Fiat Chrysler Automobiles to sign a four-year labor contract with United Auto Workers

Fiat Chrysler Automobiles to sign a four-year labor contract with United Auto Workers
Written by:
Michael Harris
1st December 2019
Updated: 11th March 2020
  • Fiat Chrysler announces a tentative agreement to be signed with United Auto Workers.
  • The tentative agreement includes labor contract spanning over four years.
  • FCA is planning a merger with Groupe PSA to create fourth largest automaker in the world.
  • UAW signed similar contracts with GM and Ford Motor earlier this year.
  • General Motors filed a racketeering lawsuit against FCA in November.

Fiat Chryslers Automobiles (FCA) has been making headlines in the past few weeks. Earlier in November, the automaker had announced an imminent merger with French multinational auto manufacturer Groupe, PSA valued at $50 billion. The merger is expected to form the fourth-largest auto manufacturer across the globe.

Taking a step further towards the realization of the merger, Fiat Chrysler announced on Saturday that a tentative agreement is to be signed with the United Auto Workers (UAW) union. The agreement highlights a labor contract spanning over the upcoming four years.

UAW Signed Similar Contracts With General Motors And Ford Motor Earlier This Year

UAW, on the other hand, has already signed similar contracts with auto giants like General Motors and Ford Motor Company in the recent past. Fiat’s contract is yet to be officially validated by the United Auto Workers union.

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UAW’s contract with General Motors, however, had met with complications that had led to a 40-day strike in America. Consequently, the automaker had to bear a massive loss of $3 billion that hindered the North American operations.

UAW revealed on Saturday that the contract includes FCA’s commitment to invest $9 billion that can be expected to create as many as 7,900 new jobs in the upcoming four years. $4.5 billion of the total investment was already announced in the first quarter of 2019. As per the announcement, Fiat Chrysler Automobiles had committed to creating around 6,500 prospects via its investment in five plants.

While FCA and UAW have chosen to not divulge further details of the tentative agreement at this stage, analysts expect the contract to mirror the terms and conditions of UAW’s earlier agreements with Ford and GM.

Terms Of Agreement Of UAW’s Contract With GM And Ford

In its contract with UAW, GM had committed to $9 billion investment in the USA, aimed at creating or retaining as many as 9,000 jobs. Ford, on the other hand, had committed a $6 billion investment in the USA, targeting 8,000 jobs to be created or retained through the course of the agreement. GM had also approved an $11,000 signing bonus for full-time workers while Ford had agreed to a signing bonus of $9,000.

General Motors has accused FCA last month of bribing the union officials in an attempt to gain an advantage by meddling in the bargaining process. In a racketeering lawsuit, GM claimed the corruption to have cost billions of dollars to the American multinational auto manufacturer over several years. Fiat Chrysler Automobiles responded with calling such claims to be entirely pointless. The lawsuit, however, is expected to badly reflect on FCA’s plans of a merger.

FCA’s performance in the stock market in 2019 has remained almost flat on average. Having opened the year at €12.57, share prices were last seen at €13.42 as of Friday.

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