UAW: FCA deal 'one of richest ever negotiated'

Michael Wayland, Melissa Burden and Michael Martinez
The Detroit News

In presenting a new tentative contract described as “one of the richest ever negotiated” by United Auto Workers leaders, union President Dennis Williams sounded confident Friday that negotiators have an agreement that will be ratified this time by its 40,000 members at Fiat Chrysler Automobiles.

Improved wages and details were all demands by the 40,000 rank-and-file members with Fiat Chrysler after an overwhelmingly majority of workers last month voted down a first tentative agreement.

The new deal, Williams said, was “overwhelmingly supported” by UAW leadership who gathered Friday in Warren and gave it a “sincere” standing ovation.

“They’re very happy with the outcome,” Williams told reporters during a conference call after the meeting.

The comments came three weeks after Williams said he believed the membership would ratify the first tentative agreement with the automaker. It was rejected by 65 percent of the workforce.

It is now up to the union’s membership, including 36,600 hourly production workers, to vote on the latest deal. Williams did not give a deadline for voting.

The main changes from the rejected deal include a path that over time would end a highly contested two-tier pay system; a new profit-sharing formula; and a bigger ratification bonus for veteran workers.

Locally, the summary — known as the “highlighter” — released by the union Friday refers to potential job losses at the Warren Truck Assembly Plant, but gains at Sterling Heights Assembly. Over the four-year contract, only 103 jobs are expected to be added nationwide.

A proposed health care co-op in the failed deal — which had been touted as a way to save costs by pooling all workers at the three Detroit automakers — was deleted from new pact.

The latest deal, like the rejected one, does not commit to significantly changing alternative work schedules that include shifts of 10 hours or more. The highlighter says the company and union would meet within 60 days following the contract’s ratification “to consider other alternative work schedules.”

Details were released two days after Fiat Chrysler and the UAW reached an agreement before an 11:59 p.m. Wednesday strike deadline.

“It looks like they’ve made some significant gains,” said Art Wheaton, a labor expert at Cornell University. “They can say we took (Fiat Chrysler) to a strike, and now they’ve made a pathway to parity, but I still think it’s going to be a tough ratification vote. I don’t think it will be overwhelming.”

Boost for second tier

The new agreement most notably gives second-tier workers — now known as “in-progression” — a clear path after eight years to make the same wages as veteran first-tier workers. They will make about $29 an hour or more depending on the job, up from $25.35 under the previous rejected contract. It’s a $10 an hour hike from their current ceiling of $19.28 an hour.

“The membership really wanted a clear path,” Williams said. “They don’t want to be considered second-class citizens.”

Appeasing second-tier workers was particularly important for Fiat Chrysler, which has a 45 percent entry-level workforce, the highest of the Detroit automakers. General Motors Co. is at 21 percent. Ford Motor Co. is at 28 percent.

Second-tier workers currently at Mopar facilities would have the same path to same top wage as their production counterparts. Under the failed deal, Mopar workers would have topped out at about $22. However, Mopar workers hired in the future would top out at only $25 after an eight-year progression.

The deal includes no cap on hiring entry-level workers. The wage system benefits the company because it doesn’t provide pensions for those workers, and their health care costs are lower.

The “clear path” to pay parity was one of two “missteps” Williams said leadership made when attempting to ratify the first deal. The other was not giving members more time to review the deal before voting.

“They’re going to go at it in a thoughtful matter, where everybody gets a chance to view this agreement and everybody gets their questions answered.”

Tier-one employees would receive a $4,000 up-front lump-sum bonus, two 3 percent general wage increases and two 4 percent lump sum bonuses. Bonuses and wage increases combined would generate gains of $20,000 for a typical production worker over the course of the four-year contract.

The profit-sharing formula has been tweaked from the first time around: The formula remains $800 for every 1 percent in North America profit margin generated. Gone is the upside bonus in which second-tier workers could earn up to $4,000 extra if profit margins were 10 percent or more.

