Autoworkers OK new deal with Fiat Chrysler

Ferrari gets top dollar for its stock
Ferrari gets top dollar for its stock

Autoworkers at Fiat Chrysler voted overwhelmingly in favor of a new labor deal, ending the threat of the nation's largest strike since 2011.

The United Auto Workers union said that 77% of its 44,000 members at the automaker voted in favor of the deal.

In September, the rank and file at the union voted to reject an earlier tentative labor deal with Fiat Chrysler by nearly a two-to-one margin.

The new four-year pact will close much of the wage gap between veteran autoworkers and so-called tier-two workers who have been hired by Fiat Chrysler since 2007. They make up 45% of the automaker's factory employees.

Under the current contract, those less senior workers earn between $17 to $24 an hour, while veteran autoworkers earn at least $28 an hour and get a pension as well as retiree health benefits.

The new deal takes the tier two workers up to $28 an hour after seven years with the company, putting them on a more even footing with veterans.

Veteran workers will get their first raise in 10 years, a 3% raise immediately and another 3% in two years. They'll also get a variety of bonuses and profit sharing payments. One is a signing bonus they'll get if they ratify the contract: $4,000 for veteran workers and $3,000 for those hired since 2007.

Related: Ferrari shares jump on first day of trading

The automaker and the union initially reached a deal in September that would have narrowed the wage gap, but would not have eliminated it. The rank and file members of the union rejected that deal, which lead the union to set a strike deadline. Union and company negotiators reached a revised deal moments before that strike was due to begin.

Fiat Chrysler (FCAU) said it was pleased the deal won approval.

While Fiat Chrysler CEO Sergio Marchionne had acknowledged that the two tiers couldn't continue long term, he also said that Fiat Chrysler is at a huge competitive disadvantage because it's so much smaller than other top automakers. He has even said publicly that the company may need to merge with a larger rival such as GM in order to survive.

The UAW said it will next try to reach a deal with General Motors (GM), and then move onto Ford (F). Both those deals are also expected to call for worker pay scales similar to what's in the Fiat Chrysler deal.

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