The United Auto Workers (UAW) appear to have done a lot better the second time around.
The UAW posted highlights of its new-and-improved tentative contract with Fiat Chrysler Automobiles (NYSE:FCAU) on Friday afternoon. To hear the UAW's leadership tell it, it's a considerably better deal than the first agreement, which was rejected by workers last month.
FCA's stock was up about 1% in Friday afternoon trading.
Workers opposed the initial deal for several reasons. Three key ones: 1. It didn't do away with a hated "two-tier" wage system under which new hires are paid a lot less than veterans. 2. It didn't give sufficient information and guarantees around healthcare. 3. And it didn't include assurances that all of FCA's U.S. factories would continue to get new products to build.
Negotiators went back to the table after the contract was rejected. The UAW made preparations to strike if a deal wasn't reached by Wednesday night, but the union and FCA executives came to an agreement just in time.
The UAW's post signals that the union's National Chrysler Council has voted to accept the agreement. The Council is made up of leaders of the UAW locals at FCA facilities. It was scheduled to vote on the agreement on Friday morning. Now it will be presented to members, who will be asked to vote on it over the next few weeks.
So what's the (new and improved) deal?
The two-tier thing: The new deal doesn't quite do away with the two-tier system entirely, but it comes closer. The Tier 1 workers still have a defined-benefit plan versus the Tier 2 401(k), and there are other differences in benefits. Hourly pay for Tier 2 workers will increase over time, reaching parity with Tier 1 "within eight years." That will be an increase of over $10 per hour for the newest Tier 2 workers.
Raises: The Tier 2 folks will get a big raise, but the Tier 1 workers weren't left out. They'll get two 3% increases and two 4% lump-sum bonuses over the life of the four-year contract. There are also increases to profit-sharing for all workers, and bonuses that will be paid, as is traditional, if and when workers vote to ratify the contract.
Healthcare: Members will continue to pay no premiums for their (quite good) healthcare plans, and there are some modest boosts to dental and vision coverages. (It's not clear whether this will be enough to satisfy members' concerns.)
Better commitments to U.S. production: The UAW says that FCA will make $5.3 billion in "new U.S. investments" over the life of the contract, and that it has committed to "fully utilize and invest in U.S. facilities."
On the surface, that seems to address all of the workers' key concerns -- without dramatically raising FCA's production costs. Of course, the devil may lie in the details. We'll know a lot more after the workers get a look at the deal over the next few days.