FCA, UAW Reach Tentative Contract Agreement

The United Auto Workers union says it has reached a tentative agreement on a new four-year labor contract with Fiat Chrysler Automobiles NV.

The deal, which covers about 40,000 FCA employees in the U.S., capped a 48-hour final marathon of negotiations. The UAW's current contract with FCA, along with those at Ford and General Motors, expired at midnight Monday.

Terms about the proposed contract were not disclosed. But UAW President Dennis Williams says the agreement achieves the union's three bargaining goals: slowing the rise in healthcare costs, rewarding workers for sacrifices made as Chrysler struggled through bankruptcy and creating a mechanism to enable entry-level hires to at least reduce their ultimate pay gap with veteran workers.

Pay is likely to be an important part of the tentative agreement. Chrysler's most experienced workers earn about $28 per hour and haven't had a raise in 10 years. Their pay compares with a cap of $19.28 per hour for more recent hires, who constitute about 45% of FCA's American workforce.

The contract now awaits a ratification vote by affected workers, which is likely to begin this weekend. The deal will set a partial pattern for new contracts at Ford and GM, whose previous agreements have been extended.

But analysts say those negotiations are likely to encounter resistance from the companies, since their hourly workforces include significantly smaller proportions of new hires. The gap means their average labor costs are already $7-$10 per hour higher than those at FCA, according to the Center for Automotive Research in Ann Arbor, Mich.