As the contract between the United Auto Workers (UAW) and the three Detroit automakers is about to expire, FCA is under increased pressure to lead the way to significant change.
The current contract expires today at midnight. Under these circumstances the UAW is working closely with Fiat Chrysler Automobiles (FCA) to lead the way in setting out a new template for a new multi-year contract. All three major automakers in Detroit should be joining in.
A statement coming from Dennis Williams, the president of the UAW reads:
“All three companies are working hard toward a collective bargaining agreement. At this time, the UAW has selected FCA to be the leading bargaining company”.
FCA has already confirmed that it is the target company and will, to the best of its efforts lead the negotiations on the agreement, yet no further comments were issued.
What’s there on the table to negotiate? A vast array of financial issues concerning all three automakers. Profit sharing, benefits, wages and bonuses are amongst the most heated topics, including health care costs.
The most ardent topic of discussion for General Motors (GM), Ford Motor (FM), FCA and the UAW is the two-tier pay system introduced in 2007. While it has benefited the industry, the two-tier scale resulted in a substantial wage gap between employees.
With FCA, over 45 percent of the hourly employees, coined ‘second tier’ employees are paid at a maximum of 19.28 dollars hourly. First-tier employees or veterans in the facilities top 26.89 dollars hourly. It’s easy to understand what the apple of discord is here.
In 2007 when the two-tier system was introduced is was motivated that the move would keep jobs where they are and prevent the industry from moving to low-cost destinations. From this perspective, the two-tier system helped the automakers keep the promise. But it also lowered wages.
According to stats released by the Center for Automotive Research, for GM and FM the labor cost dropped from approximately 79 dollars hourly to 58 dollars, respectively 57 dollars for wages and benefits combined.
When both FCA and GM filed for bankruptcy in 2009, the initial cap on second-tier workers was limited to 20 percent. Using bankruptcy as an argument, the cap was lifted for both companies. FCA benefited greatly from the move. Now, it’s time to turn the table.
The UAW is set to gain wage raises and bridge the gap between the two tiers.
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