Rough Road Ahead for the U.S. Auto Union

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As the latest proposed labor agreement with Fiat Chrysler got rejected by 65 percent of its members, the United Auto Workers have found themselves in a tough position while trying to salvage the contract.

Renewed Negotiations

Local union leaders were informed by leaders of the UAW at a meeting held in Detroit last week that negotiations are expected to convene on Friday where they will approach Fiat Chrysler again to discuss reestablishing the negotiation. During the meeting no plans of a strike were discussed and no public statement has been made about the future plans at Fiat Chrysler following the rejection of the proposed four year plan.

Main Issues

Worker discontent however, is following a strong recovery by Detroit automakers that are bouncing back from their recent, rather precarious, position. Despite the uptick, the improving market does not remove the threat posed by low wage workers in Mexico as well as non-union factories in the south of the country, nor does their perceived improved bargaining position automatically secure the conditions that the union workers were hoping for.

The rejected contract encompassed raises for workers, considered as veterans, who earn $28 an hour, as well as recently hired workers who only earn around $19 an hour. Just some of the sticking points are that the proposed contract does not narrow this gap as much as many lower paid workers had hoped for, and also does not adequately address raises for veterans who have made concessions on their salaries and benefits in the last three rounds of negotiations when Detroit automakers were fighting for their very survival.

The fact that the automakers have announced the move of several of their production facilities to Mexico does not help the situation, as the workers who have already made significant concessions feel betrayed and their patience is starting to wear thin. This leaves Fiat Chrysler with a potential ticking time bomb on its hands and probably one it cannot relocate fast enough before it explodes.

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