Marchionne satisfied with Unifor contract

Lower loonie brings cost of deal within expectations for carmaker

Fiat Chrysler Automobiles CEO Sergio Marchionne said Tuesday he was “relatively satisfied” with the new, four-year contract struck this month with Unifor.

The additional costs generated from the agreement are “manageable,” Marchionne said during a third-quarter financial results conference call with financial analysts.

The contract was modelled after an agreement reached with General Motors, which set the pattern for Detroit Three bargaining.

“On the economics, we were bound by the GM deal,” Marchionne said. “When you look at the impact on overall costs of the deal and you combine it with the devaluation of the Canadian dollar, both (assembly) plants in Canada remain competitive.”

The costs’ impact “is manageable, and certainly falls within our plan expectations for FCA,” he said. “I feel relatively satisfied that we reached a satisfactory objective; it buys us peace on the farm for the next four years, which are pretty important years.”

The deal, which covers almost 10,000 hourly workers in Windsor, Brampton and Etobicoke, offers a general wage increase of four per cent for traditional workers, and $12,000 in bonuses over the life of the contract. New hires will also receive the bonuses along with annual wage increases in each year of the 10-year grid to the maximum hourly rate of $36.17.

The contract also includes a pledge by FCA to invest $325 million to rebuild the paint shop at the Brampton plant, which assembles the Chrysler 300 and Dodge Challenger and Charger sedans. It also has committed $6.4 million in upgrades at its Etobicoke casting plant. FCA Group posted a thirdquarter net profit of US$659 million — up from US$420 million in the same period last year. U.S. sales rose one per cent to 570,000 vehicles while market share increased 30 basis points to 12.5 per cent.

In Canada, however, the falling loonie has proven to be a doubleedged sword for the carmaker. While the lower Canadian dollar has benefited its Canadian operations, it has made FCA’s vehicles more expensive for car buyers, said Marchionne.

“Things are getting quite expensive” in Canada, he said.

FCA’s third-quarter sales in Canada fell 18 per cent compared to the same period last year, while market share dropped 240 basis points to 12.6 per cent.

“The alarming situation is Canada,” Marchionne said. “We were market leader up to the first half, in terms of share. But we’re not out to chase volumes just to get numbers into the fold here.”