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Sergio: Two-tier wage structure eliminated in FCA deal with UAW [w/video]

The two-tiered wage structure that governs the way domestic car companies pay their unionized employees – and rankles many of them in the process – could soon be a thing of the past. In a tentative deal seen as a bellwether for other ongoing negotiations, the United Auto Works and Fiat Chrysler Automobiles reached a tentative agreement on a four-year contract that would disband the two-tier structure, in which some workers earn higher hourly wages for performing the same job, over time. Officials who announced the tentative agreement late Tuesday in Detroit were short on details of its contents and union members still must ratify it. But FCA CEO Sergio Marchionne said the two-tiered structure will disband by the end of the contract. "The team has crafted together a very thoughtful process, where the issue will go away, go away over time," he said. Further details weren't divulged. Union negotiations with Ford and General Motors are ongoing, so hammering together a deal that sheds the two-tier structure with Chrysler first could set a precedent followed by the other members of Detroit's Big Three automakers. Other key issues that emerged in negotiations with FCA included escalating health-care costs and rewarding workers for the health of the auto industry. But dealing with the two-tier structure, born as GM and Chrysler circled bankruptcy during the Great Recession, was something the UAW wanted to confront. "The UAW has a philosophy about the economic balance of this country and the inequality, and our mission is to bridge the gap in this country," UAW president Dennis Williams said. "It's gotten out of whack. ... We don't want to share anything, and I truly believe that corporations that have that set of mind have lost their way." The UAW's executive board was expected to review the tentative agreement this morning before a union membership vote is scheduled. For Marchionne, who skipped the Frankfurt Motor Show to shepherd the negotiations during their final hours, the tentative agreement means he can shift his concern back toward pushing an FCA merger with General Motors or another company and touting the idea of industry consolidation in general. "The other side of this is capital usage in this business, which is something that remains unsolved," he said. "It makes the labor side sort of pale in comparison, given the magnitude of the potential synergies and benefits we'd be deriving from an intelligent approach.

Marchionne's FCA-GM merger might come after Ferrari spinoff

Sergio Marchionne is continuing to rumble about working out a merger with General Motors, but don't expect anything big to happen before at least early next year. That's because Marchionne would likely wait for the Ferrari spin-off to be complete before beginning his next big deal, according to Automotive News. While the Ferrari IPO on the New York Stock Exchange is expected in the coming weeks, that only concerns 10 percent of the shares. The remaining 80 percent of stock is being distributed among shareholders in 2016. Piero Ferrari holds the final 10 percent with no intention to sell. This strategy allows FCA to claim 80 percent of the Prancing Horse's profits in the automaker's 2015 financial results. According to Automotive News, the tactic has other advantages, as well. FCA would be flush with cash by waiting for the spin-off to be complete, and it would keep Ferrari separate if a GM merger actually happens. Marchionne thinks Ferrari could be valued at over $11 billion in the IPO, and it could make FCA $3.3 billion richer when complete. Marchionne believes a combined FCA/GM could sell 17 million vehicles a year globally and rake in $30 billion in earnings. In the CEO's opinion, the two automakers are wasting money by developing components to do the same things on their vehicles. Although, so far the General's top execs are rebuffing all of his advances.

Federal judge orders Barra and Manley to try to resolve GM racketeering lawsuit

DETROIT — A federal judge in Detroit on Tuesday ordered the chief executives of automakers General Motors and Fiat Chrysler Automobiles to meet by July 1 to try to resolve GM's racketeering lawsuit. U.S. District Court Judge Paul Borman called on GM CEO Mary Barra and FCA CEO Mike Manley to meet in person to try to resolve a case that could drag on for years. "What a waste of time and resources now and for the years to come in this mega-litigation if these automotive leaders and their large teams of lawyers are required to focus significant time-consuming efforts to pursue this nuclear-option lawsuit if it goes forward," Borman said at the end of a hearing during which FCA asked the judge to dismiss GM's lawsuit. Borman said instead, the companies need to focus on building cars and keeping people employed at a time when the coronavirus has hurt the U.S. economy and the country is also dealing with issues of racial injustice after the death of George Floyd, a Black man whose death in police custody in Minneapolis triggered worldwide protests. GM filed the racketeering lawsuit against FCA last November, alleging its rival bribed United Auto Workers (UAW) union officials over many years to corrupt the bargaining process and gain advantages, costing GM billions of dollars. GM is seeking "substantial damages" that one analyst said could total at least $6 billion. Barra and Manley should meet, taking into account social distancing to keep them safe, to "explore and indeed reach a sensible resolution," Borman said in the hearing, which was broadcast online. It is common for judges to order parties to try to resolve disputes out of court. But it is unusual that the chief executives of two big companies be instructed to meet face-to-face, not just to settle their differences but also to serve a greater good. A GM spokesman said the No. 1 U.S. automaker has a strong case and "we look forward to constructive dialogue with FCA consistent with the courtÂ’s order.” FCA had no immediate comment. Borman said he wanted to hear from Barra and Manley personally at noon on July 1 to provide him with results from their discussion. FCA shares were up 6.1% at $10.24 in New York and GM shares were down 0.5% at $26.25 on Tuesday afternoon. Government/Legal Chrysler Fiat GM