UAW-FCA Council OKs contract proposal; workers vote starting Friday

Dec. 5--Fiat Chrysler Automobiles workers represented by the UAW would see a boost for temporary workers, improvements in health care for in-progression workers and a bonus that matches what Ford workers get if they ratify a proposed labor contract.

Voting begins Friday and is expected to wrap up next Wednesday in an effort to make those bonuses available by Christmas.

Without the outward drama of protests and a strike that marked General Motors' proposed deal with the union, the UAW-FCA Council gave its blessing Wednesday to a tentative agreement between the union and automaker.

Still, the local union leaders who make up the council met for almost six hours at the Renaissance Center in Detroit before taking action.

Cindy Estrada, UAW vice president and director of the UAW-FCA Department, said the agreement:

-- Lifts all current full-time employees to top pay in four years.

-- Provides parity on health care for all in-progression employees.

-- Provides a pathway to full-time status and eventually top pay for all temporary employees.

-- Extends prescription drug coverage for temporary employees.

-- Sets a $9,000 ratification bonus for traditional members and a $3,500 bonus for temporary members.

-- Enhances the profit sharing formula by 12.5%.

-- Creates more than 7,900 jobs from more than $9 billion in investment, including $4.5 billion in newly announced projects.

"It's estimated in 2020 that perhaps 3,800 of the temporary employees will now get to full-time status," according to UAW spokesman Brian Rothenberg.

The four-year agreement includes a moratorium on plant closures. The investment announced in February for FCA's massive expansion on Detroit's east side to remake the Mack Engine complex for Jeep SUV production is included in the totals.

Investments were announced for numerous plants:

-- Belvidere Assembly ($55 million, current Jeep Cherokee continues with fresh models off that platform)

-- New Detroit assembly ($1.5 billion, new Jeep three-row SUV and next generation Grand Cherokee)

-- Jefferson North ($3 billion, current Dodge Durango continues with mild hybrid electric Durango in 2020 and next generation Grand Cherokee with plug-in hybrid version in 2021)

-- Toledo North and South ($280 million)

-- Sterling Heights Assembly ($210 million)

-- Warren Truck ($2.8 billion, new Wagoneer/Grand Wagoneer in 2021)

-- Also: $650 million for power train plants, $495 million for stamping plants and $85 million at other facilities, including $600,000 for FCA Auto Transport.

The union noted that the Mount Elliott Tool and Die facility in Detroit, where die making has already ended, is not to be sold or disposed of at the present time. Die-making equipment there is supposed to be moved to stamping plants and efforts will be made to repurpose the building.

The union also released information about another plant with an uncertain future. FCA will continue joint operations with supplier ZF at Marysville Axle for two years. All current FCA employees will be allowed to transfer within the Detroit labor market, although ZF is expected to continue operations at the plant.

The deal, which gives an estimated 47,200 UAW-represented FCA workers a ratification bonus on par with those at Ford and only $2,000 short of GM workers, is widely expected to be ratified.

If it is, it would mean the end of 2019 contract bargaining with the Detroit Three, a period marked by months of discussions, a 40-day GM strike and the downfall of ex-UAW President Gary Jones, who resigned in disgrace as the union and automaker corruption scandal continued to unfold. The scandal, which has prompted pledges of ethics and financial controls reforms from acting President Rory Gamble, took a new turn Wednesday afternoon when former UAW VP Joseph Ashton, a former GM board member, pleaded guilty in federal court in Detroit for his role in a scheme involving kickbacks and bribes from contracts worth millions of dollars.

The UAW's International Executive Board is expected on Thursday to select a new president to formally replace Jones.

Despite the likelihood of ratification, several workers have expressed concern that union locals had already scheduled votes before Wednesday's council meeting. Those workers said that's a sign that the deal will be pushed through. FCA workers, however, do have the distinction of having rejected their first contract offering during 2015 talks.

The deal follows the pattern set with GM, the company selected by the union to go first in bargaining, and then Ford. That initial arrangement set a path to permanent status for temporary workers and a quicker journey to top pay for in-progression employees. The Ford and GM contracts also saw wage increases -- two 3% annual raises and two 4% lump sum payments -- and no change in health care costs.

FCA's heavier reliance on temporary and in-progression workers than its crosstown Detroit rivals was expected to make improvements for those employees more of a contentious issue for the automaker. Fiat Chrysler's labor cost advantage and its earlier decision to shift its focus toward SUV and truck production has led to a robust financial picture a decade after Chrysler's bankruptcy.

Once the contract is settled, attention on FCA will likely turn to the proposed merger with Peugeot maker PSA Groupe. That arrangement, with more details expected before the end of the year, is expected to put new pressure on the rest of the auto industry to consolidate as the entity would become the world's fourth-largest automaker, combining FCA's popular Jeep and Ram franchises with PSA's head start in electrification.

PSA's ability to quickly turn around the former GM brands Opel and Vauxhall add an interesting storyline as PSA in its new form would compete directly against GM on its home turf. All this is happening as GM's federal lawsuit against FCA, alleging the company and its late CEO Sergio Marchionne corrupted labor talks for years, plays out. A shareholder lawsuit was filed Monday in New York against FCA, two current company leaders and the co-executors of Marchionne's estate, piggybacking on the GM claims.

Here are more highlights from the UAW-FCA deal:

-- Health care protected from cost shifting.

-- Retirement packages: $60,000 for eligible hourly Belvidere, Illinois, Marysville Axle, Mount Elliott Tool and Die and Milwaukee PDC pre-2007 employees.

-- Skilled trades: Two $1,000 tool allowances.

-- Production workers already earning top rate and skilled trades workers will receive two 4% lump sum bonuses and two 3% general wage increases. Production workers still growing into top rate will receive two 3% wage increases in addition to annual progression increases.

Contact Eric D. Lawrence: [email protected] or (313) 223-4272. Follow him on Twitter: @_ericdlawrence.

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