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UAW sends Fiat Chrysler contract with health-care, profit-sharing gains to membership

Breana Noble
The Detroit News

A tentative labor agreement reached between Fiat Chrysler Automobiles and the United Auto Workers includes health-care gains for lower-paid employees, profit-sharing increases and pathways to top wages.

The deal would help to bridge some gaps in benefits between Fiat Chrysler employees and those at Ford Motor Co. and General Motors Co., which likely would increase the Italian American automaker's labor costs. Local union leaders making up the UAW-FCA council on Wednesday voted to send the deal to the membership for ratification, UAW spokesman Brian Rothenberg said.

Votes are expected to begin on Friday and be completed by 4 p.m. Dec. 11 so members can receive ratification bonuses around Christmas, Rothenberg said.

The agreement would provide the same health insurance — including dental and vision coverage — to lower-paid, full-time employees as top seniority employees receive, according to a union summary of the agreement. Their plans do not include monthly premiums.

Temporary employees would receive prescription drug coverage. Autoworkers already pay some of the lowest total health-care costs, which is on average about 4% at Fiat Chrysler compared to 28% for the average American household.

Such gains could help the contract get approval from rank-and-file members, which experts have said could be a challenge. UAW-FCA members turned down an initial tentative agreement in 2015.

"We are pleased to announce, thanks to your solidarity and sacrifice, we have achieved gains toward all of these bargaining priorities," acting UAW President Rory Gamble and UAW Vice President Cindy Estrada wrote in a message to UAW members in the summary. "The contract presented to you today creates a template for continuing growth and prosperity for UAW FCA members and FCA."

Fiat Chrysler declined to comment.

Health care was a priority for leaders as they walked into the council meeting Wednesday: "We first want to make sure it's maintained," said George Vazquez, president of Local 946 in Virginia. "We have pretty good health care. I'd like to see if we have any better benefits."

In addition to health-care gains, a $12,000 cap has been removed on profit sharing. The cap was removed in GM's contract; Ford's was removed in 2015. The agreement also would increase the profit-sharing formula — by $100 — to $900 per 1% of profit margin in North America.

Like the contracts already approved this fall with Ford and GM, all current production employees with seniority would earn top wages by the end of the agreement's four-year term. Temporary employees would have a pathway to full-time status and top wages; an estimated 3,800 employees would reach full-time status in 2020. They would have the chance to be hired-in prior to the company hiring workers off the street, according to the summary.

These changes could be expensive to Fiat Chrysler: Lower-paid production employees represent a larger percentage of its 37,200 UAW-represented employees than at its crosstown rivals.

The deal also places stricter limitations on Fiat Chrysler's use of temporary employees, though there is not an 8% cap like there is at Ford. Instead, the use of these supplementary employees on weekdays for absenteeism will be calculated quarterly. Fiat Chrysler also no longer has unlimited use of them on Mondays, Fridays, weekends and holidays. Their use will be determined based on need from that quarter of the previous year and be subject to UAW approval.

Wage increases and lump-sum payments follow the pattern at Ford and GM. Skilled trades and top-paid production employees would receive 3% base wage increases in the first and third years of the agreement. They also would receive 4% lump-sum bonuses in the second and fourth years. Lower-paid, full-time production employees and temporary workers hired before 2007 also would receive the 3% wage increases. Temps hired before 2015 would have an improved wage schedule.

The health care gains were good news, said John Barbosa, a team leader at Dundee Engine Plant, but he was disappointed in the wages that have not gone up more as the automaker comes off years of record profits.

"I don’t feel that our monetary compensation is what it should have been," Barbosa said. "The compensation that they are offering is far below that. I think they could’ve given more."

Seniority autoworkers would receive $9,000 signing bonuses, and temporary employees would receive $3,500 bonuses — the same as Ford's employees. After a 40-day strike, GM seniority employees received record $11,000 bonuses, while temporary workers received $4,500. In 2015, Fiat Chrysler's top seniority employees received $4,000 bonuses and lower-paid, full-time workers received $3,000.

