Fiat Chrysler CEO Sergio Marchionne sits with Dennis Williams, president of the United Auto Workers, during labour talks in July.Jeff Kowalsky/Bloomberg
Fiat Chrysler Automobiles NV will be the lead target in negotiations for a new contract between the United Auto Workers and the three Detroit auto makers, the union said.
The UAW's contract with Fiat Chrysler's North American unit, General Motors Co. and Ford Motor Co. is set to expire at midnight Monday. The union will focus on Fiat Chrysler while working with all three companies toward a collective bargaining agreement, UAW president Dennis Williams said in a statement Sunday.
The UAW has made it clear it expects to be paid back for wage and benefits concessions that helped the companies survive lean times and two auto maker bankruptcies. Union leaders argue that the companies' strong sales means they can afford to make concessions. While a strike is considered unlikely, both sides are bracing for tough negotiations.
For decades, the UAW has selected one company with which to negotiate. An agreement with one typically sets the template for all three, keeping pay and benefits close to parity.
The union is looking for the first raise in about a decade, while the companies are hoping to hold the line so they can compete with foreign rivals that have lower costs at their U.S. factories.
Fiat Chrysler, in a statement, confirmed it was chosen to set the pattern for this year's agreement and said it would have no further comment for now.
Having won deep concessions from the unions, Fiat Chrysler, Ford and GM are loath to give up too much. They want labour costs that are in line with the U.S. operations of their foreign competitors. Ford's average labour cost, including benefits, is about $57 (U.S.) an hour, or $10 more than at the U.S. operations of Fiat Chrysler or Toyota Motor Corp. and $2 more than at GM, according to the Center for Automotive Research in Ann Arbor, Mich.
The Detroit Three hope to keep hiring entry-level workers at less than the $28 an hour that their senior workers earn. They are even considering asking for a new tier of even lower-paid workers in their U.S. factories, people familiar with the matter said in March. That may be a tough sell. In March, the UAW's Mr. Williams said, "They've got too many damn tiers now."
To help the auto makers save money on benefits that can be put toward wages, the UAW has suggested pooling all three companies' active employees – hourly and salaried – into one group for better negotiating leverage with health-care providers. This may have legs because starting in 2018 workers with high-cost plans will have to pay federal taxes on the benefit.
As part of the bankruptcy process, UAW workers at GM and Chrysler agreed not to strike during 2011 talks for the current contract. This year, union members at all three auto makers have that power.
Even so, a strike is unlikely, said Gary Chaison, a labour professor at Clark University in Worcester, Mass. The union is trying to organize the U.S. factories of international auto makers such as Volkswagen AG and doesn't want to appear hostile, he said.
"The UAW is trying to paint itself as the problem-solving union, not the old confrontational union," Dr. Chaison said.