U.S. union sets sights on Fiat Chrysler in auto talks

Canadian workers watching the American negotiations for their 2016 contract deals

The United Auto Workers’ (UAW) choice of Fiat Chrysler as its negotiating target in talks toward a new contract has raised some interesting questions for Canadian autoworkers.

Fiat Chrysler is the least profitable of the Detroit Three automakers and thus has the least to give in talks set to establish the pattern for the other two U.S. automakers.

Industry watchers had been betting the UAW would choose either General Motors or Ford Motors, since North America’s autoworkers are trying to regain ground they lost during the auto industry crisis of 2008.

“Pretty much everyone was picking either GM or Ford given that they’re in much better financial shape than Fiat Chrysler,” said Tony Faria, an auto industry expert with the University of Windsor.

“To me, Fiat Chrysler would be the least able to agree to a lucrative contract.”

On the other hand, Fiat Chrysler is also the least able to withstand a strike at its North American plants, Faria noted in an interview, “particularly their Jeep products, which are produced in Toledo and the RAM trucks, which are all built in the U.S. They can’t afford to lose production of either of those.”

A strike, which could disrupt production at Chrysler’s Canadian plants in Windsor, Ont., and Brampton, is not widely expected.

The deals covering 140,000 American autoworkers were set to expire Monday at midnight. The talks are of special interest to Canadians for another reason: The outcome will set the tone for industry negotiations on this side of the border with the same three U.S.-based automakers in 2016.

While the Canadian Auto Workers, now part of Unifor, have struck somewhat different deals from their U.S. counterparts, the issues are similar, Unifor economist Jim Stanford noted. Both are looking for a raise for their most senior members, who haven’t seen a real pay increase in the past seven or eight years.

They’re are also looking to end a practice that began during the auto industry crisis of putting new hires on a different wage scale than existing employees.

In Canada, new hires start at a lower rate, $21an hour, and take 10 years to reach $35 an hour, the same top rate existing workers got after six years on the job.

In the U.S., new hires start at $15 (U.S.) an hour and top out at $19.28, versus $28 for those already on staff, a structure that has resulted in a twotier wage system.

Unifor declined to comment on its U.S. counterpart’s negotiating strategy. However, Stanford noted that the decline in the Canadian dollar since the last set of talks has made Canadian wage rates more favourable than the U.S.

Fiat Chrysler, with its larger share of tier 2 workers, has the most to lose in closing the gap. Yet, its chief executive officer, Sergio Marchionne, has been the only vocal opponent of the two-tier setup among auto industry executives.

“I firmly believe you should pay the same wage for the same work,” the Italian-born, Toronto-raised Sergio Marchionne told a joint press conference with the UAW in August. Anything less is “bound to create tension and is unsustainable in the long term.”

UAW president Dennis Williams talked about trying to find creative solutions “that enhance our members’ ability to have a high-standard, middle-class standard of living and yet have flexible and variable pay.”

Another theory is that choosing Fiat Chrysler would allow the UAW to maintain its long-standing practice of “pattern bargaining,” in which the deal set with the first company becomes the model for the other two.

The union says pattern bargaining ensures the automakers don’t try to compete on the backs of its workers’ wages.

“The UAW has to get an agreement that will pass Fiat, otherwise it’ll blow up their pattern,” Arthur Wheaton, a labour professor at Cornell University, said in an interview.

“By going to Fiat first, they can add contract sweeteners to GM and Ford, who can easily afford more than Fiat Chrysler can.”