Published: Mon, December 02, 2019
Economy | By

FCA reach proposed tentative deal on new four-year contract

FCA reach proposed tentative deal on new four-year contract

Fiat Chrysler Automobiles NV and the United Auto Workers (UAW) union on Saturday announced a tentative agreement for a four-year labour contract, a boost for the automaker as it works to merge with France's Groupe PSA.

Fiat Chrysler agreed not to close assembly plants during the life of the contract and to invest in its factory in Belvidere, Illinois, that makes Jeep Cherokee SUVs and employs nearly 3,700 hourly workers, people familiar with the talks said earlier.

The full details of the agreement remain unknown, but, according to the union, it is similar to those concluded with GM and Ford.

Fiat Chrysler Automobiles (FCA) is the last of the three major Detroit auto manufacturers who in principle reach agreement with the powerful union.

The new tentative deal with Fiat Chrysler includes a $9,000 ratification bonus and most importantly a promise of not to close any of the company's assembly factories over the next four years. Further details will be provided at a later date.

The factory officials are expected to meet next week to vote on the deal.

The Illinois factory west of Chicago now makes the Jeep Cherokee small SUV and employs about 3,700 union workers on two shifts.

Sources also have indicated that FCA's union members will receive as much as $9,000 in signing bonuses. The larger of the automakers contends Fiat Chrysler's former CEO, the late Sergio Marchionne, used bribes and other means to get favorable, albeit illegal, settlements with the union that made it more hard for GM to remain competitive.

Even if union leaders approve the deal, ratification isn't guaranteed.

FCA hourly and salaried workers are expected to begin their vote on whether to ratify the contract December 6 in a process that usually takes about two weeks, the Detroit Free Press reported Saturday.

A person briefed on the matter says the United Auto Workers and Fiat Chrysler are close to reaching a tentative contract agreement. Redburn Partners upgraded shares of Fiat Chrysler Automobiles from a "sell" rating to a "neutral" rating in a research note on Friday, November 1st. The Ford and GM contracts saw improvements for temporary and in-progression workers, wage increases two 3% annual raises and two 4% lump sum payments and no change in health care costs. That compares with an average of $50 per hour at US plants owned by foreign-based automakers.

The corruption allegations are at the heart of a federal lawsuit GM filed earlier this month against Fiat Chrysler. Commerzbank upgraded Fiat Chrysler Automobiles from a "hold" rating to a "buy" rating in a report on Wednesday, October 30th.

General Motors alleges that the move, which it contends cost it billions of dollars, was aimed at forcing a merger with Fiat Chrysler that was desperately sought by FCA CEO Sergio Marchionne, who died in 2018.

Italian-American Fiat Chrysler and PSA, the maker of Peugeot and Citroen, last month announced a planned $50 billion merger to create the world's fourth-largest automaker.

It's not clear if or how the various issues facing FCA and the UAW impacted the final settlement. Many workers at the company have been suspicious of the union's leadership since the scandal became public in 2017.

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