By on January 16, 2020

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Concessions made to the United Auto Workers by the Detroit Three during last fall’s bargaining talks will weigh on the automakers’ bottom lines, but none more so than Fiat Chrysler’s.

Labor costs stand to jump significantly at FCA, partially erasing the cost advantage it enjoyed over Ford and General Motors.

As reported by Automotive News, the Center for Automotive Research has mapped out the changes between the current four-year labor agreements and previous ones. The current contract sees workers showered with the expected raises and bonuses, temporary workers given a pathway to full-time employment, and healthcare coverage maintained.

GM set the standard for the agreements after weathering a 40-day strike that saw its American plants go idle, with product at its Mexican and Canadian plants drying up as parts supply dwindled.

According to CAR, hourly labor costs at Ford will rise from $61 an hour to $69 an hour by the end of the four-year contract. GM will see its hourly costs jump from $63 to $71 an hour. FCA, which made heavy use of temporary workers (and faces accusations from GM of perverting past bargaining talks with the help of bribes), sees the biggest increase in the hourly cost of labor. Its costs are projected to rise from $55 an hour to $66.

That jump places FCA just five bucks behind GM and three bucks behind Ford. Previously, the gap was $8 and $6.

As no member of the Detroit clan can claim to be cash-poor, the increases do not come as a shock. As Art Schwartz, labor consultant and past GM negotiator, told AN, “Anyone who went into this thinking the labor cost would stay the same or go down was dreaming.”

[Image: Fiat Chrysler Automobiles]

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36 Comments on “The Price of Peace: Fiat Chrysler Sees Biggest Jump in Labor Costs...”


  • avatar
    SCE to AUX

    Employ fewer workers – problem solved. The cannibals at UAW management are good with that.

    • 0 avatar
      ect

      It’s not like the UAW really had or has a choice. Automation has been very busy destroying unskilled and low-skilled factory jobs for at least 2-3 decades, and continues to. Over time, technology will replace a lot of skilled jobs, as well – and probably is already.

      • 0 avatar
        highdesertcat

        “It’s not like the UAW really had or has a choice.”

        But the buyer has a choice. Buyers who do not want to support the UAW can always buy something made by a non-union plant or made in Mexico, even elsewhere.

        And if they have had all the fun they can stand with Ford, GM or Fiatsler, they can buy something else.

        That’s one of the really great things about America: we have a choice!

        Use it, or lose it.

        • 0 avatar

          Do you really think that is what motivate buyers? Incredible if that’s true.

          I personally motivated by product and its value for me. Who made it never crossed my mind.

          • 0 avatar
            highdesertcat

            Different things motivate different people. People who have a lot of disposable money, or deferred spending (i.e. savings) often are motivated by greed; wants over needs. Like buying that BEV as a fourth car in a two-driver household.

            Others may be motivated by needs.

            But everyone is influenced by their prior or future ownership experiences.

            Some older Americans had decades of bad experiences with the products they bought from the Detroit Three. Hence the foreign brands and transplants do so well.

            In your case, I can understand that you being from Russia would make you giddy with glee to find your automotive dreams come alive in the West.

            I was visiting my relatives in Germany shortly after the people in Berlin tore down that wall.

            Did my cousins sell a lot of MB, VW and Opel to residents of East Berlin? You betcha – more than they had in stock. For cash money.

            Motivation is often derived from a person’s life experiences.

    • 0 avatar
      Ol Shel

      Yes, put fellow Americans out of work, because YOU are the only worker that matters.

      What a humanitarian…

  • avatar
    cprescott

    I am all for adding as much automation to the building of vehicles as possible and to deny the UAW’s ability to create a slushfund for the DNC. I have watched plenty of videos about modern car production and there are still jobs that humans do that don’t need to exist. Is that being mean? No. It is being realistic. Having people who are doing a job that requires SKILLED labor is one thing. Creating jobs for the heck of it is an issue that needs to be eliminated.