The agreement also addresses plants whose futures were somewhat uncertain. Fiat Chrysler would not sell or dispose of the idled Mount Elliott Tool & Die in Detroit and look for future opportunities to make use of the site. The company also would continue its joint operations with ZF Group at its Marysville Axle Plant for the next two years, after which the UAW would negotiate with ZF. Employees would have the opportunity to transfer to another FCA facility.

Fiat Chrysler has committed to an additional $4.5 billion in investments and 1,400 new jobs as a part of the four-year deal. That is on top of the February announcement of $4.5 billion into five Michigan facilities to create 6,500 new jobs, which included transforming its Mack Engine Complex on Detroit's east side into a new Jeep assembly plant. The plant would operate three eight-hour shifts, according to the agreement, as would the adjacent Jefferson North. Jefferson North would receive $3 billion in investments, up from $900 million announced in February.

New investments also include $55 million in Belvedere Assembly in Illinois, which will continue to produce the Jeep Cherokee SUV and new models based on that same platform. Toledo North and South, Sterling Heights and Warren would also receive more investments.

Indiana Transmission would receive $455 million for an expansion and would hire more than 1,000 employees. Stamping plants in Sterling Heights and Warren would receive $190 million and $305 million, respectively. The company plans to make an $80 million investment for core electrification. In Michigan, Dundee and Trenton engine plants would receive $10 million and $30 million, respectively.

The planned investments are more than Fiat Chrysler's $3.4 billion commitment in 2015 that was expected to create 103 jobs. 

Ford Motor Co.'s newly ratified contract includes more than $6 billion in investments that would create or retain 8,500 jobs. The Dearborn automaker will close Romeo Engine Plant. GM plans to invest $7.7 billion into its facilities, which will create or retain 9,000 jobs, according to its contract. It also was able to sell Lordstown Assembly in northeast Ohio and shutter transmission plants in Baltimore, Maryland, and Warren.

Like contracts at Ford and GM, skilled trades employees also would receive two $1,000 tool allowances. Traditional employees would receive one-time $1,000 contributions to 401(k) plans. A retirement package of $60,000 also would be offered to employees hired prior to 2007 at the idled Mount Elliott Tool & Die, Marysville Axle, Belvidere Assembly in Illinois and a Mopar parts and distribution center in Milwaukee.

The UAW and Fiat Chrysler struck a tentative deal Saturday, almost two weeks after discussions intensified with the automaker and after a number of "distractions," as Estrada, director of the union's FCA Department, called a series of recent events related to a federal corruption investigation into the UAW that has identified Fiat Chrysler as a co-conspirator.

The deal came after General Motors Co. filed a racketeering case last month against Fiat Chrysler, but not the UAW, claiming its late CEO Sergio Marchionne had orchestrated a conspiracy, including bribes, to corrupt bargaining in 2009, 2011 and 2015 that hurt GM. Fiat Chrysler has called the claims "groundless."

The proposed labor deal would dissolve the jointly operated UAW-Chrysler National Training Center nonprofit funded by the automaker. The training center has been at the center of the federal probe.

The same day GM's lawsuit was filed, the UAW's executive board filed charges under the UAW constitution in a move to remove UAW President Gary Jones and Region 5 Director Vance Pearson from the union. Both were on paid leave at the time and have since resigned their positions and memberships. Jones has been implicated in the federal probe, but not charged. Pearson has been charged with embezzlement of union funds, mail and wire fraud, and money laundering.

When Jones went on leave on Nov. 3, Gamble, UAW vice president and director of the Ford Department, replaced him as acting president. The UAW International Executive Board is scheduled to vote on a permanent replacement Thursday.

Meanwhile, Fiat Chrysler also is in discussions to merge with French automaker Groupe PSA to create the fourth-largest automaker in the world. Talks are on track to have a memorandum of understanding in early December.

The companies have said no plants will close as a result of the merger. Most of PSA's trade unions in Europe have shared a favorable opinion on the combination, though the UAW has not commented publicly on a proposed deal reached in October. Language to protect employees in the case of a merger, Rothenberg said, remains in the tentative agreement.


Twitter: @BreanaCNoble