UAW Chooses FWA as Target for Labor Talks

The United Auto Workers union has selected Fiat Chrysler Automobiles as its target for this year's contract negotiations. Results will be used as a pattern for similar deals at General Motors and Ford.

The three companies began labor talks in July for new agreements to succeed their current four-year contracts with the UAW, which expire tonight. The union represents 140,000 employees in the U.S.

Analysts consider this year's talks the most contentious in a decade because they come as the U.S. auto industry is enjoying record profits after surviving its worse slump ever six years ago. The UAW is especially keen on ending the two-tier wage scheme it agreed to at the depths of the industry's woes.

FCA benefits most from the two-tier structure, which pays new workers roughly half as much as veteran hourly employees, because about 45% of its U.S. hourly workers receive the lower wage. At Ford and GM, the ratio is roughly 20%.

FCA CEO Sergio Marchionne said two months ago he agrees with the UAW that paying workers two wage rates for the same work is unfair. But erasing the difference completely would eliminate FCA's current labor cost advantage over nonunionized foreign-owned auto plants.

The UAW also wants to hike base pay for veteran workers, who haven't had a raise in 10 years. Carmakers prefer to freeze wages and pay bonuses based upon company performance. The union is touting the idea of FCA, Ford and GM forming a single healthcare pool that could reduce benefit costs enough to pay for the equalized wages it wants.