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

Wed, Sep 16 2015

The two-tiered wage structure that governs the way domestic car companies pay their unionized employees – and rankles many of them in the process Â– 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. So I'm delighted we could bring this to a satisfactory conclusion, and now I could focus the remainder of the objective, which is my first priority once ratification is achieved." See the full press conference, below.

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News Source: UAW
Image Credit: Getty

UAW/Unions
Chrysler
Sergio Marchionne
labor

By Pete Bigelow