UAW members apparently reject FiatChrysler pact

DETROIT (PAI) – Auto Workers members at FiatChrysler have apparently rejected a new four-year contract that UAW leaders worked out with FiatChrysler.

With one plant, in Belvidere, Ill., left to vote, huge rejection margins elsewhere – notably in the Detroit suburbs and Toledo, Ohio – made it “mathematically impossible” for the pact to pass auto analysts said. Some 87 percent of Toledo production workers, members of Local 12, voted no. So did 80 percent of skilled trades workers.

Key issues in the rejection were the pact’s apparent free hand to FiatChrysler to shift jobs between U.S. plants or to Mexico, and dissatisfaction with the very gradual elimination of the two-tier wage system at the #3 Detroit automaker.

The FiatChrysler vote is important because new UAW President Dennis Williams had selected the company as the firm where the union would negotiate its “pattern” contract, whose provisions could then be adopted at the two larger Detroit-based car firms, Ford and GM.

And Williams and UAW Chrysler Department Vice President Norwood Jewell had strongly urged the 36,000 FiatChrysler workers to accept the agreement. The union had no immediate comment on the rejection report.

UAW dissidents urged a “no” vote. “Both FiatChrysler and the UAW are working to create even more divisions between workers within the plants, pitting young against old in a drive to increase productivity through relentless speed-ups,” one dissident blog said. 

The contract gave more-veteran “Tier 1” workers raises of 3 percent on ratification and again in September 2017, plus 4 percent lump sum bonuses in the pact’s second and fourth years. That prompted the dissidents to say the Tier 1 workers’ pay would essentially stay flat, following a decade of no raises at all.

Tier 1 workers now get around $28 hourly. Tier 2 workers would start at $17 an hour, a contract summary said. Tier 2 workers’ wages would rise to a maximum of $25.35 an hour after seven years. By the end of the contract, new hires in 2015 will rise to $22 an hour, with other workers rising to $23 or $24 an hour. Tier 2 covers about 45 percent of FiatChrysler workers.

“Back in 2007, we understood why we had to negotiate a two-tier wage structure,” Williams and Jewell said in a letter to workers. “But that was then and this is now,” as the Detroit car firms are profitable.

“Now is the time to share in those gains. Your bargaining committee has taken a thoughtful and strategic approach to addressing this inequity over time in a way that allows the company to continue to invest in its plants, develop new product and keep our jobs secure.”

The health care system FiatChrysler and the UAW agreed to is a version of the Voluntary Employee Benefits Agreement (VEBA) the Detroit 3 and the UAW created after the Great Recession hit. The VEBA covers retirees and the UAW runs it, with the automakers funding it through a complicated stock arrangement. Williams, in his cover letter, says the union wants to extend the VEBA to active workers at Ford and GM too, producing a larger pool of workers and economies of scale the union can use in negotiating health care costs.

The union and the firm also agreed to discuss – in the future – what to do about the so-called “Cadillac tax” that takes effect, under the federal Affordable Care Act, in 2018. That levy taxes so-called “high value” health care plans, many of which are union plans. Democratic presidential hopeful Hillary Clinton may come out for Cadillac tax repeal in early October.

The Steelworkers, the Communications Workers, the Laborers and other unions have banded together in a coalition to roll back the Cadillac tax before it fully takes effect. The Cadillac tax is supposed to force people to buy cheaper health insurance – but its revenues also help pay for the money needed to cover the uninsured.

Photo: An assembly line worker builds a Chrysler automobile.  |  Paul Sancya/AP