UAW set to strike as FCA keeps talking

Negotiations between UAW and Fiat Chrysler Automobiles to restructure a deal overwhelmingly rejected by workers last week took an ominous turn Tuesday with the union issuing a strike notice that says the current contract extension will expire at 11:59 p.m. Wednesday.

The question looming over negotiators now is whether bargaining teams can solve a long list of complex issues before the strike deadline. The stakes for FCA and the union are extremely high.

"Once a strike starts, it's kind of like letting a genie out of a bottle — you don’t know what is going to happen," said Gary Klotz, a labor law attorney and partner at Butzel Long in Detroit.

The automaker signaled a less dire picture than the strike notice appeared to suggest.

"FCA US confirms that it has received strike notification from the UAW," the company said in a statement Tuesday. "The company continues to work with the UAW in a constructive manner to reach a new agreement," the statement continues, suggesting talks continued at some level.

If a strike is called, it could be national action or it could target strategic plants in which case workers at other FCA facilities would remain on the job unless production is affected by the striking plants.

"The union has two options," said Arthur Schwartz, retired director of labor relations at General Motors and now a consultant. "They can call a strike at Fiat Chrysler and say 'We're going to GM or Ford.' Or they can keep their workers at FCA on the job and move to one of the others."

There remains the possibility that the sides are making real progress and strike preparations are merely theater to appease UAW members angry at union leaders for the deal last month that fell well short of their expectations.

“From the UAW point of view, it would almost be more politically astute to get everyone to go out on strike if it were a way to serve as a safety valve," Klotz said.

A national strike could quickly become costly to the automaker and the union — estimated to be as much as $300 million a day in lost revenue. Fiat Chrysler has been profitable in recent years, but it remains the weakest automaker among the Detroit Three. The UAW’s strike fund declined from more than $1 billion a decade ago to just more than $600 million in 2013.

Throughout the day Tuesday, thousands of workers received strike instructions from their union stewards and local leaders. There was rising anxiety and confusion in plants across the country as workers wondered if their facility would be included in a possible strike.

A notice issued to workers at Warren Truck Assembly said negotiations were still ongoing, but "In the event an agreement is unable to be reached or an extension is not agreed upon and a strike is called ....members are to take their personal belongings and IMMEDIATELY exit the building in an orderly and dignified manner."

Last week, 65% of Fiat Chrysler workers voted against a tentative agreement that UAW President Dennis Williams and other union officials recommended.

In the wake of that historic defeat, Williams gathered the union's top UAW-Chrysler officials from across the country to figure out what could be done to restructure the agreement. They decided to restart discussions with the automaker.

The contract that was rejected would have provided all workers with a $3,000 signing bonus. Wages for entry-level workers, those hired after 2007, would have increased immediately from a range of $15.78 to $19.28 to a range of $17 to $24. Those at $24 an hour — reserved for those with six to seven years of service — would reach $25.35 after another year of service. At the low end, that's an immediate 8% raise. At the highest end, it would have meant an immediate 24% raise.

Workers hired before 2007 would have received two 3% wage increases and two lump-sum bonuses over the four-year life of the contract.

The proposed contract also included a commitment from both sides to work on creating a new health care cooperative for all active UAW auto workers. The co-op would work to negotiate better rates and treatments from health providers without an increase in what workers pay for care.

While workers voted against the agreement for a number of reasons, many cited a lack of information about the health care cooperative and fears it would lead to higher health care costs; concerns about the company's plans to move the production of the Chrysler 200 and the Dodge Dart from the U.S.to Mexico, and frustration over the lack of a pathway for entry-level workers to increase their wage to the $28 per hour rate that older workers make. Anger over new work schedules put in place a few years ago and a new proposed attendance policy also are high on the list of worker objections.

On Tuesday, UAW Vice President Norwood Jewell sent a letter to the company's top negotiator Glenn Shagana, vice president of employee relations at FCA, giving formal notification that the union is terminating the current agreement that had been extended while negotiations continued. The letter said all agreements are terminated as of 11:59 p.m. Wednesday.

The UAW's notice appears to be a serious threat — not symbolic posturing — according to a person briefed on the union's plans who declined to be named because he was not authorized to speak publicly about strike preparations.

The UAW's elected leaders are told to pick up picket signs, the person said. That was not the case Sept. 14 when the expiration of the current four-year contract was approaching. Some UAW officials also are being asked to meet with plant management to make contingency plans and assign a limited number of workers to keep essential operations such as power, heating and cooling running if there is a strike.

Striking workers would be eligible for strike pay. Anyone laid off because their plant was affected by another striking plant would be eligible to file for unemployment compensation unless the company can prove their layoffs are the direct result of a strike.

So far, the Free Press is able to confirm that strike instructions have been issued at UAW Local 1166, which represents workers at a casting plant in Kokomo, Ind., Local 372, which represents workers at an engine plant in Trenton, Local 140, which represents workers at a pickup truck plant in Warren, Mich., Local 7, which represents workers at Jefferson North Assembly and Local 1264, which represents workers at a stamping plant in Sterling Heights.

The strike deadline postings are ambiguous, said Kristin Dziczek, director of the Labor & Industry Group at the Center for Automotive Research. “It doesn’t tell the membership where things stand.”

It might be a transitional state until the UAW international executive board authorizes a walkout, she said.

A national walkout or strike would threaten to quickly destabilize Fiat Chrysler, which has been profitable in recent years, but is the weakest company of the Detroit Three. It also could do tremendous damage to the relationship between the union and the company that has markedly improved in recent years compared with prior decades.

“They don’t have to go long if they do strike,” Dziczek said. "A strike causes pain on both sides and applies pressure to get back to the table.”

Striking costs each individual in the pocketbook and is not done lightly, said Dziczek, who predicted from the start that a strike was likely at FCA but takes no delight knowing that she might be proven right.

“It is a financial strain to walk the picket line for $200 a week.”

A targeted strike at pinch points like the Kokomo transmission plant would mean a few thousand workers would have to rely on $200 in weekly strike pay while workers at other plants that go down because they can’t build vehicles without transmissions would receive unemployment benefits and not be hurt as much financially by a walkout.

Targeted strikes don’t put as big a dent in the UAW’s strike fund, but Dziczek said the fund is big and that is not a concern. Nor does she think a strike would be lengthy.

Historically, UAW strikes have ranged in duration from hours to weeks.

In 2007, there was a two-day national strike at General Motors and a 6.5-hour targeted strike at Chrysler. In 1998, workers at GM's plant in Flint went on strike in 1998 for 54 days and in 1976, Ford workers were on strike for 28 days during a national walkout.

Fiat Chrysler will be most hurt by the idling of the Kokomo transmission plant and the vehicle assembly plants in Toledo and Jefferson North that make popular Jeeps and the Warren Truck plant that makes the Ram full-size pickup.

“That would hit Fiat Chrysler where it hurts," Dziczek said.

Contact Brent Snavely: 313-222-6512 or bsnavely@freepress.com. Follow him on Twitter @BrentSnavely.

Contact Alisa Priddle: 313-222-5394 or apriddle@freepress.com. Follow her on Twitter @AlisaPriddle. Staff writer Greg Gardner contributed to this report.