    • 0 avatar
      mikey

      @cprescott …. After viewing “plenty of videos” you’ve certainly gained vast knowledge of the modern vehicle manufacturing industry

      Some advice. Share that knowledge with any manufactoring facility, Union or non..Tell the Industrial Engineers “you have a way to eliminate thousands of jobs”:

      . You sir will be rich beyond your wildest dreams.

      If that doesn’t work out ??? You’ve obviously not watched enough videos

      • 0 avatar
        golden2husky

        Well said. I don’t understand the sheer hate that auto workers get. The fat cats are making far far more. Why should those who are responsible for helping them make that money be treated like industrial revolution slaves? People deserve dignity and fair pay. In turn they owe 100% focus on doing the best job they can. Firing dead wood, I’m all for it. But most people actually do put in a good day’s work.

        • 0 avatar
          highdesertcat

          “I don’t understand the sheer hate that auto workers get.”

          There’s a lot of historic precedence for that hate. Much of it retold on ttac over the past decades.

          People in other assembly disciplines or industry do not get the same pay or benefits as the UAW, and that’s what ticks a lot of those people off.

          But thank Allah all that’s changing and the future holds fewer human assemblers and more robotics.

          One cute anecdote about minimum wages rising: a guy I have known for decades owns a string of McDonald’s franchises and when the minimum wage went up on 1 Jan 2020, what did he do?

          He installed 4 kiosks in each of his outlets and fired 16 cashiers from each outlet, 8 from day shift and 8 from night shift.

          How much money did that save him? Enough to pay for all the kiosks plus an additional $20K per outlet per year.

          Not too shabby.

          More robotics in the global auto industry, please. Better products, more precision, less drama.

          • 0 avatar
            golden2husky

            You seen to get enjoyment out of seeing people lose their jobs. Why?

          • 0 avatar
            DenverMike

            They’re the kind of jobs you ride out as far as you can, knowing if you don’t have an appreciable skill that’s “in demand” when the party’s over, you’re screwed.

            That’s if they want to maintain their current lifestyle.

          • 0 avatar
            28-Cars-Later

            Minimum wage costs jobs, its really that simple.

          • 0 avatar
            JimZ

            “People in other assembly disciplines or industry do not get the same pay or benefits as the UAW, and that’s what ticks a lot of those people off.”

            this is often said by the same people who worship guys like Jeff Bezos and the like.

            huh. somehow the person getting paid a decent wage building something useful is “evil,” while the guy hoarding many times more money than he could spend in a hundred lifetimes is the “good guy.”

          • 0 avatar
            highdesertcat

            golden2husky: “You seen to get enjoyment out of seeing people lose their jobs. Why?”

            You need to word up on jobs and careers lost over the past decades to the betterment of technology and automation.

            This will give you a chuckle: way back when, when I was stationed at Oxnard AFB, CA, in 1968, I was the night manager for a local McDonald’s, and my wife was on call 24/7 at our home as a telephone operator for a doctors’ office.

            A lot of other jobs have disappeared because of automation, technological advances, and now robotics.

            Phasing out more assembly workers is long overdue, whether that is at McDonalds or a vehicle assembly line.

          • 0 avatar
            golden2husky

            HDC, I totally understand the dynamics at play, and realize that automation has just begun with the elimination of jobs. There certainly are positives to this: the quality of automobile body assembly certainly can be attributed to the precision afforded by robotic assembly. And, in theory, prices should be reduced, though I’m too much a cynic to believe that, as the business owners will take all the cost savings for themselves. So I understand the whys. But to my actual statement, the tone of your posts on this topic says this: Bring it on, I don’t care who loses their jobs, I’ve got mine, so I just don’t care about those who didn’t pick an automation-resistant career path. Problem is what happens when the people that rent those properties you own can no longer afford your rent? As long as their are others to take their place no big deal…but what happens when lack of good employment means more and more people are unemployed or underemployed? Such rot causes communities and entire regions to collapse. And the reality is not everybody is cut out for college, or military careers, or financial jobs. If I had a kid that had no interest in higher education, I’d push them toward the skilled trades. Can’t be outsourced, imported, or replaced by robots. And my buddy who has a civil service plumbing job will tell you, great pay. As in over $200K with OT.

