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The UAW confirmed Thursday that its members have defeated a proposed four-year contract with Fiat Chrysler Automobiles that its leaders had recommended, dealing the union a serious blow as it works to negotiate new contracts with the Detroit Three.
The union said 65% of Fiat Chrysler workers voted to reject the contract.
UAW President Dennis Williams said he does not consider the rejection of the contract a setback.
“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," Williams said in a statement.
Nevertheless, rejection of a national contract is unprecedented for the UAW in modern times. It's the first time since 1982 that UAW members have rejected a national agreement..
"We will gather the issues together; notify FCA that further discussions are needed," Williams said in his statement. "We will be meeting with the UAW-FCA National bargaining committee and council to discuss the issues.”
Fiat Chrysler issued an extensive statement in response, expressing its disappointment with the results.
"The tentative agreement was designed to yield a strong and competitive FCA US, thus providing stability for our workforce and opportunity for future growth and investment in an increasingly complex global marketplace," the company said. "The company will make decisions, as always, based on achieving our industrial objectives, and looks forward to continuing a dialogue with the UAW."
The UAW had hoped to use the agreement with Fiat Chrysler as a pattern after it was ratified to craft new contracts with Ford and General Motors. Now, the UAW must decide whether or not it wants to return to the bargaining table with Fiat Chrysler to demand a better deal, ask its members to re-vote on the existing agreement, or move on and complete contract talks with Ford or GM.
Earlier this week, UAW Vice President Jimmy Settles issued a five-day strike at Ford's F-150 plant in Kansas City, Mo., over a local contract dispute.
Despite that dispute, Mark LaNeve, vice president of sales and marketing for Ford, on Thursday said, “We’re confident we’re going to be able to negotiate a fair and competitive labor agreement with our UAW partners and we’re going to continue working in that direction."
The UAW also has called its top elected Chrysler leaders to attend a meeting in Warren on Thursday to talk about what to do next.
Meanwhile, workers inside the plants are openly speculating about whether the company will crack down on various rules and regulations or whether their union will call a strike.
The union already has made strike preparations at most of its UAW local units, according to a person briefed on the union's planning who could not be named. Typically, the union's strike preparations include selecting strike captains, assigning workers to picket line shifts and mapping out plant entrances.
A notice sent to members of UAW Local 1264 on Tuesday spelled out how workers would be notified if a strike were to be called. The notice instructs workers at Sterling Stamping in Sterling Heights to calmly gather all personal belongings, leave the plant and report to the local union hall.
Evidence that the UAW's effort to convince a majority of the 40,000 union-represented workers at the automaker was in trouble began to emerge shortly after voting began last week as workers at plants in Michigan and Indiana began to reject the contract.
As voting wore on, the margin of defeat at UAW local units that represent workers at various plants grew bigger.
Workers at some plants voted against the agreement because of media reports that the car or truck that they make will be moved to different plants at some point over the next four years. While Fiat Chrysler made a commitment to the UAW to invest $5.3 billion at its U.S. plants the automaker has not spelled out where or when those investments will take place.
Meanwhile, the Free Press has reported that the automaker plans to move production of the Chrysler 200 and the Dodge Dart to Mexico from assembly plants in Sterling Heights and Belvidere, Ill. The automaker also plans to move its Ram 1500 pickup from Warren to Sterling Heights and its Jeep Cherokee from Toledo to Belvidere.
"All the UAW workers in Metro Detroit are bombarded with rumors or work going to Mexico," said Simon Vuli, who has worked at Sterling Heights Assembly for three years.
The defeat is especially troubling for Williams and the UAW because the contract appeared to achieve the three main goals that UAW set out to accomplish in negotiations.
If ratified, the proposed contract would have given workers hired before 2007 their first raise in 10 years and would have significantly bridged the pay gap between entry-level workers and the longtime workers.
"I think once the membership looks at it, hears the explanation for it, I think they will ratify it," Williams said on Sept. 18. "I think they will see it’s a very balanced and thoughtful agreement."
If ratified, the agreement would have given all workers a $3,000 signing bonus, entry-level workers in assembly plants would see wages increase to a range of $17 to $25.35 per hour, and workers hired before 2007 would receive two 3% wage increases and two lump-sum bonuses over the life of the contract.
It would also would have established a new health care cooperative for all active UAW auto workers that would work to negotiate better rates and treatments from health providers without an increase for what workers pay.
But many workers said they didn't like the proposed contract because it failed to provide entry-level workers with a full path to the $28-per-hour average wage that workers hired before 2007 make, and a lack of clarity on a new health care cooperative.
In 2011, workers were told that the UAW's contract with the automaker required the company cap its percentage of entry-level workers at 25% "at the end of this contract." That would have forced Fiat Chrysler to bumped some workers who earn $19.78 or less up to $28 per hour but would have kept the remaining entry-level workers at their current wage.
UAW leaders decided to abandon that cap and instead negotiated an agreement to adopt a new pay scale of $17 to $25.35 per hour for all entry level workers.
Williams argued that the proposed agreement significantly bridged the gap in pay between the two worker classes, but workers didn't see it that way. Instead, many workers were livid and said the company and the union broke its promise to honor the cap.