Fiat Chrysler Automobiles US said it is "disappointed" that a vote by its some 40,000 UAW workers voted down a new contract between the union and the automaker.
DETROIT, MI - Fiat Chrysler Automobiles US said it is "disappointed" that a vote by its some 40,000 UAW workers voted down a new contract between the union and the automaker.
The UAW is expected to also release a statement on the result of its rank-and-file members defeating the proposed, four-year contract agreement, which had been tentatively struck Sept. 15 by the UAW and FCA top brass.
Union leaders are set to meet Thursday afternoon in Warren to decide what to do next.
In FCA's statement, the company said the two sides worked hard to reach an agreement that would both award workers while maintaining a competitive edge.
"Striking the right balance in these two objectives has been the most difficult thing to accomplish in these negotiations, but after many hours of dialogue and debate between the UAW and FCA US leadership, the Company felt that a just and equitable compromise had been reached," the statement reads.
Summaries of the tentative contract agreements can be seen here.
Some highlights included a $3,000 ratification bonus for eligible members, continued profit-sharing, wage increases and a new healthcare co-op designed to keep benefit costs low.
But workers have reportedly been leery of the overall wage structure as well as a planned production shift that would send some work to Mexico while bringing other labor back to the U.S.
The possible loss of U.S. production is one risk UAW workers face in negotiating new contracts with the automakers, but on the other hand the Detroit Three have been reporting solid profits and record vehicle sales.
All three companies are in far better financial shape than in 2011, when contracts were last struck and workers were forced to make some concessions, but the industry as a whole is now enjoying fairly robust growth, noted Karl Brauer, senior analyst at Kelley Blue Book.
"It's a tricky balance, because the earlier agreement is a large part of what's driven the success of U.S. automakers as well as the increased level of domestic vehicle manufacturing," Brauer said. "An increase in UAW pay and benefits absolutely makes sense right now, but if the cost to automakers is too high it will likely drive domestic vehicle production outside the U.S., and it could set them up for financial risk if and when the market contracts, which is inevitable."
The tentative agreement between FCA and the UAW would have served as a broad guide for negotiations with Ford and General Motors, but those latter automakers could now serve as a lead in the contract talks.
On Tuesday, workers at Ford's Kansas City, Mo. truck plant went on a five-day strike notice over disagreements with the Dearborn company. The Kansas City plant employs about 7,500 workers, who build the Ford F-150.
UAW Vice President Jimmy Settles said in a statement that the action was necessary because "the company has failed to negotiate in good faith at the local level on issues surrounding manpower provisions, the national heat stress program, and skilled trades scheduling amongst others."
Settles also said the current agreement FCA workers had been voting on is different than Ford's agreement on factors ranging from vacation language to entry-level and legacy pay rates.
Going into the talks, which officially began in July, one priority for the UAW was to bridge an apparent wage gap between so-called Tier 1 and Tier 2 workers.
The two-tier wage system was set up to boost hiring of entry-level workers in the late 2000s when automakers were struggling. Tier-2 entry-level workers are compensated at nearly half the hourly rate of so-called Tier-1 legacy workers who were hired before 2007.
FCA easily has the largest share of Tier-2 workers, at about 45 percent, versus 28 percent at Ford and 20 percent at GM.
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.