FCAU Fiat Chrysler Automobiles NV

By Nora Naughton 

A lengthy round of labor talks in Detroit has ended after the United Auto Workers said it secured a new four-year contract with Fiat Chrysler Automobiles NV, the last of three deals negotiated this year by the union.

About 71% of Fiat Chrysler's unionized workforce voted to approve the agreement, the UAW said. The new deal includes terms that will likely close a longstanding labor-cost gap between the Italian-American car company and its larger rivals, labor experts say.

The ratification brings to a close a grueling round of labor negotiations for UAW leaders, with new contracts in hand at Fiat Chrysler, General Motors Co. and Ford Motor Co. Talks were more confrontational than in previous years, with the UAW executing one of the largest private-sector strikes in nearly half a century at GM. Top UAW officials also faced a widening federal investigation into corruption in its top ranks as negotiations progressed, leading to the resignation of former UAW President Gary Jones last month.

As talks began at Fiat Chrysler, GM used evidence uncovered in the federal investigation of corruption between Fiat Chrysler executives and UAW leaders as the backbone for a civil racketeering lawsuit. In the suit, GM accuses Fiat Chrysler of solidifying its labor-cost advantage by bribing UAW officials to ensure it had certain advantages over its two Detroit competitors, including a less expensive workforce.

The now-ratified contract at Fiat Chrysler, which covers the company's roughly 47,000 UAW-represented workers, includes wage increases, improved health-care benefits and enhanced profit-sharing. Full-time workers also will receive a $9,000 ratification before the end of the year, the UAW said.

Fiat Chrysler also is attempting to solidify the terms for a merger with France's PSA Group. Current UAW President Rory Gamble has said the union would discuss this merger at the bargaining table, but it didn't directly affect the terms of its new contract with Fiat Chrysler.

The new contract terms are likely to close a roughly $8-an-hour labor-cost advantage Fiat Chrysler has over GM, which became a focus of GM's racketeering lawsuit, according to labor experts. GM's average hourly spend on labor was $63 heading into contract talks this summer, and Ford's was $61, according to the Center for Automotive Research. Fiat Chrysler was spending $55 an hour.

Those figures are expected to increase over the four-year span of the new contracts with the UAW due to gains on wages and health care won by the union, analysts have said. The UAW's 40-day strike at GM is also expected to ding the company's 2019 earnings by nearly $3 billion.

Despite concerns about a looming downturn in the U.S. auto market, the union was able to achieve much of what it set out to win in this round of talks, said Kristin Dziczek, a labor expert and economist at the Center for Automotive Research. Still, the companies maintained important flexibilities on the use of temporary workers and where they can build vehicles.

"The UAW walks away from this with a lot of money in its pockets," Ms. Dziczek said. "But what the union didn't get is any additional job security guarantees or protections."

(END) Dow Jones Newswires

December 11, 2019 17:16 ET (22:16 GMT)

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