By on October 8, 2015

FCA US HQ

Bloomberg reported (via Automotive News) Thursday that a proposed contract brokered Wednesday night between the United Auto Workers and Fiat Chrysler Automobiles would raise Tier 2 workers’ pay to $29 per hour, up from $25 per hour, after an eight-year, “grow-in” period.

The separation between the two classifications of union employees — veteran Tier 1 and more recently hired Tier 2 — was a major point of contention for the workers, who voted down the proposed contract last week by a margin of nearly 2-to-1.

Roughly 40 percent of FCA’s union employees are Tier 2 workers, a much higher proportion than General Motors and Ford. On average, those employees are paid $9 to $12 less per hour less than workers hired before the recession. The proposed contract, according to the report, would not eliminate the tiered system, but instead bring closer the two pay scales. The contract also wouldn’t cap the number of Tier 2 workers hired by the automaker.

The union will take the proposed contract — which was negotiated with FCA only hours before a proposed strike — to its workers on Friday.

“We heard from our members, and went back to FCA to strengthen their contract,” UAW President Dennis Williams told employees Thursday. “We have made real gains and I look forward to a full discussion of the terms with our membership.”

Senior employees would get the same raises proposed in the rejected contract.

Get the latest TTAC e-Newsletter!

Recommended

35 Comments on “Report: New UAW Contract Could Boost Tier 2 Pay Up to $29 Per Hour...”


  • avatar

    $29 an hour???

    DAMN…

    that suuuuuucks

  • avatar
    SCE to AUX

    I don’t know how anyone can defend such market distortion.

    • 0 avatar
      RideHeight

      I don’t know how anyone can defend inheritance.

    • 0 avatar
      Xeranar

      When you can prove it’s market distortion I’ll start defending it. :)

      • 0 avatar
        malikknows

        Political pressure (i.e. unions) demanding economic benefits = market distortion by definition.

        • 0 avatar
          Xeranar

          Then by definition everything is market distortion under that theory. The market will pay as it can bear before collapse, distortion is an argument used by those who want to justify their position against change.

          • 0 avatar
            malikknows

            No. Workers providing economic benefits deserve economic remuneration. Economic decisions being made for economic reasons are legitimate. This is a market. Economic decisions made under political pressure are unlikely to be sound economically. Increased pay gained through political pressure is economically unjustified. They are market distortions. The auto manufacturers in the US were put in crisis because they were subjected to political pressure for higher pay and benefits than could be justified economically. R&D and other economically necessary expenditures were short-changed relative to payroll due to this economic pressure. Workers are justified to demand more when they provide more economic benefits then they receive. But to be paid more than they provide economically is also unjust.

    • 0 avatar
      tonycd

      It’s worth asking where that $29 figure came from.

      In my former life as an AFL-CIO union member, I read figures about my pay that were published by all media outlets without question, and they were wildly in excess of my actual paychecks. I suspect that management in these cases does a high-side spitball of the dollar value of all benefits combined, adds it to actual hourly pay, and reports it to an unquestioning media as the “total value” of their compensation offer.

      • 0 avatar
        Lorenzo

        It could just be stupid media. The San Francisco Chronicle in the ’90s ran an article, “What Government Workers Earn”. They said they took hourly rates and multiplied by 40 hours and 52 weeks for annual pay, but that doesn’t work for government workers paid by the month.

        Highway maintenance workers at the time were paid a max of $2,654/month, or $31,848/year, statewide. Apparently they asked a maintenance worker and assumed “twenty-six Fifty-four” was $26.54/hour, and reported that highway maintenance workers were making $55,200. If you expect the press to get facts wrong, and you’ll never be shocked.

  • avatar
    Rday

    Looks Like the great con man Sergio had his breakfast, lunch and dinner eaten by the UAW… what a pussy.

  • avatar
    GS650G

    Sergio is one of the shrewdest there is. He knows he won’t be paying those wages for long. He’s already looking to break FCA up

  • avatar
    brn

    Let’s be sure to put the hate on anyone wanting to earn a decent wage, doing a shitty job, in freaking 2015.

    • 0 avatar
      Altair7

      Menial skill = menial wage. There was a time when most were able to understand the concept.

      • 0 avatar
        brn

        It’s a tad bit more difficult than flipping burgers. If it were so darn easy, China would already dominate.

