DETROIT (AP) — The United Auto Workers union has approved a new four-year contract with Fiat Chrysler and now will turn its attention to bargaining with General Motors.
UAW members at Fiat Chrysler's U.S. factories voted 77 percent in favor of the agreement, the union said. The contract covers 40,000 workers at 23 U.S. factories.
It was the second time in a month that Fiat Chrysler workers voted on a contract. A previous deal was soundly rejected largely because it didn't eliminate a much-hated two-tiered pay system. The new agreement gives raises to all workers and eliminates the two tiers over eight years.
Fiat Chrysler said in a statement that it was pleased that the contract passed. UAW President Dennis Williams said the agreement boosts wages and gives members job security "while still allowing the company to competitively produce high quality vehicles."
The union will use the Fiat Chrysler deal as a template for talks with Ford Motor Co. and General Motors Co. The UAW will be bargaining with GM next, according to statement issued by the union Thursday afternoon.
Williams says Ford and GM make more money and should be able to pay more, a statement that conflicts with company goals of cutting labor costs to bring them more in line with foreign automakers with U.S. factories.
GM Chief Financial Officer Chuck Stevens conceded that its "operating circumstances" are different from Fiat Chrysler. He said GM is committed to keeping a 10 percent pretax profit margin in North America for a number of years, but he's confident it can still reach a deal with the union.
"We'll engage in a constructive way to come up with a contract that meets the needs of the business, the employees and all of the stakeholders," he said Wednesday after GM announced third-quarter earnings.
The new agreement with Fiat Chrysler gradually eliminates the tiered pay system that the union agreed to in 2007 when all three Detroit automakers were in financial trouble, bringing all U.S. factory workers to the same wage over eight years. But members have resented the varying pay, and the company's current CEO, Sergio Marchionne — who took over when Chrysler merged with Italian automaker Fiat in 2009 — has called the two-tier wages "unsustainable."
Under the new agreement, workers with four or more years of experience will make the top $29 hourly wage within four years; workers with less experience would make between $22.50 and $28 in four years and top wages in eight years.
About 45 percent of FCA's U.S. hourly workers are lower-tiered workers who now make wages as low as $15.78 per hour. For a typical member with two years in, the UAW said the agreement is worth $44,000 over four years.
Like the previous agreement, the new contract promises the first raises in nine years for the highest-paid workers, who now start at $28 per hour. Top-tier workers will get a $4,000 bonus if the agreement is ratified; lower-tier workers will get $3,000. The previous contract promised $3,000 bonuses for all workers.
Workers from both tiers banded together to defeat the previous contract, saying they deserved a bigger share of Fiat Chrysler's profits after giving up raises and bonuses when the company was struggling.
The new agreement calls for a $5.3 billion investment in U.S. plants, as the previous agreement did, but this time the UAW spelled out which plants would get that investment.