“This deal, I think, has a really good chance of passing,” said Ken Mefford, a veteran worker at the company’s Warren Truck Plant. “Is it everything that everybody wanted? No, but you’ve got to be realistic.”

Jobs and products

The latest tentative agreement does not give specifics on what vehicles would be introduced to various plants under a $5.3 billion product investment plan, but it does detail potential workforce changes.

Sterling Heights Assembly could potentially gain 1,751 workers, the agreement says, while Warren Truck faces a “potential workforce reduction” of 2,406.

Belvidere Assembly in Illinois could potentially gain 585 workers, according to the agreement. Indiana Transmission Plant I could see a potential increase of 220 jobs, while Indiana Transmission Plant II would see a potential reduction of 450. Tipton Transmission would see a potential increase of 403 workers.

The summary questions the long-term livelihood of Connor Assembly in Detroit, where the Dodge Viper SRT is produced. The summary says the sports car will be “built out” in 2017 and “no future product has yet been identified.”

Workforce levels at other assembly plants would remain the same.

Before details of the first tentative agreement were disclosed, The Detroit News and other media outlets reported that the investment plan includes a product shuffle in which nearly all domestic car production would be moved to Mexico, and voids left on U.S. assembly lines would be filled with more-profitable SUVs.

Williams said moving cars to Mexico “was never discussed” with him: “I don’t know who or how it happened where people really thought some vehicles were being pushed to Mexico,” he said. “We do have products that have a lifecycle, and the company will have to go ahead and figure out what are the new products coming in and where they’re going. But that’s always true. That happens everywhere.”

Looking ahead to GM, Ford

Parts of the Fiat Chrysler contract could be used for pattern agreements at General Motors Co. and Ford Motor Co., according to Williams.

“There is pattern issues in here,” he said, adding he will look at those areas over the weekend. “There are things that are also unique to FCA.”

Williams did not signal which company the union plans to negotiate with next. Ford and GM have been waiting in the background since indefinitely extending their contracts Sept. 14 — the day the union’s contracts with all the Detroit automakers were set to expire.

“We’re continuing our discussions with the UAW in good faith to obtain an agreement that meets the needs of GM employees and the business,” GM spokeswoman Katie McBride said Friday.

Ford said in a statement, “We look forward to negotiating a fair and competitive labor agreement that enables us to continue providing jobs and investment here in the U.S., and that ensures a prosperous future for the company, our employees and our communities.”

Arthur R. Schwartz, president of Labor and Economics Associates, called the latest tentative agreement “expensive,” and said he was surprised to see additional money for signing bonuses and entry-level workers.

But he believes it has enough new in it for members to give it the OK. Schwartz said it addresses many questions from members and provides a pathway to equal pay for entry-level workers. He had seen only a 50-50 chance of the first contract being ratified.

“I’d be surprised if this is not ratified,” he said.

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Second-tier workers

Wages: Under the failed tentative contract, workers would have started at $17 an hour and top out at $25.35. Under the new contract, they would start at $17 an hour and top out at same wage as traditional workers — about $29 — after an eight-year grow-in period.

Signing bonus: Unchanged from failed contract: $3,000.

Profit sharing: Under failed deal, workers would have received $800 for every 1 percent of North American profit margins, plus up to $4,000 extra if margins were 10 percent or more. Under the new deal, workers would get $800 for every 1 percent of North American profit margin, but additional incentives were taken away.

Health insurance: Vision and dental plans improved. $100 ER co-pay and $50 urgent care co-pay added.

First-tier workers

Wages: Unchanged: Two 3 percent wage increases in first and third year, plus 4 percent lump-sum bonus in second and fourth years.

Signing bonus: Increases to $4,000 from $3,000.

Profit sharing: Unchanged from failed contract: $800 for every 1 percent of North American profit margin.

Health care: Unchanged.

Source: UAW