UAW Gives 'Hour By Hour' Extension of Fiat Chrysler Contract

The United Auto Workers union said Tuesday it offered Fiat Chrysler's U.S. subsidiary an "hour by hour" extension of its contract as negotiations continued.

The union offered indefinite contract extensions to GM and Ford while it focuses on reaching a deal with FCA US.

The UAW's four-year contracts with the Detroit Three carmakers expired at midnight Monday (0400 GMT Tuesday.)

"The UAW and FCA US LLC announced this evening that they have extended the existing collective bargaining agreement on an hour by hour basis as 2015 bargaining continues," the union said in a brief statement issued shortly after the contracts expired.

The union leadership has the authorization of its members to call a strike should the talks with FCA fall apart.

General Motors and Ford are watching the talks closely because whatever deal is reached with FCA will dictate the wages and benefits the United Auto Workers union seeks at the remaining Detroit carmakers.

The union has historically ensured that the Detroit Three automakers do not face competitive disadvantages by negotiating similar four-year contracts with each.

FCA was "a logical choice" to be tappped as the so-called target company because the union is determined to eliminate a two-tier wage structure imposed after the auto industry collapsed in the wake of the 2008 financial crisis, said Harley Shaiken, a labor export from the University of California-Berkeley.

"It's easier to start with the weakest company. You don't want to negotiate something at General Motors and Ford that's unacceptable" to FCA US, he said.

This is the first time that the UAW has been able to use a strike threat to strengthen its hand since 2007. The terms of GM and Chrysler's 2009 bankruptcies prevented the union from going on strike during the 2011 negotiations.

Even a brief strike could seriously damage FCA's bottom line, Shaiken said.

"They are living closer to the edge and they can't make up production of their hot vehicles," he told AFP.

UAW President Dennis Williams has repeatedly said that he views a strike as a failure.

However, the union is also looking to claw back some of the major concessions made in order to help the Detroit Three survive the economic crisis. All three carmakers are now posting massive profits and the industry is booming.

Williams has vowed to end the two-tier system, where newer workers are paid significantly less than long-term employees. Roughly 43% of FCA US employees earn about $16.50 per hour, while workers with seniority earn $30 per hour wage.

The union is also looking for a raise for workers with seniority, who have not seen a wage increase since 2006 and have lost roughly four percent of their purchasing power to inflation. The union gave up automatic cost-of-living adjustments during the 2009 bankruptcies.

Williams also wants the contract to reflect a commitment to slow or end the flow of auto company investment into Mexico.

Fiat Chrysler chief Sergio Marchionne appears more willing to meet the union's demands than executives at GM and Ford, which this year have announced significant new investments in Mexico, Shaiken noted.

Marchionne was set to attend the launch of a new Alfa Romero in Frankfurt on Tuesday morning but cancelled those plans "due to other commitments in the United States" FCA said in a statement.

While the automaker declined to comment on the negotiations a source confirmed Marchionne would be involved in the talks.

"It sends the message he thinks he can really get something done," said Kristen Dziczek of the Center for Automotive Research in Ann Arbor, Michigan.