Going into negotiations to renew four-year contracts for the some 140,000 auto workers in the U.S., the UAW had sought to bridge a wage gap and address healthcare costs.
DETROIT, MI - Going into negotiations to renew four-year contracts for the some 140,000 auto workers in the U.S., the UAW had sought to bridge a wage gap and address healthcare costs.
UAW President Dennis Williams suggested both issues are being addressed, though details of the tentative contract reached between the UAW and Fiat Chrysler Automobiles will not be revealed until after union workers have a chance to vote on it, which will likely come next week.
Williams and FCA chief executive Sergio Marchionne spoke to the media Tuesday night at a press conference called shortly after the tentative agreement was struck. Previous worker contracts made in 2011 expired at midnight on Monday but had been extended on an hourly basis.
Workers at Ford and General Motors are also now operating on four-year contracts extended from 2011 as negotiations with those two automakers continue.
FCA was selected as the lead of the Detroit Three for ironing out a new agreement, meaning the contract reached with the company and its 37,000 hourly workers will set the direction for the final contracts with the other two American automakers.
However, the Associated Press reports that Williams said Tuesday some specific factors will be taken into consideration with the other companies, as both Ford and GM are larger and more financially robust than FCA. New contracts with Ford and GM are not expected to be reached this week.
For the UAW and FCA, the relatively quick resolution to contract negotiations, which in the past had extended for days and even weeks past the deadline, was seen as a surprise.
That was especially true given the major issues on the table, including two-tier wage structures and health care benefits, said Karl Brauer, senior analyst at Kelley Blue Book.
"Marchionne appeared to support the UAW on eliminating the two-tier wage structure, and his willingness to resolve that issue was probably a key factor in how quickly and painlessly a tentative agreement was reached," Brauer said. "If the UAW membership, Ford and GM all agree to the terms of the contract this will go down as one of the least contentious labor negotiations in recent memory."
As contract talks officially began with each automaker this past summer, Marchionne was vocal about his opposition to the two-tier wage system that was set up in the late 2000s to boost hiring at a time the automakers were struggling. So-called "tier-2" workers are paid nearly half the rate of "tier-1" legacy workers, who were hired before 2007.
Marchionne said in July that he believes workers doing the same work should be paid the same wages, adding that, "therefore anything that is dual in nature, (that) creates two classes of citizens in any society," is unsustainable in the long term. "You can't live that way."
Of the Detroit Three, FCA easily has the largest share of tier-2 workers. They account for 45 percent of the hourly labor force at FCA, compared with 28 percent at Ford Motor Co. and 20 percent at General Motors, according to Automotive News.
At the same time, analysis from the Center for Automotive Research in Ann Arbor shows that blended average hourly labor costs, which include direct and temporary employees, at GM are $58, at Ford they're $57, and at FCA they're $48.
Those averages are $49 at Honda, $48 at Toyota, $42 at Nissan, $41 at Hyundai, $39 at BMW and $38 at Volkswagen. Mercedes-Benz has the highest rate at $65.
So FCA has the most tier-2 workers but it correspondingly also has the lowest labor costs of the Detroit Three.
Meanwhile, healthcare benefits are also a major factor in the UAW talks. In the past, Williams has floated the idea of a creating a large pool for all UAW workers to keep healthcare costs low. No details of plans for healthcare benefits as part of the new contracts were revealed Tuesday night.
David Muller is the automotive and business reporter for MLive Media Group in Detroit. Email him at dmuller@mlive.com, follow him on Twitter or find him on Facebook.