United Auto Workers reject Fiat Chrysler contract by wide margin

Contract negotiations between United Auto Workers union and US carmakers hit an impasse on Thursday as workers at Fiat Chrylser rejected a deal, the first time in over 30 years that a tentative national labor contract has been rejected by United Auto Workers (UAW).

UAW members rejected a tentative agreement between with Fiat Chrysler by 65% after a ballot on Tuesday, the results of which were finalised on Thursday.

UAW members at large assembly plants in Toledo, Ohio, and Sterling Heights, Michigan, all rejected the pact as did most other factories, by a wide margin.

“We will gather the issues together; notify FCA [Fiat Chrysler] that further discussions are needed. We don’t consider this a setback; we consider the membership vote a part of the process we respect,” Dennis Williams, president of the UAW, said in a statement.

“What I love about our organization most of all is that no matter what we do, what action we take, the ultimate decision and the power of the union is our members and they make the final decision,” he said.

Ahead of the vote, workers had expressed concerns about the continuance of a two-tier pay structure, healthcare benefits and the possibility that some car production would be shifted to Mexico.

About 40,000 union Fiat Chrysler employees – and about 100,000 Ford and GM employees – have been working under a contract extension since 14 September.

The UAW began bargaining with Ford, GM and Fiat Chrysler in July. Fiat Chrysler was selected as the lead company in the talks, making it the focus of bargaining.

The new deal had pay raises but didn’t end a lower wage rate for those hired after 2007. These “new” hires start at about half the $29 an hour wage that the long-serving workers are paid. The union originally agreed to a two-tier pay structure back in 2007 when then-Chrysler was near bankruptcy.

When a tentative agreement was announced in September, Fiat Chrysler CEO Sergio Marchionne agreed that tiered wages were unfair and said the negotiators came up with a carefully crafted agreement “whereby that issue will go away”.

In a statement released on Thursday, the company expressed its disappointment with the vote. “The tentative agreement was designed to yield a strong and competitive Fiat Chrysler Automobiles US, thus providing stability for our workforce and opportunity for future growth and investment in an increasingly complex global marketplace,” the statement read. “The company will make decisions, as always, based on achieving our industrial objectives, and looks forward to continuing a dialogue with the UAW.”

“This is our time now. The UAW has given back and given back, making concessions after concessions. I think Sergio may have a hard lesson to learn here but we are ready for that,” Phil Reiter told the Wall Street Journal. For the past two years, Reiter, 44, has been working for Fiat Chrysler in Toledo.

The union will now gather issues and notify the Fiat Chrysler that “further discussions are needed”.

“We don’t consider this a setback; we consider the membership vote a part of the process we respect,” said Williams.

The Associated Press contributed to this report.