Workers at Fiat Chrysler Automobile’s Kokomo Transmission plant had a front-row view of the 40-day strike by local General Motors workers, who picketed just across the street from the factory on Ind. 931.
Around 250 members of United Auto Workers Local 292 walked out of the GM Components Holding plant in September to fight for higher wages and job security as the union and company hashed out a new contract. That agreement was ratified on Oct. 25.
Now, thousands of local FCA workers may be facing a strike of their own.
The UAW has begun to focus bargaining on FCA, raising the possibility of another strike against a Detroit automaker. FCA is the last of the Big 3 Detroit automakers to go to the bargaining table with the union.
Ford workers ratified their contract Friday night, while the union settled with General Motors last month following the strike by 49,000 workers that shut down the company’s U.S. production for more than five weeks.
Ford, which has 55,000 UAW workers, mostly followed the pattern agreement set at GM. But industry analysts say the same deal will cost Fiat Chrysler a lot more money because of the makeup of its workforce.
Fiat Chrysler CEO Mike Manley said recently that automakers are in “different conditions” in terms of labor forces, hinting the company may be reluctant to follow the pattern.
The union, however, expects FCA to follow the template set by GM and Ford.
“We look forward to bargaining a fair, balanced and patterned contract as FCA is a profitable company,” the UAW said in a statement. “You cannot brag about your earnings to Wall Street and at the same time ignore the sacrifice of your workforce that put you in that profitable position.”
Officials with UAW Local 685 decline to comment for this story.
The deal with Ford and GM gives workers hired after 2007 pay raises so they reach top UAW production wages within four years. It also gives temporary workers a path to full-time jobs within three years. Workers hired after 2007 now are paid lower wages than workers hired before that, even though they’re doing the same jobs. Workers hired before 2007 get a mix of annual pay raises and lump sum payments.
In Kokomo, UAW Local 292 members overwhelmingly voted to reject that contract, with 80% of production workers and 64% of skilled trades voting it down.
UAW Local 292 Shop Chair Greg Wohlford said in a previous interview that the biggest reason local workers disapproved of the agreement was the fact it didn’t guarantee jobs would stay in Kokomo or any other GM plant and not be shipped to Mexico or other overseas locations.
The contract also capped local workers’ pay at about $10 less than GM’s non-Component Holdings plants, like the ones in Fort Wayne and Marion, where the top wage is $32.32 per hour.
For Fiat Chrysler, the company has more workers hired after 2007 and a higher percentage of temporary workers than either Ford or GM. That means the terms of the contract set with those companies would cost FCA more money, said Kristin Dziczek, vice president of labor and manufacturing with the Center for Automotive Research, an industry think tank in Ann Arbor, Michigan.
“They are looking at significant cost increases,” Dziczek said of FCA. She says a strike against FCA isn’t out of the question, and depends on how willing the company is to follow the pattern set by Ford and GM.
FCA said in a statement it welcomes bargaining toward a deal to keep investing in the company’s future and creating opportunities for employees and communities.
Ford has about 18,500 workers hired after 2007 who will get big pay raises with the new contract, compared with GM’s 17,000. But Fiat Chrysler has over 20,000 union employees hired after 2007.
In addition, about 11% of Fiat Chrysler’s UAW workforce is temporary, while Ford has a cap at 8%, Dziczek said. So Fiat Chrysler would have to make more workers full-time in the next three years, another large expense.
Since 2016, Fiat Chrysler has posted more than $10 billion in net profits, largely on earnings in North America. The profits will make it tough for FCA to argue that it should be able to deviate from the pattern set at GM and Ford, Dziczek said. Also, Fiat Chrysler workers in the past have received lower annual profit-sharing checks than those at the two Detroit competitors.
Fiat Chrysler in past years has enjoyed a labor-cost advantage compared with Ford and GM. FCA’s labor costs, including wages and benefits, amounted to $55 per hour going into the contract talks, while it was $61 at Ford and $63 per hour at GM, according to the Center for Automotive Research. That compares with an average of $50 per hour at U.S. plants owned by foreign-based automakers.
Complicating the talks is an agreement for Fiat Chrysler to merge with France’s PSA Peugeot, with the new entity run by PSA’s chief executive. Details are still being worked out, but the deal could close by the end of the year. Experts say the deal would strengthen the company’s position in an automotive industry shifting quickly toward electric and autonomous vehicles.
United Auto Workers Local 685 President Rick Ward said in a previous interview that “We realize that FCA was behind the 8-ball on the electric vehicles, and I think Renault is probably leading the pack on that. ... I got no judgment now, I’ve just got to wait and see what I hear from the International.”
Ward, like industry experts across the globe, said he views the move in part as an effort by FCA to prepare itself for the industry’s current and incoming changes.
“I think that’s what it would do,” he said. “I think that’s why they did it. But, again, the business end of it, I’m not going to pretend I really know how it works. They said no plant closures, so right now there’s no reason that that’s going to happen.
Also mudding the contract negotiations are the ongoing federal investigation into some of the UAW’s leadership, with bribery and embezzlement allegations starting at Fiat Chrysler. Many workers at the company have been suspicious of the union’s leadership since the scandal became public in 2017.
Union President Gary Jones, whose home was raided by federal agents and is implicated in the scandal, has taken a paid leave of absence. He has not been charged in the case, nor has he commented. Vice President Rory Gamble, who negotiated the contract with Ford, is now acting president.
— The Associated Press contributed to this story.