The United Auto Workers union said Sunday that it chose Fiat Chrysler as its target company in ongoing contract negotiations with Detroit automakers.
Fiat Chrysler — the smallest of the three companies — now becomes the focus of bargaining and could be hit with a strike if negotiations stall. A deal with FCA will also set a general pattern for contracts at General Motors and Ford.
All three companies officially kicked off bargaining for new four-year contracts in July. The current contracts expire Monday but likely will be extended. The contracts cover around 140,000 U.S. factory workers.
In a statement, UAW President Dennis Williams said all three automakers are "working hard" to reach an agreement and will continue negotiating even as the UAW turns its focus to FCA. FCA confirmed its selection but said it would have no further comment.
Kristin Dziczek, director of the industry and labor group at the Michigan-based Center for Automotive Research, says the choice of FCA — the smallest and least profitable of the Detroit Three — signals a different attitude at the UAW, which used to go after the most profitable automaker during negotiations.
"This is the recognition that the union has had for a while, that you can't destroy the companies and still have jobs," she said.
Still, this year's talks were expected to be the most contentious in years because all three companies are healthy and making money. The union wants a piece of the profits in the form of hourly pay raises for longtime workers who haven't had one in a decade.
The UAW also wants to close the wage gap for entry-level workers, who make about half the $29 hourly wage of veteran employees. The wage gap benefits FCA the most, since 45 percent of its hourly workers make entry-level wages. Only around 20 percent of workers at Ford and GM make the lower wage.
Dziczek said the UAW might have chosen FCA because its CEO, Sergio Marchionne, has said he wants to eliminate the wage gap.
But automakers also want to cut labor costs to stay competitive. FCA is the only one of the Detroit Three whose U.S. labor costs are lower than foreign competitors like Toyota; Ford and GM think that's an unfair advantage and want to be on par with FCA, Dziczek said.
All three companies also want to stick with profit-sharing instead of increasing hourly labor costs. During the past four years, workers have gotten annual profit-sharing checks; at FCA, those bonuses totaled $9,000 per worker.
Williams and Marchionne, who greeted each other with a hug as the negotiations began in July, both say they would consider it a failure if they can't reach an agreement and workers strike. Workers at FCA — known as Chrysler before its 2009 merger with Fiat — went on a seven-hour strike during contract negotiations in 2007 but were prohibited from striking in 2011 under terms of a government-funded bankruptcy.