Proposed Fiat Chrysler UAW pact gradually ends two-tier pay: sources

Thu Oct 8, 2015 7:04pm EDT
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By Bernie Woodall and Nick Carey

DETROIT/KOKOMO, Ind. (Reuters) - The latest proposed four-year contract for Fiat Chrysler Automobiles NV's U.S. unionized workers would over time eliminate the much-maligned two-tier pay structure, allowing new hires to reach top pay within eight years, sources said.

The proposal agreed by United Auto Workers and Fiat Chrysler (FCAU.N: Quote) (FCHA.MI: Quote) negotiators late Wednesday night would also increase the top pay for some second-tier workers to $29 in the course of the agreement, up from their current pay of about $19 per hour, sources said. That would also be up from about $25 top pay for second-tier workers that was in the proposed contract rejected last month by a nearly 2-to-1 margin.

The failure of the first agreement led the UAW to threaten a strike against Fiat Chrysler, which was to begin Wednesday at one minute before midnight eastern time. That would have been the first stoppage at a U.S. automaker since 2007.

There is no cap on the percentage of second-tier workers in the new deal. If one had been enacted, that could have created a permanent second tier while raising some to first-tier pay level, analysts said.

The sources would not say whether the company put more money on the table or if the same amount of spending in the previous agreement was reshaped.

Alston Horner, a 25-year-old second-tier worker at the Kokomo Transmission Plant in Indiana, said on Thursday he will have to wait to learn the details from his local union leaders before he can offer support of the new proposal.

"That $29 sounds good, but the company just doesn't hand you something without taking something away somewhere else," said Horner. "And I still think it takes too long to get to the top. Eight years? That's more than one contract. How do we know they are going to keep that promise for more than one contract?"

Second-tier workers with some tenure will get to the top pay during the four years of the contract. For instance, a five-year veteran who makes the lower tier of pay would reach the new top pay in three years, the sources said.   Continued...

Fiat Chrysler Autos assembly workers leave the Fiat Chrysler Automobiles (FCA) Warren Truck Assembly plant during a work shift change in Warren, Michigan October 7, 2015.  REUTERS/Rebecca Cook