UAW workers ratify contract with Fiat Chrysler

Breana Noble
The Detroit News

United Auto Workers members employed by Fiat Chrysler Automobiles ratified a labor agreement with the automaker on Wednesday, bringing the union's nearly five months of negotiations with the Detroit Three to an end for the next four years.

Members ratified the deal with the automaker with 71% support, according to the union. That included 74% of hourly, 59% of skilled trades and 67% of salaried employees.

“It is not easy in pattern bargaining to be the final Detroit 3 contract,” UAW President Rory Gamble said in a statement. “It means a much longer period of negotiating. Our negotiating team at the UAW and those local national negotiators were able to keep pattern and consequently negotiate a contract that will lift many lives during the life cycle of this contract."

The quadrennial affair persisted through a proposed merger and a federal corruption investigation into the UAW that led to shake-ups in union leadership and an unprecedented lawsuit between two automakers. But the months of talks — that included a 40-day national strike against General Motors Co. — achieved agreements that are closer in parity, especially at Fiat Chrysler. Meanwhile, automakers retained much of the flexibility they desired as sales are expected to slide and they look to compete in an autonomous and electric future.

"They both got a little of what they needed to get," said Kristin Dziczek, vice president of industry, labor and economics for the Center for Automotive Research in Ann Arbor. "That’s how that’s supposed to work."

Cindy Estrada, vice president for the UAW's Fiat Chrysler department, listens to opening talks between the automaker and the union in July. UAW members have approved the labor contract.

Fiat Chrysler's agreement with the UAW decreases health-care costs for lower-paid production employees — highlighting an area where the Detroit Three failed to find cost savings and which could shrink the gap in labor costs between FCA and its rivals. And although the agreements provide pathways for current full-time employees to reach the top of the pay scale within four years, the automakers still may use temporary employees and have flexibility on the size of their manufacturing footprints.

“We wouldn’t be the company we are today without the contributions of our UAW-represented workforce, and this contract recognizes and rewards their dedication in helping us achieve that success,” Mark Stewart, chief operating officer of Fiat Chrysler North America, said in a statement.

More: Follow the UAW-FCA contract vote

As Christmas and other holidays approach, it was the hefty signing bonuses that had many Fiat Chrysler employees supporting the contract, officials said. Ratification bonuses are $9,000 for full-time employees and $3,500 for temporary workers.

"That $9,000 signing bonus upped the 'yes' vote," said Mike Booth, president of Local 961 that represents employees at the Marysville Axle Plant. "There's a lot of people saying that won them over."

A majority of voting members at Booth's local supported the agreement with 55% support even after he and Vice President Jim Coakley wrote a letter calling on members to vote against the agreement because it doesn't guarantee a philosophy of "equality for all."

Marysville Axle employs Fiat Chrysler employees but is operated by Germany's ZF Group. Under the new contract, the Italian American automaker will unload the facility after two years. UAW members will have the opportunity to transfer to another plant in the Detroit region or stay with ZF.

Local 961 in February sued Fiat Chrysler to keep the plant operating as-is until a federal corruption investigation into the UAW is complete. The probe has identified the union and automaker as co-conspirators in a bribery scheme. The arrangement hurt Marysville because papers signed between Fiat Chrysler and ZF stated their partnership would continue until at least 2023, Booth said.

The lawsuit is "still in place," he said. "We're still working for the membership. We're doing it for the same reasons."

A majority of workers at Trenton Engine approved the tentative agreement by 79%. It received support from 73% of production and 78% of skilled trades employees at Dundee Engine. Overall, a majority at Toledo Assembly Plant approved the agreement, though production workers voted against the deal by 18 votes. A majority of production employees at Jefferson North Assembly in Detroit approved the deal with 82% support, while skilled trades workers voted it down by 58%.

The deal also addressed the idling Mt. Elliott Tool & Die Plant in Detroit. Fiat Chrysler promises to not sell it but look at other uses for it. Under their contracts, Ford Motor Co. can close Romeo Engine Plant, while GM closed two transmission plants and sold Lordstown Assembly in Ohio.

Fiat Chrysler is doubling its $4.5 billion investment announcement in February. The additional funds will support upgrades in Michigan, Ohio, Indiana and Illinois and create another 1,400 jobs.

The contract removes health-care premiums for all full-time production employees. They represent 59% of Fiat Chrysler's U.S. hourly production workforce, which does not include skilled trades. Autoworkers already pay some of the lowest total health-care costs — at Fiat Chrysler, it is about 4% compared to 28% for the average American household.

In addition to health-care gains, a $12,000 profit-sharing cap is gone like at Ford and GM The contract also increases Fiat Chrysler's profit-sharing contribution — by $100 — to $900 per 1% of profit margin in North America.

An $8 per hour per employee labor cost disparity between Fiat Chrysler and GM could shrink as a result.

"Just the fact that they now have the same health-care for the in-progression workers eats away at some of that difference," Dziczek said. "A big proportion of that also has been in profit-sharing. It depends on how profitable Chrysler will continue to be."

Temporary employees also have a pathway to full-time status and top wages; 3,800 employees are expected to reach full-time status in 2020. The UAW also will be able to exercise stricter authority on the use of temporary employees in the future.

Like at Ford and GM, the Fiat Chrysler contract provides 4% lump-sum bonuses in 2019 and 2021 and 3% base wage hikes in 2020 and 2022.

The gains all follow a turbulent season of labor talks that came amid the four-year federal probe into the union that has resulted in 11 convictions, charges against 13 people and has implicated two former UAW presidents, Gary Jones and Dennis Williams, who have not been charged.

More than a month into the labor talks that kicked off in July, federal agents raided the homes of Jones and Williams and other locations in four states. Details from those raids included in an affidavit in a criminal complaint charging Vance Pearson, Region 5 director, helped to identify Jones and Williams as unnamed officials in the document. The officials are accused of orchestrating a conspiracy that embezzled more than $1.5 million in member dues for cigars, alcohol, private villas in Palm Springs, California, and other luxuries.

Months after the August raids, Jones and Pearson resigned. But that wasn't until after Jones had been at the negotiating table with GM and Ford, Pearson had advised the UAW-GM bargaining committee, both went on paid leave and the union's executive board brought charges under the UAW constitution against them. It also was after UAW-GM employees striked at the Detroit automaker for 40 days — the longest national walkout against GM in nearly 50 years.

Meanwhile, GM last month filed a racketeering lawsuit against Fiat Chrysler, claiming its late CEO Sergio Marchionne had organized a bribery scheme that corrupted three rounds of bargaining in an attempt to hurt GM and take it over. Fiat Chrysler has called the claims "groundless" and a response to its potential merger with French automaker Groupe PSA, a proposition that also was announced in the midst of labor talks and could be formalized next week. GM has denied its suit is in response to the proposed merger.

U.S. Attorney Matthew Schneider recently suggested the federal probe into the UAW is only halfway complete, and GM's racketeering lawsuit could take years, according to experts. But the UAW is under new leadership with Gamble, its former vice president and Ford Department director, being officially appointed as president last week. He led the final days of labor talks with Ford and Fiat Chrysler, and already has announced a series of reform efforts.

"On the whole, the union did really well. Some of the things are standing still, which can be seen as a gain when the other side is proposing a loss," Dziczek said. "They can build on those achievements."

Twitter: @BreanaCNoble