          • 0 avatar
            highdesertcat

            golden2husky, there also something magical about automation and robotics.

            Remember when automated teller machines first made their appearance and all those people were phased out as ATM became common?

            And then there were telephone operators. Thousands lost their jobs when dialing your number became common place with the rotary dial phone.

            Automation is a wondrous thing. That’s being progressive in the real sense, for the betterment of society because machines can work 24/7 with little or no drama, and with a great deal more accuracy and precision.

            Unlike human beings.

            Remember that necessity is the mother of invention — if human employees had not been so problematic for employers there would never have arisen a need for automation to take their place.

      • 0 avatar
        JimZ

        at this point, I’m pretty sure “cprescott”- and everyone else who drags irrelevant politics into it with their first comment- is just a troll posting from a stuffy room somewhere in Russia.

        • 0 avatar
          highdesertcat

          JimZ, politics and several industries, including the US auto industry, are inseparably interwoven.

          We all saw this in 2009 with the selectively applied handouts, bailouts and nationalization where some (politically affiliated) jobs were saved while other jobs and employers died.

    • 0 avatar
      thegamper

      Most people don’t know what UAW workers actually make. The average line worker, excluding overtime, is not making a ton of dough even under the new labor agreement. Its true that compared to non union manufacturers in other sectors, UAW members enjoy extremely generous wages and benefits, particularly for unskilled labor. However, those wages and benefits will ultimately secure their future unemployment, maybe not now, maybe not this decade, but eventually, definitely.

      That being said, I don’t see a problem with people wanting a living wage, there are a lot of people with college degrees and even post graduate degrees making plenty of money and adding essentially nothing of value to our economy or providing any real value to their employer. Everyone needs to live and if you have a few kids, $100k/year in wages doesn’t really go as far as it used to.

      My personal gripe with the union is the graft, complacency and laziness that it creates. The best reason I know of not to by a UAW made car is that I really don’t want to drive my family down the highway at 75mph in a vehicle made by people who cannot be fired for doing a horrible job or even intentionally sabotaging production. The absolute job security makes zero sense and is really what breaks the system and will ultimately kill quality as well as the employer’s bottom line. If the automakers could stock their ranks with excellent employees that work hard and that take great pride in their work, the labor costs would not seem so out of whack. But as it stands, a functional crackhead, chronic underachiever, perpetual screw up can all remain employed at an OEM for 30 plus years. No thanks. I will look elsewhere.

      • 0 avatar
        mikey

        @ thegamper …With all due respect ..Your last paragraph is about 20 years out of date . I own a 19 Impala built in Detroit with UAW represented employees.

        The build quality, fit and finish is flawless.

        • 0 avatar
          thegamper

          I never said that they aren’t capable of building good cars, I just said that they cannot fire employees that aren’t interested quality or routinely do a poor job, screw up and generally underperform. That is a horrible model in any industry. Try as they may, those who should have lost their job long ago drag down the employer and all the people who deserve to work there.

          • 0 avatar
            JimZ

            ” I just said that they cannot fire employees that aren’t interested quality or routinely do a poor job, screw up and generally underperform. ”

            absolutely they can. where did this notion that union employees “can’t be fired” come from? More Fox News glurge? The point of having a contract is that letting someone go isn’t as simple as telling them “GTFO” whenever they feel like it, like at-will employment.

          • 0 avatar
            thegamper

            I have a somewhat unique perspective Jim. I have deposed hundreds of UAW workers and know quite a bit about all the BS that happens that would NEVER be tolerated in any sort of non union job.

            Do you recall the group of Chrysler Jefferson workers who were caught leaving the plant grounds, smoking pot and drinking on company time and then coming back to their line jobs.
            It made at least local if not national news. They still work there. They probably just got raises and bonuses. I rest my case.

