to give you $30 an hour, you’ve got to fight for it.”
Analysts say the cost of a strike could have major repercussions for the company and the union, financial and otherwise. Fiat Chrysler is the weakest of Detroit’s Big Three.
“The UAW is playing with fire by issuing a strike threat,” said Patrick Anderson, CEO of Anderson Economic Group in East Lansing. “There’s no guarantee that Chrysler survives the decade.”
The union Tuesday threatened to strike the carmaker if a deal could not be reached by the Wednesday night deadline. UAW Vice President Norwood Jewell sent a notice to Fiat Chrysler that formally cancels a previous contract extension with the automaker and issued the deadline.
Much of Fiat Chrysler’s workforce is new. Many of the company’s hourly workers — an estimated 45 percent of them entry-level — have not been through a strike before.
UAW members last struck Chrysler in October 2007. The walkout was brief, lasting about six hours before the union and the company announced a tentative agreement.
Doug Thabit, a 32-year veteran worker at Toledo Assembly Complex, said he always prepares for bad times, but doesn’t know how many of the newer workers were financially ready.
“At this point in our career with so many years in the plant and the things we’ve seen happen, you sort of anticipate a low period, which is what we’re going to go into,” he said about four hours before the strike deadline. “I know a lot of the younger guys aren’t.”
To help support some who might be ill-prepared, at least one GoFundMe.com donation page has been created in case of a strike.
Fiat Chrysler and the UAW also had the choice of continuing to negotiate, or the union could shift its bargaining focus to either Ford Motor Co. or General Motors Co.
The two sides resumed talks late last week after Fiat Chrysler members by a 2-to-1 ratio voted down a tentative agreement reached Sept. 15. The contract expired Sept. 14.
Members say they opposed the first deal for various reasons: It failed to eliminate a tier-two wage structure that has divided workers. It did not fully explain a new health care co-op. And it failed to detail $5.3 billion in plant investments that reportedly would move nearly all car production to Mexico in exchange for more profitable pickups and SUVs built in the United States.
The union posted on its Facebook page “strike facts,” telling members that in the case a strike is called, who would be eligible to receive strike benefits, how much pay they would receive and when, and which medical benefits are covered.
A national strike at Fiat Chrysler could cost the automaker each week nearly $1.7 billion in lost revenue and more than $35 million in net income, said Sean McAlinden, chief economist at the Center for Automotive Research. A targeted strike would affect the company less so, he said.
Anderson said, “Even a one- or two-day strike has cost related to it, but a ‘Hollywood’ strike just for show that lasted a few days really wouldn’t cost that much at all”
The company at the end of September had 76 days worth of inventory on dealer lots, but popular Jeep models are more limited. McAlinden said a targeted strike at Fiat Chrysler’s transmission operations in Kokomo, Indiana, would affect 60-75 percent of Fiat Chrysler North American production within 24 hours. He said if the company’s Toledo Machining plant also went on strike, that would “clobber everything in North America.”
Earlier Wednesday, McAlinden said the chances of a Fiat Chrysler strike was at least 50 percent.
The union gave up its right to strike during 2011 talks as a condition of government bailouts of Chrysler and GM.
Anderson said the UAW “badly miscalculated” its members with the first deal.
He said a strike of any length could be extremely harmful to Fiat Chrysler and the company could lose buyers that could be hard to get back later.
“If the UAW were to strike Fiat Chrysler, it would not be like 1970 or 1980. It is a whole new era,” he said. “I don’t think there is much sympathy among the buying public for auto workers going on strike, and I don’t think that Fiat Chrysler demands the brand loyalty that it once did among car buyers.”
“With the exception of a few niche products, they’re unlikely to wait around while Chrysler and the UAW work out their differences,” Anderson said.
Before Chrysler’s U.S. bailout, Anderson’s firm predicted that the automaker would need the support of another company. “They’re only a few missteps away from having an existential crisis,” he said.
Included in the tentative agreement voted down was a $3,000 signing bonus that was $500 less than the last contract; a 3 percent pay raise for legacy workers in the first and third years of the contract; and increases to entry-level workers that would have started at $17 an hour, up about $1 per hour.
Entry-level workers could have seen their top wage increase to $25.35, up from $19.28. The deal also included better profit-sharing based North American operations.