October 7, 2015 / 1:50 PM / 3 years ago

Fiat Chrysler, U.S. union UAW at table as strike looms

DETROIT (Reuters) - With a threatened strike hanging over them, negotiators from Fiat Chrysler Automobiles NV and the United Auto Workers union continued to meet on Wednesday afternoon, a Fiat Chrysler spokeswoman said.

A Chrysler Warren Truck Assembly sign is seen in front of the Fiat Chrysler Automobiles (FCA) plant in Warren, Michigan October 7, 2015. REUTERS/Rebecca Cook

The U.S. union on Tuesday called for a strike against Fiat Chrysler’s U.S. operations at 11:59 p.m. EDT on Wednesday (0359 GMT Thursday) unless a new agreement on a four-year contract is reached.

There are 40,000 Fiat Chrysler UAW workers who could strike.

A union spokesman gave no details of the talks including whether the company was willing to sweeten the deal it offered the UAW that was approved Sept. 18 by the union leaders but rejected last week by 65 percent of its rank-and-file Fiat Chrysler membership.

Workers have said they turned down the contract because many wanted a two-tier wage and benefit system eliminated. Short of that, they sought a cap on that lower-paid second tier at 25 percent of the total union workforce. Many workers also wish to undo some of the concessions they have given since 2007 to keep the company competitive.

The last time the UAW called a strike against Detroit automakers, who currently make up about 37 percent of the union’s membership, was in 2007 at Chrysler and General Motors Co. GM and Chrysler were prohibited from striking until this year as part of the 2009 bailout agreement with the U.S. government.

Sean McAlinden, economist with the Center for Automotive Research in Michigan, estimated that Fiat Chrysler could lose $40 million of operating profit and at least $1 billion of revenue weekly in a strike of all its U.S. production plants. That calculation uses an estimated per-vehicle profit of about $1,100 in the first half of the year.

The company’s U.S. production plants are concentrated in the U.S. Midwest, in Michigan, Indiana, Ohio and Illinois.

McAlinden and other labor analysts have suggested for months that the UAW could cripple the company’s production by striking at four transmission plants and a castings plant that feeds them in the Kokomo-Tipton area in Indiana.

Such a move would within days slow and then stop production at company assembly plants in Michigan, Ohio and Illinois, including the plant that makes the profitable Jeep Wrangler in Toledo, Ohio.

A strike would occur as the U.S. auto industry is at its highest mark in a decade, and as Fiat Chrysler is enjoying an ongoing streak of 66 months with year-over-year sales gains.

Fiat Chrysler is the No. 4 automaker in the U.S. market as measured in sales, behind GM, Ford Motor Co, and Toyota Motor Corp. It represents about 12.4 percent of U.S. auto sales, up from less than 9 percent when Fiat and its CEO, Sergio Marchionne, took control of Chrysler in 2009.

Fiat Chrysler’s minivan plant in Windsor, Ontario, which is across the river from Detroit, would also be affected within days of a strike at U.S. plants, the president of the Canadian union, Unifor, told the Windsor Star newspaper. Unifor represents autoworkers at Fiat Chrysler, GM and Ford.

Jerry Dias, Unifor president, told the Windsor Star that a stoppage at the Kokomo-Tipton plants would affect Fiat Chrysler plants in Windsor and Brampton, Ontario, “within a day.”

Art Wheaton of the Worker Institute at Cornell University said that a short-term strike could help the UAW leadership prove to the rank and file that it is being tough with Fiat Chrysler, which he said matters because of some worker perceptions that the union and company are too close.

“A short-term strike gives the members the message that ‘We took it as far as we could at the table and if you want to get more, you are going to have to live on the strike pay but remember that every minute you are on strike is a dollar that Fiat Chrysler is not going to have to afford to pay you,’” said Wheaton.

He referred to the $200-per-week strike pay that UAW members will receive, which they do not earn until the strike goes into its second week. Workers do not receive their first strike pay until a strike reaches its third week.

Fiat Chrysler shares were up 3.2 percent at $14.71 in New York on Wednesday afternoon.

Additional reporting by Agnieszka Flak in Milan; Editing by Matthew Lewis

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