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Fiat Chrysler's US workers reject contract offer

Dennis Williams.jpg
"We don't consider this a setback; we consider the membership vote a part of the process we respect," said Dennis Williams, UAW president.

[DETROIT] The United Auto Workers said on Thursday that members at Fiat Chrysler have rejected a proposed contract, a speed bump in the union's drive for deals with the Detroit Three automakers.

The UAW said the tentative four-year contract, which would provide broad pay raises, was voted down by 65 per cent of the union members in the ratification vote. The union represents 40,000 employees at Fiat Chrysler Automobiles' US unit, FCA US.

The contract deal was supposed to have served as a template for the UAW's contracts with two other major US automakers - General Motors and Ford - which are also up for renewal.

"We don't consider this a setback; we consider the membership vote a part of the process we respect," said Dennis Williams, UAW president.

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"What I love about our organisation most of all is that no matter what we do, what action we take, the ultimate decision and the power of the union is our members and they make the final decision," he said.

Mr Williams said the union will seek further talks with FCA after the failure of the tentative deal struck on September 15.

The contract would have seen US auto workers win their first raise in a decade, clawing back some of the major concessions they made to help the Detroit Three survive the 2008 financial crisis.

It was not clear whether the UAW will now pursue contract talks with GM and Ford. The union represents 50,000 employees at GM, the largest US automaker, and 52,000 at Ford, the number two.

The UAW has traditionally negotiated similar contracts with all three automakers to prevent their employers from suffering competitive disadvantages.


FCA, launched in 2014 after Italian automaker Fiat bought the third-largest US automaker and led by Italian Sergio Marchionne, said it was "disappointed" in the contract vote and "looks forward to continuing a dialogue with the UAW." But the vote of defiance by members of the powerful union represents a setback for Mr Marchionne and his restructuring plans for Chrysler in the US.

The "no" vote was overwhelming, supported by more than 70 per cent of the union members at assembly plants in the Detroit suburb of Sterling Heights.

Mr Marchionne had suggested production of passenger cars built there would end soon and be replaced with production of a new truck.

At a Jeep complex in Toledo, Ohio, more than 80 per cent rejected the contract. Workers said that they had been sold out by the company's threat to transfer a key product, the Jeep Cherokee, to another plant, a move they feared could eliminate hundreds of jobs.

The rejection also reflected workers' demands that Chrysler elevate a significant portion of the workforce hired over the past four years to the higher paying "first tier" of wages that are now earned by workers hired before 2007.

Roughly 43 per cent of the workforce now collects second-tier wages; critics of the tentative agreement said the number should be reduced to 25 per cent under a contract provision negotiated in 2011.

The second-tier workers were hired in the aftermath of the recession in which FCA's predecessor, the Chrysler Group, went bankrupt and required a federal bailout to stay in business.

"The memories of our near-death experience in 2009 are vivid to this day in the minds of most of us at FCA. A large number of new employees have been brought into the Group since then who, thankfully, did not have to endure the pain and sacrifices that were required of the workforce then," FCA US said in a statement on Thursday.

Norwood Jewell, the top UAW negotiator in the talks with FCA, had described the tentative agreement as the best contract the union had negotiated since 1999.

The rejected agreement included raises in the hourly wages of both tiers of workers and for new employees, a richer profit-sharing plan and system of bonuses for meeting quality and productivity goals.