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Somber kickoff of Fiat Chrysler-UAW contract negotiations

Jul 14, 2015

Fiat Chrysler CEO Sergio Marchionne and UAW President Dennis Williams at 2015 contract talks kickoff.
Credit Fiat Chrysler

Is there trouble in store for Fiat Chrysler come September?

Some analysts believe so, saying the automaker faces the greatest risk of a strike by fed up Tier 2 workers at Chrysler.

Tier 2 workers make roughly half the pay of the higher-seniority Tier 1 workers – while doing the same job.

Tier 2 workers also get a lower level of benefits, and they do not get health insurance upon retirement.

Both union leaders and Fiat Chrysler CEO Sergio Marchionne agree that it's unfair.

But Marchionne warned at today's contract negotiation kickoff that any contract that attempts to bridge the wage and benefits gap must be sustainable in bad times, as well as good times.

"We need to be cognizant of what happens when there's a downturn," he said. "The downturns in this industry are lethal enough to kill you. I mean, they'll chop you off at the knees." 

He added, "If we insist on going back to the antagonistic type of bargaining that was once typical of this industry, it will be absolutely disastrous."

UAW President Dennis Williams agreed that the union needs to protect the profitability of Fiat Chrysler. 

But he says the situation with Tier 2 workers is "bleak," saying many live in near-poverty, with no "path to the middle class," as their Tier 1 co-workers have.