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Talks under way with NHTSA to resolve recall issues: FCA CEO

Sergio Marchionne, Chief Executive of Fiat Chrysler, speaks during the first press preview day of the North American International Auto Show in Detroit, Michigan January 12, 2015. REUTERS/Rebecca Cook

By Joseph White

(Reuters) - Fiat Chrysler Automobiles NV Chief Executive Sergio Marchionne said Tuesday the automaker is in talks with U.S. highway safety regulators to head off potential fines over the company's handling of recalls involving 11 million vehicles.

Marchionne gave an impromptu press conference on the sidelines of a ceremonial handshake to kick off contract talks with the United Auto Workers union.

Regarding the discussions with the National Highway Traffic Safety Administration, Marchionne said, "There's nothing signed," but said the company needs to change the way it deals with regulators going forward.

Marchionne didn't elaborate on the discussions, but indicated he hopes the company can avoid fines.

"We have adapted not in the best possible way to the new regime," Marchionne said, referring to the more active approach to enforcement taken by NHTSA administrator Mark Rosekind. NHTSA convened a hearing July 2 on Chrysler's handling of recalls. The company could face fines up to $700 million.

"We have to continue to work with the agency to put us on the right path," Marchionne said. NHTSA officials were not immediately available for comment.

NHTSA said in a statement Tuesday that "one possible outcome is a consent order in which Fiat Chrysler agrees to address issues with its recall performance. That remains a possibility. We hope to have steps to announce soon after the public comment period after the hearing ends on July 17."

Regarding the UAW, which represents some 35,700 FCA workers in the United States, Marchionne reiterated his view that the two sides should work to eliminate a so-called two-tier wage system and replace it with a new approach in which wages vary with profits.

"I firmly believe in wealth distribution," Marchionne said.

UAW President Dennis Williams said the UAW wants to narrow the gap between workers earning the entry level wage of $16-$19 an hour, and veterans who earn about $28 an hour.

Marchionne also addressed the future of a Jeep factory in Toledo, Ohio more directly than he has in the past, saying the reason for his delay in deciding the plant's future is that FCA cannot afford to shut the factory to retool it for a new generation of the hot-selling Jeep Wrangler.

Wrangler production must continue while the new model's assembly line is being built, he said, and FCA has not figured out how to do that in the Toledo factory. A decision should come by the end of the summer, he said.

(Reporting By Joe White; Editing by Peter Galloway and Cynthia Osterman)