        • 0 avatar
          brenschluss

          Earnestly, I would be interested to know what is expected of an upper-tier UAW member employed at an American automotive factory. This might be interesting to explore for people who don’t know any better, like myself.

          It’s easy to talk shit, but I have no idea what one is told once clocked in at one of these factories.

  • avatar
    Xeranar

    So many fancy armchair analysts getting uppity over a $160 a week raise…

    Who knew $8,320 a year raise would make people lose their minds. I mean selling nearly 2 million vehicles annually in the US and nearly 116 billion in net revenue…Clearly they better be running to stop the checks or they’ll be out of business tomorrow!

    Anyhoo….The plants aren’t closing anytime soon. Sergio knows that Mexican wages are rising faster than most plants in SE Asia and while they don’t parallel the US’ yet they will sooner many will think.

    • 0 avatar

      FCA Tier 2 workers deserve what they’re getting. The Agnelli family and chief bagman Marchionne has done well on their backs.

      At the same time, they seem smart enough to realize they’re making hay while the sun shines. FCA is a hot mess about to totter into disaster, and this time even Jeep is being tarnished (Renegade née 500X). Without a product plan, updates or new technology, those NA truck factories will be very quiet in 3-5 years.

      • 0 avatar
        tonycd

        Tiered pay is cancerous to a workplace’s morale. Shame on the unions for allowing it in the first place. They sold out their younger peers to temporarily protect pay and benefits for themselves. And in so doing, they destroyed the united front that workers must present in order to retain a measure of power over their own livelihoods.

    • 0 avatar
      28-Cars-Later

      Percentage wise it sounds like fair sized wage increase but I don’t think Tier II has had a raise since it was introduced (or have they?).

      Assuming they have not, if two weeks vacation is factored in as per the link below, compensation is $60,320 up from 50K or a total increase of 20.64%. However 20.64% / 7 years since 2008 is only 2.94% per year, or a standard three percent raise. Not too shocking when you break it down…

      http://www.convertunits.com/hourly/29

      • 0 avatar
        Xeranar

        Exactly, I was doing the math and compared to Tier I they’re still bringing home less than they should be without the two-tier system. Never mind that the headline is the optimal amount, essentially longevity pay that I imagine a large percentage would get but not all.

        Skilled labor willing to work in a factory and make that kind of money is actually telling of how little the rest of the economy makes than how much they’re overvalued. It’s kind of sad when you think about it in a sustainable wage like that is possible and yet the average individual makes around 28K.

        Sidenote: Minimum wage raised to $15 an hour would make the median wage around 36K, household around 72K (up from 28K & 51K respectively).

        • 0 avatar
          28-Cars-Later

          You would think some news agency would have done the math and indicated what it really was in the headline (a COLA raise).

          That 28K figure sounds high given some of the people I have encountered in the past two years. I suppose its an aggregate of workers of various ages and locations nationally? That I could see.

        • 0 avatar
          Lorenzo

          Chrysler workers got $17/hour from Iacocca in 1986. That’s $37/hour today.

    • 0 avatar
      DenverMike

      “Net Revenue”, for sure. But what’s left “taxable”, once the dust settles? For the year, about 2 billion? So what’s FCA’s liability for this raise? Has to be 100+ million annually, no?

      Mexico auto assemblers are at about what exchanges for $5 an hour. Benefits? Overtime pay? Paid vacation? Holiday pay? 401K? Maternity leave? Complaining? Complaining about $5 an hour???

      • 0 avatar
        Xeranar

        DM – It gets hard to know taxable income since FCA owns atleast a portion of most of its OEMs along with how many subsidiaries and offshoots that can hide funds. Using physical product profitably rates of 7% would put peg them around 8.12B, I think the 2-3B most quote is due to a mixture of debt servicing and R&D shuffling. Still a drop in the bucket given how much they pay workers.

        Mexican workers are paid about $5 an hour but Mexican unions are starting to strengthen and the basic drive to reach parity with the US is increasing. Mexico is in a complex position where they want to protect their cheap labor market but they also know that inevitably they’re going to increase and so are walking a careful line right now. Basically the strongest point in Mexico is the low cost of living coupled together, they can afford to work for less. That’s changing though as newer first world access comes in and drives standards of living up as well as international unions starting to take note that Mexico’s laws are supportive as long as you can keep the strongmen out.

