Fiat Chrysler labor interviews can be difficult

On the one hand, things are going pretty well at Fiat Chrysler, which would imply that it can come to an agreement fairly quickly.

The company has said it has no plans to shut down either US or European facilities, and financial analysts and credit rating agencies all agree that the company will be stronger if and when the deal is completed.

Indeed, rather than shutting down American plants, such as GM ( GM ) and Ford ( F ] does, Fiat Chrysler ( FCAU ) is building a new facility to build Jeeps in Detroit, which will add nearly 4,000 jobs. And Fiat Chrysler has already added about 5,000 union members to payroll payments over the past four years.

But Fiat Chrysler has worked under a contract that gave it a lower average labor cost than either GM or Ford in recent years, as it used far more recent hires to receive lower wages and lower benefits than workers hired before 2007.

While veteran employees receive roughly the same salary in all three companies, only 28% of Fiat Chrysler hourly workers were hired before 2007, thus earning the highest salary. a lower salary and benefit package, or temporary workers receiving an even smaller package.

That means Fiat Chrysler today has a labor cost advantage of between $ 8 and $ 1[ads1]0 hours compared to Ford and GM said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research, a think tank in Michigan.

The Ford and GM agreements will eliminate the pay gap among permanent workers at the end of the four-year contracts. And these agreements will also move several of the temporary workers to permanent status.

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Since GM and Ford had far fewer of these workers than Fiat Chrysler, they could agree that the union demand easier . It will be far more expensive for Fiat Chrysler to match the agreements the union has won from GM and Ford.

The Fiat Chrysler management has already made it clear that they may not comply with the same terms.

"Obviously, each of us, each of the three big ones in Detroit, is in a different workforce situation," CEO Michael Manley told investors last month. "I hope to be able to put an end to the negotiations and move on to building great cars in the near future, but beyond that I don't want to get into speculation about what might work and what might not work. Here . "

This comment brought a quick response from the union, which made it clear that it expects Fiat Chrysler to step up in the pattern set for GM and Ford, especially since the North American business is where it makes its money.

"You cannot boast of your Wall Street earnings and at the same time ignore the sacrifice of your workforce that put you in the profitable position," the statement said.

The merger agreement with PSA also poses a negotiation challenge for the company. If it goes through, the new combined company will be bigger than GM. That will reduce the argument that it needs a cheaper deal than GM and Ford.

"The argument that & # 39; we are the little brother and deserves a [cost saving] deal," it's going to be a tough sale, "Dziczek said.

Thus, Dziczek said there is little chance of Fiat Chrysler will be able to avoid matching the agreements between GM and Ford.

"Fiat Chrysler workers have seen the agreement the union got with GM and Ford. They will not settle for much less, "she said. Even if the union negotiators were to reach such an agreement, it will not be ratified by UAW members who receive a lower salary.

" You can make an appointment you want, "But if it doesn't get ratified, it's not a contract," she said.

"I know it's cold, I know it's almost a Thanksgiving party. But I don't think it will rule out that the union is using the strike weapon if they can't get what they need, "Dziczek said.

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