September 15, 2015 / 12:36 PM / 2 years ago

UAW, Fiat Chrysler reach tentative labor pact

DETROIT (Reuters) - Fiat Chrysler Automobiles (FCHA.MI) (FCAU.N) and the United Auto Workers union reached a tentative agreement for a new labor contract for the company’s 40,000 unionized workers in the United States, the union and the company said Tuesday evening.

UAW President Dennis Williams addresses their Special Bargaining Convention held at COBO Hall in Detroit, Michigan in this file photo from March 25, 2015. REUTERS/Jeff Kowalsky/Files

UAW President Dennis Williams and FCA Chief Executive Officer Sergio Marchionne scheduled a press conference in Detroit at 7:15 p.m. EDT (2315 GMT) to discuss the agreement. The two sides released no details.

The deal will now go to FCA unionized workers for ratification.

“Expectations are very high for raises for everyone,” Kristin Dziczek, labor analyst with the Center for Automotive Research, said Tuesday before the agreement was announced.

Veteran UAW workers, who make about $28 per hour, have not had a wage hike in a decade. More recently hired factory workers earn so-called second-tier wages that topped out at $19.28 in the old contract. Those workers have pushed UAW leaders to narrow that gap or set a clear path to eliminating it.

At FCA, about 45 percent of the hourly UAW workers earn lower-tier wages.

The surge in profits for the once-struggling Detroit automakers, FCA, Ford Motor Co (F.N) and General Motors Co (GM.N) has also fed pressure from rank-and-file UAW members for substantial raises.

FCA’s North American operating profit in the second quarter reported on July 30 was $1.35 billion, up 37 percent from the previous year.

If the UAW secured significant pay hikes it could help the union’s efforts to organize non-union auto plants in the southern United States, and possibly embolden workers in other industries where pay has stagnated in the face of economic uncertainty and global competition.

“The stakes go well beyond Detroit and the automotive industry,” said Harley Shaiken, a labor expert at the University of California-Berkeley.

Williams had also pushed publicly for the automakers to consider a proposal to pool their respective company health plans into a single group to curb rising costs. It was not known whether FCA agreed to that proposal in any form.

The terms of the deal with Fiat Chrysler, if ratified, will set the pattern for subsequent labor agreements at General Motors and Ford, the UAW has said. The union has extended contracts at Ford and GM pending the outcome of talks at FCA.

Reporting by Bernie Woodall and Joe White; Additional reporting by Nick Carey in Chicago; Editing by Lisa Von Ahn and Lisa Shumaker

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