US autoworkers won their first pay raise in a decade in a deal with Fiat Chrysler Automobiles NV’s (FCA) US subsidiary that will be used as a template for talks with General Motors Co and Ford Motor Co, their union said on Friday.
The United Auto Workers Union (UAW) succeeded at clawing back some of the major concessions made in order to help the Detroit Three carmakers survive the 2008 financial crisis.
While the wage gains are significant, the UAW was not able to fully close a much-maligned pay gap between newer employees and those with seniority.
Photo: Reuters
It was also unable to stop FCA US from shifting some US production to Mexico, but union officials said they do not expect to see any jobs lost because demand for the vehicles that will remain in the US is so strong.
“Once the membership looks at it, I think they’ll ratify it. They’ll see it’s a fair and balanced agreement,” UAW president Dennis Williams told reporters.
The UAW contracts cover 142,000 workers at the Detroit Three, of which nearly 40,000 work for FCA.
Fiat Chrysler chief Sergio Marchionne called the tentative agreement a “transformational deal” in a letter to employees.
“It guarantees that our workers will share equitably in the success we are able to generate working together while ensuring that our company will be able to remain competitive,” he said.
The union’s executive council voted to endorse the contract on Friday. Ratification votes are expected to begin next week at plants across the country.
Workers with seniority who currently earn between US$28 and US$33 per hour will get 3 percent raises in the first and third year of the contract and lump sum payments in the second and fourth years of the contract.
Those on the “second tier,” who were hired after 2007, will see their wages increase from the current rate of US$16 to US$21 per hour up to US$22 to US$25 per hour over the course of the four-year contract.
Everyone will get a US$3,000 signing bonus.
The union also won an increase in the profit sharing formula, which will pay workers US$800 for every 1 percent in profit margin generated by the company in North America.
FCA also agreed to a new quality and productivity bonus which could give workers an extra US$4,000 to US$13,000 over the course of the contract.
The company also promised to invest US$5.3 billion in its US factories and products over the next four years.
However, that investment comes with the bitter pill of production realignment.
Production of lower-margin compact vehicles such as the Dodge Dart, Chrysler 200 and Jeep Compass and Patriot would all move to Mexico, while production of the Jeep Cherokee would move from Toledo, Ohio to Belvedere, Illinois.
The union was also able to protect its generous healthcare benefits despite rising costs and to recover some items lost during the recession such as double-time pay for working on Sunday.
“Sundays are important to us,” Williams said.
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