By on October 4, 2011

Considering the United Auto Workers’ VEBA fund is still Chrysler’s second-largest shareholder, CEO Sergio Marchionne is taking an amazingly hard line with the union. With a GM deal long done, and Ford’s deal moving towards approval, Chrysler is the last automaker on the UAW’s to-do list… and Marchionne tells Bloomberg he’s up for a fight if necessary, saying

I sincerely hope that we don’t have to get to arbitration. But if necessary, Chrysler will go there. We and GM are completely different

Marchionne is reportedly pushing the UAW for a number of tough concessions, including a mere $3,500 signing bonus (compared to $5k at GM and a reported $6k at Ford), and the elimination of a planned 2015 cap on entry-level “Tier Two” workers (at 25%). And though both of these are tough asks, he’s using UAW boss Bob King’s concept of union internationalism as a cudgel against the UAW, playing Italian unions off their American counterparts. And as a result, he could earn Chrysler a favored place among America’s unionized autoworkers.

The key to Marchionne’s Italian strategy was to threaten Italian unions with the prospect of Fiat pulling out of its home market and retrenching in lower-cost production centers like Poland and Brazil. That agreement eventually went through, and, as Bloomberg reports

Marchionne reached three labor agreements in less than a year as part of his strategy of raising productivity at Fiat’s domestic plants. The deals at all three factories include measures to limit strikes and curtail absenteeism.

Fiat also won approval to introduce longer shifts and run plants on a six-day workweek. In addition to more hours, workers get shorter breaks and postpone lunch until their shift’s end.

The changes at Mirafiori, Fiat’s oldest plant, in January were won with a 54 percent majority and set a milestone in Italian labor relations.

And to prove how serious he is, Marchionne has even withdrawn Fiat from Confindustria, Italy’s largest business organization, over difficulties in applying those reforms uniformly across its Italian production base. Says Marchionne in his withdrawal letter

Fiat, which is engaged in the creation of a major international group with 181 plants in 30 countries, cannot afford to operate in Italy in an environment of uncertainty that is so incongruous with the conditions that exist elsewhere in the industrialized world

And, having manhandled the Italian unions, Marchionne is not only asking the UAW for tough concessions, but he’s also setting a deadline that could send negotiations into arbitration (since the UAW has a no-strike agreement with Chrysler). Which gives Berkley professor and UAW mouthpiece Harley Shaiken cause to warn Marchionne that

He’s rolling the dice

But with Marchionne approving new products, including a 5-door Alfa-Romeo MiTo, and small Fiat and Jeep SUVs, for the Mirafiori plant, he’s offering carrots as well as sticks. And the longer the UAW waits to get a deal with Chrysler, the more carrots could be distributed around the globe… which means fewer carrots for the UAW. And at this point, the UAW’s Chrysler employees can’t afford to hurt their employer, which has largely funded their benefits with its own stock. Look for Marchionne to come out of this negotiation looking like the smartest guy to ever take on the UAW.

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13 Comments on “Sergio Marchionne: International Union-Buster...”

  • avatar

    Somehow the idea of an Italian-made Jeep sounds about as good an idea as tiramasu from McDonalds. Go ahead Sergio. Build all your Jeeps in Poland or Italy or wherever and see what that does for sales. I hope the UAW calls your bluff.

    • 0 avatar

      Me too! If the UAW wins this battle, they’ll lose their pensions.

    • 0 avatar

      Italian Jeeps? Probably not.

      If I were a UAW guy, I’d be much more concerned about the prospect of Mexican Jeeps.

    • 0 avatar

      Jeeps, or vehicles branded as Jeeps, are built in a number of countries now. They even were built in China, though the tooling for the ’80s version of the Cherokee is now used to produce a Jeep-like knockoff, as seen in TTAC awhile back. Jeep has great brand equity worldwide, and the smaller, simpler older editions are still more appropriate for other countries than the made-for-the-American-market Jeeps constructed in Toledo. Sergio likely has visions of dramatically expanding volume of 4-wd Jeeps in places that don’t have America’s road system.

  • avatar

    An Italian-made Jeep is no more strange that an American-made Alfa.

    We are cursed with living in ‘interesting times’.

  • avatar

    Harley Shaiken…for a minute I had him confused with Al Shanker, the teachers’ union boss who said something like “When school children pay union dues, that’s when I’ll look out for the interests of school children.”

    • 0 avatar
      Robert Schwartz

      In Woody Allen’s movie Sleeper, woody wakes up 200 years in the future. He asks what happened to old world that he knew, and he is told: “Some guy named Albert Shanker got a hold of an A-Bomb.”

  • avatar

    Sounds like the right man to bring Chrysler from the brink.

  • avatar
    Robert Schwartz

    “The key to Marchionne’s Italian strategy was to threaten Italian unions with the prospect of Fiat pulling out of its home market and retrenching in lower-cost production centers like Poland and Brazil.”

    And here he can ask the UAW if they know what “Hecho en Mexico” means

  • avatar

    Article reads like the long version of:

    What I said!

  • avatar

    I love this man.

  • avatar

    Finally, someone who might actually put the UAW on its kiestger, so to speak and about time.

    Now, let’s just hope it’s not detrimental to the workers though.

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