Howes: UAW-FCA’s ‘transformational’ deal sets high bar

Daniel Howes
The Detroit News

Hard details are sketchy, but clues dropped over the past 36 hours suggest United Auto Workers President Dennis Williams and his team got movement on issues the union most cares about.

Namely, a process that will close the gap separating second-tier wages from so-called “legacy” wages of $28.50 per hour, and, second, an understanding on a health care co-op pool for active employees that is “embedded in the spirit of the agreement and I sincerely hope it gets implemented,” said Fiat Chrysler Automobiles NV CEO Sergio Marchionne.

In a letter to employees Wednesday, Marchionne said the proposed agreement provides “a pathway to higher wages for workers hired under the two-tier pay structure, helping ensure that all those who work hard will be rewarded commensurate with others doing the same or similar jobs.”

Sounds an awful lot like “bridging the gap,” doesn’t it? Marchionne also described a “transformational deal because it guarantees that our workers will share equitably in the success we are able to generate working together while ensuring that our company will be able to remain competitive.”

That remains to be seen. Union staffers are busy drafting the contract “highlighter” to brief members in advance of ratification votes to be scheduled over the next few weeks. The document traditionally is leaked to the news media and industry analysts eager to dissect the details, with an eye toward determining just how transformational — or not — any deal actually is.

The comparative silence is raising concerns among rank and file predisposed to fill the information void with worst-case scenarios, idle speculation, venting on social media and voice-mails to the news media. But the silence suggests something else, something refreshing: a professionalism that understands rumors and leaks only make the job of ratification harder.

Marchionne and Williams set a high bar in their public comments Tuesday evening. The FCA CEO signaled that second-tier pay, introduced in the 2007 agreement, would “go away over time.” The UAW president said the deal “keeps us in a competitive place” and “we will continue to make vehicles, gain market share and make the best damn vehicles in the world ... and still reward our members with both a base and an upside.”

Beyond the fairly unusual (but not unprecedented, according to industry veterans) joint press conference to announce a tentative agreement, Williams and Marchionne practically cooed their ideological alignment on creating economic wealth, sharing it and building the kind of mature labor-management relationship this town has seen all too rarely.

Profitability and surging market demand can do that, coupled with a union leadership that displays a keener understanding of the ceaseless competitive pressure and realization that unprofitable companies building middling products are not good for the union or its members.

“FCA I can tell you under Sergio’s leadership is a different company than it was some years ago,” Williams said. “Our relationship is very unique. We have one of those relationships that we debate often about philosophy, the economy, engineering process and multiple things, which is very unusual.”

Generally, that’s true. But it’s also true that labor-management relations in the epicenter of the modern labor movement have improved markedly. They’re a product of the global financial meltdown, the bankruptcies of FCA’s Chrysler unit and General Motors Corp., and generational change in C-suites and Solidarity House.

Still, some things don’t change. The global auto industry’s shrewdest dealmaker isn’t likely to accede to “bridging the gap” on second-tier pay and introducing the health care co-op concept to the Big Three-UAW party without getting something substantial in return.

Four years ago, before his spectacular blow-up with then UAW President Bob King, Marchionne proposed an eight-year “grow-in” path for the second-tier hires that would culminate in a base wage of roughly $25 an hour, according to two sources familiar with the situation. In exchange, “legacy workers” now making $28.50 an hour would see minimal to no increase in base pay, though they would pocket the customary contractual bonuses and profit-sharing payouts.

The kicker: As those legacy workers moved to retirement, their pay scale would retire, too, replaced by a new rate. They would combine with less expensive benefits to help contain all-in labor costs (base wage, overtime, bonuses and profit-sharing) and keep FCA competitive with non-union, foreign-owned rivals operating in the United States.

It’s unclear how much of that concept is baked into the tentative agreement announced Tuesday night and vetted Wednesday morning by the union’s international executive board. But it likely did not come free to Marchionne, and whatever is proposed needs to prove lucrative enough to survive ratification.

This isn’t close to being over. The agreement will be scrutinized in union halls and plant floors over the next two weeks, doubtless encountering fierce resistance from some quarters. All that before the union moves to close deals with GM and Ford Motor Co., which Williams suggested are likely to be richer because the companies are a lot more profitable in the United States than FCA.

The other thing that isn’t over? Marchionne’s quest for a merger partner, preferably GM. In remarks it would have been easy to miss, the FCA CEO said: “I can now, as an organization, focus on the remainder of my objective, which has now become the first priority and it will be as soon as ratification is achieved.”

(313) 222-2106

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays and can be found at

Catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.