        It’s a complex situation that won’t change in the next decade but automakers are hedging their bets in Mexico mainly because of two reasons:

        The inevitable labor bust/income challenge towards parity

        &

        Destabilization due to the drug cartels and ineffectual government.

        If either of those gets too large the plants won’t be worth the billions they invested. So it’s a game of risk, pay more upfront in the US knowing you’ll have a guaranteed supply of vehicles and labor or roll the dice and risk blowing a multi-billion dollar plant. Many are choosing the latter and hoping to be out of the boardroom when the first one happens basically.

        • 0 avatar

          I work with a bunch of engineers that used to work for a electrical component maker with operations in Mexico. They say in the late 90’s it was very cheap and workers were there 6 days a week with little benefits. 5 years later they had unionized and had benefits. He said the biggest thing they want and got was long vacations and holiday pay. I gather they got almost 4 weeks of vacation. The mexican unions took a hit in the recession, I expect with the new focus on mexican factories they will start seeing wage increases. I believe they are a lot lower then China now so they have room to rise. Also X says is right Mexico is unstable, One of our suppliers has two factories in Mexico one near the border in I gather a stable area the other further in with much cheaper labor. Deliveries from the cheaper one have lots of issues with shipping and workers not showing up. I don’t think you want to put all your eggs in that basket.

  • avatar
    Lorenzo

    The tier 2 workers will get raises over eights years? The contract isn’t that long, and FCA’s tier 2 workers aren’t going to wait that long. It looks like the UAW is in the impossible position of trying to satisfy its members while knowing that their employer is on the rocks and won’t survive the contract they want.

    FCA will have to merge with a bigger company, be broken up through spin-offs, or be parceled off in bankruptcy. It doesn’t have the income to pay higher salaries and service its massive debt from old Fiat. The workers need to be told how shaky their job security is, but that would undermine Sergio’s effort to find a buyer.

    • 0 avatar

      In the US they are doing very well and from what I just looked up in their earnings report Europe has somewhat stabilized in the last 2 quarters for them and is no longer bleeding cash. The current drag on profits is paying for previous losses in Europe and a sudden collapse of sales in south american over the past 6 months. So globally Fiat can’t afford it In the US however they can, at least that would be my argument if I worked there, “my division is doing great I need a raise”.

  • avatar
    seanx37

    Does FCA really have the money for this? Or in reality, they are just kicking the can ? Knowing that they most likely will be sold, or dismembered long before such wages take effect?

    • 0 avatar

      It’s a joke. They’ll never sustain those wages.

      FCA will be into serious trouble within 2-3 years, if not sooner. Most customers don’t care what goes on behind the scenes but a few things will make things bad for FCA:

      – An economic dip
      – Wages don’t grow
      – None of the North American product lines get proper updates
      – FCA pays more to keep the factories going than realize demand
      – Sergio brings back sales banks
      – The market’s oversaturated with Jeeps
      – The banks reject Sergio’s spiel and call in loans
      – No one wants to merge

      It’s delusional to seriously think it’s going to stay sunshine, daisies and lollipops forever at FCA, and that they’re well-poised for a downturn is delusional.

      BTSR calling me a wienie in 5….4….3….2….1

      • 0 avatar
        seanx37

        That is basically what I thought. The huge debt,and servicing of it is a big issue. And the fact that FCA had to delay updates due to lack of money is going to be a huge problem now that all the competition has either updated, or will update all competing products by the time FCA gets around to it.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • Lie2me: I actually like the way it looks, but whether anyone will want one, we’ll see
  • N8iveVA: New e-tron starts at $67k. Model X starts at $80k, Model X performance model is $100k. yikes
  • EBFlex: TTAC is probably right. The Mustang isn’t profitable yet they still make that. Or maybe only at Ford they can...
  • EBFlex: “ Does XXX amount of sales always translate to (acceptable) profits? Is there a magic number? What was the...
  • RHD: “After spending a fortune to purchase and then spruce up the track, it has to be maddening for him to see...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Matthew Guy
  • Timothy Cain
  • Adam Tonge
  • Bozi Tatarevic
  • Chris Tonn
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber