UAW, Fiat Chrysler extend contract amidst wage negotiations

The United Auto Workers union said early today that it would continue talking with Fiat Chrysler Automobiles to enter into a new contract for the automaker's US factory workers, delaying a possible strike at its most profitable operations.

The current contract was to be extended by the two parties after its expiry at midnight, "on an hour by hour basis" and bargaining would continue, the UAW said.

According to commentators, the decision to extend the contract covering around 40,000 FCA workers in the US came as a sign the two sides were progressing on a complicated pay and benefits negotiations.

UAW president Dennis Williams and his chief negotiator with FCA, Norwood Jewell, could ask members to stop work in the event of a deadlock in the talks.

The issue centres around a proposal to overhaul a two-tier pay system that disadvantaged new hires, which the UAW wanted to eliminate, and to restructure company health plans to curb rising costs, Reuters reported.

Fiat Chrysler CEO Sergio Marchionne canceled plans for attending the Frankfurt International Motor Show in Germany and stayed in the US, a strong sign that a deal was near, commentators said.

The UAW announced yesterday that it had picked Fiat Chrysler as its target company in the contract talks, meaning a deal with FCA could set a general pattern for contracts at GM and Ford (See: Fiat Chrysler to set pattern for wages and benefits at Detroit Three).

FCA could also face a strike in the event of negotiations stalling, although workers at several FCA factories yesterday said that they had not been told of any strike plans.

Bargaining for new four-year contracts started in July. Around 140,000 US factory workers are covered under the contracts.

According to Kristin Dziczek, director of the industry and labour group at the Michigan-based Center for Automotive Research,  union members could expect some financial gains in this contract, since all three companies were healthy and profitable.

However, they had to be  careful, since automakers could move operations to lower-cost countries such as Mexico if US labour costs rose too high.

The union has been demanding pay raises for long-time workers who had not had one in a decade. It also sought to close the wage gap for entry-level workers, who started at about half the $29 hourly wage of veteran employees.