Fiat Chrysler workers vote on new contract

Chrysler hit with record fine
Chrysler hit with record fine

Fiat Chrysler autoworkers began voting Tuesday on a new contract that would hike some worker's pay to $28 an hour.

The United Auto Workers union reached the tentative deal on October 7, just minutes before 40,000 workers were set to go on strike. The vote is set to be completed on Wednesday night.

It calls for a big pay hike for 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 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 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 by nearly a two-to-one margin primarily because of the two-tier wage scale.

It's not clear what happens if members again reject the deal. Union leaders could go back to the table with Fiat Chrysler, or they could set a new strike deadline.

But it's also possible the union could put talks there on hold and try to reach a deal with either General Motors (GM) or Ford Motor (F). The two have 50,000 UAW members in their U.S. factories, but far fewer of the tier two workers. Talks at those companies have been on hold while the UAW focused on Fiat Chrysler.

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.

Fiat Chrysler (FCAU) had no comment on terms of the new agreement, saying it would wait for the ratification process to take place.

The company had argued it needed to control costs, despite a sharp improvement in auto sales. Fiat Chrysler was formed in 2009 after Chrysler went through a bankruptcy and a federal bailout at least partly because it had higher labor costs than nonunion automakers.

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.

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