          • 0 avatar
            28-Cars-Later

            Adding on to what TheGamper said, until 2018 in order to even be considered for a union job at a GM plant you *had* to be referred by a current union employee. This was codified in the UAW contract, and I know this because I worked on the referral software and candidate management system (GM farmed this out).

  • avatar
    indi500fan

    When GM goes bankrupt the next time, the UAW better hope there’s a Democrat in the White House again.

    • 0 avatar
      FreedMike

      You don’t think the spectre of tens of thousands of blue collar workers getting more or less permanently sh*tcanned in places like Michigan and Indiana wouldn’t move the current president to do a similar bailout? I’d argue Trump would be *more* likely to do it – a lot of the folks who would be getting canned are in his base, in states he needs to win.

      One of the only positive things about Trump – and it’s a short list – is that the guy isn’t hung up on conservative ideology. The old-school GOPers got their undies in a bunch because bailing out GM violated their “free-market” sensibilities. But Trump doesn’t give a flying f**k what old-school GOPers think. If he thought a GM bailout would help him politically, he’d move on it…like a b*tch, one might say.

    • 0 avatar
      N8iveVA

      I thought the GM bailout was started under Bush.

      • 0 avatar
        FreedMike

        People conveniently forget that. In fairness, though, most of it was carried out under Obama, and while I’m sure some of it was a favor to the unions, it was still the right thing to do. Things may have gotten quite a bit worse with tens of thousands of autoworkers tossed on the unemployment – probably not as bad as some people have argued, but things were bad enough as they were.

        Anyone who argues with a straight face that it would have been worth the economic damage to let these companies die to appease the laissez-faire gods is a fool…or REAL invested in something that makes lots of money in bad times.

    • 0 avatar
      JimZ

      the bailouts started under Bush, you dimp. Do you also still believe Obama ordered the creation of the Chevy Volt?

  • avatar
    tomLU86

    Couple of things here:

    1. Bush (GOP) initially bailed out GM and Chrysler/Cerberus. GM was going down on HIS watch.

    2. CPrescott has probably never worked in a factory, let alone an auto plant. Even 50 years ago, “unskilled” (referred to as OTS or “Other Than Skilled” in auto industry) workers needed some skills, and more importantly, traits, to do mind-numbing repetitive work correctly, and some or many of them, had to have enough skill and initiative to compensate for the inevitable oversights in the car’s engineering and design, and the facility where it is put together. If a task is automatable, it has, is, or will be automated. Doing mind-numbing work on a product that is expensive, costing $14,000 to $100,000 or more, and most cannot afford is probably worth more than doing unskilled work at restaurant

    3. No love here for UAW leadership. Also, no love for Republicans or Democrats. The higher you go up the food chain, the less real difference there is. It’s mostly about “how” you do things, and “who” gets to sit in driver’s seat, and do them. To a serious, thoughtful observer of current events, and the news media, this looks like professional wrestling.

    4. For you GOP lovers and Dem haters, we have cartel capitalism in the US. The Republicans will take care of big money, and then allocate the leftovers to their supporters–or tell them hard work will get them their share. To you Dem lovers and GOP haters, big money owns your party–see GOP comment.

    In a free society, if the workers can extract more from FCA or GM, why shouldn’t they? They make possible the $25 or $50 million pay day for their CEOs. Do Asian CEOs make that much? Did Ghosn?

  • avatar
    tomLU86

    correction: GM was NOT going down on his (Bush’) watch

    • 0 avatar
      28-Cars-Later

      You misspelled “Cheney”.

    • 0 avatar
      highdesertcat

      “correction: GM was NOT going down on his (Bush’) watch”

      That’s right and Shrub gave GM and Chrysler enough funds until 31 Mar 2009 so the next administration could decide how to make the orderly transition and sale of these dead companies.

      And we also know that GM was selectively kept alive but that Chrysler was palmed off with a $1.3BILLION bribe to Fiat.

      What really bugged me was all the Mom&Pops that were not bailed out but were left to die on the vine. And hundreds, if not thousands of small businesses did die due to benign neglect.

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