Nearly two-thirds of the 40,000 United Auto Workers at Fiat Chrysler have voted to reject a proposed contract agreement with the company.
Sixty-five percent of the membership voted against the pact, the union said Thursday, sending UAW leaders scrambling for a Plan B. Union leaders from across the nation began meeting Thursday in a Detroit suburb to talk about their next move.
Fiat Chrysler employs about 7,100 UAW workers in Kokomo. A source at UAW Local 1166 told the Detroit News that 59 percent of the production employees and 61 percent of the skilled-trades workers at the 1,100-worker Kokomo Casting plant voted to reject the contract. At Kokomo's three Fiat Chrysler transmissions plants, 77 percent of the production workers and 65 percent of the skilled workers voted down the deal, the union said.
The rejection is a slap at President Dennis Williams who pitched the deal as a fair way to compensate workers yet keep the company competitive in a global auto market.
The rejection by such a wide margin leaves open the possibility of a strike, since members seem to be unified in their opposition, said Kristin Dziczek, director of the labor and manufacturing group at the Center for Automotive Research, an industry think tank.
"A strike puts pressure on all the parties to come back to the (bargaining) table," she said. "When you have this much anger and anxiety, I think a strike provides an outlet for some of that."
The vote likely will send Williams back to Fiat Chrysler to seek more, but it's unclear how temperamental CEO Sergio Marchionne will react, she said. Williams and Marchionne have a good relationship, but Dziczek is not sure how that will play into getting a better deal.
In a union statement, Williams said he doesn't consider the vote a setback because it's part of the contract process. "The ultimate decision and the power of the union is our members, and they make the final decision," he said.
Fiat Chrysler said it was disappointed in the vote because bargainers for both sides worked hard on an agreement "that would adequately reward the commitment of our workforce while ensuring the company's continued success." FCA looks forward to continued bargaining, the statement said.
The union, which represents 40,000 workers at FCA, now can choose to go on strike, return to bargaining with the company to seek a better deal, or shift its talks to General Motors or Ford. Union workers at all three companies have stayed on the job under contract extensions since Sept. 14.
The union reached a tentative agreement with the company two weeks ago that includes pay raises, the potential for increased profit sharing and a $3,000 signing bonus. But some members objected because the raises don't bring an end to a two-tier wage structure in which workers hired after 2007 are paid less than veteran employees. The contract also allows the company to shift some car production to low-wage Mexico, replacing it with new trucks and SUVs that carry higher price tags to cover higher U.S. wages.
Workers said they voted "no" because the deal didn't give lower-tier workers a path to reaching the top wage of $28.50 per hour. They also said the contract doesn't cap the number of second-tier workers. The UAW agreed to allow lower pay for entry-level workers in 2007 when Detroit automakers were struggling financially. About 45 percent of FCA's workers are paid the lower wage, while GM and Ford can't exceed 20 percent to 25 percent.
Under the deal, pay for entry level-workers would rise 31 percent to top out at $25.35 per hour after three years. Top-tier workers hired before 2007 would go from $28.50 per hour to $30 per hour during the four-year contract. They haven't had raises in more than a decade, although they have received profit-sharing checks.
Union workers made concessions in recent contracts to help struggling automakers return to health. But now all three are making money, and members want a bigger share.
But companies are fearful of raising their labor costs so that they're not competitive with foreign automakers that have U.S. factories.
"It's a tricky balance," said Kelley Blue Book Senior Analyst Karl Brauer. "An increase in UAW pay and benefits absolutely makes sense right now, but if the cost to automakers is too high it will likely drive domestic vehicle production outside the U.S., and it could set them up for financial risk."