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UAW picks GM for autoworker talks after Fiat Chrysler deal

United Auto Workers (UAW) President Dennis Williams (L) and Fiat Chrysler Automobiles (FCA) CEO Sergio Marchionne hold a news conference to announce a tentative agreement in Detroit, Michigan, September 15, 2015. REUTERS/Rebecca Cook

By Bernie Woodall

DETROIT (Reuters) - The United Auto Workers said on Thursday it will negotiate its next deal with General Motors Co (GM.N), after the union's workers at Fiat Chrysler Automobiles NV (FCAU.N) (FCHA.MI) ratified a new pact.

The contract reached with Fiat Chrysler will be used as a basic pattern for deals the union will attempt to reach first with GM and later with Ford Motor Co (F.N). The UAW announced earlier Thursday the Fiat Chrysler deal for 40,000 workers had been ratified by 77 percent of those who voted.

While the Fiat Chrysler pact sets the pattern, GM workers and the UAW are going to expect a richer deal because GM is more profitable, said labor analyst Arthur Schwartz. GM and Ford each have about 52,700 UAW-represented workers.

"(UAW President) Dennis Williams has already said it's going to be Chrysler-plus at GM and Ford," said Schwartz, a former negotiator for GM.

GM has highlighted its improving financial situation and rosy outlook since an Oct. 1 meeting with Wall Street analysts.

And on Wednesday, it reported record quarterly profit, derived almost entirely from its home in North America where vehicles made by UAW members are its top sellers.

However, GM Chief Executive Officer Mary Barra and Chief Financial Officer Chuck Stevens have made clear that no deal with the UAW will threaten its maintaining 10 percent operating profit margins in North America, which it will achieve this year.

GM has already committed to invest $5.4 billion over the next three years in U.S. manufacturing and on Thursday said it will add 1,200 workers and a second shift at its last remaining production plant in Detroit, where the company is headquartered.

GM negotiators are expected to remind the UAW that its labor costs are higher than Fiat Chrysler's in large part because it has hired fewer lower-paid workers since 2007, when the union and the Detroit Three automakers agreed to a two-tier wage structure as all of the companies were reeling financially.

The new Fiat Chrysler contract, effective as of next Monday, provides a clearer path to top pay for so-called "second-tier" workers.

Fiat Chrysler's labor costs have been lower than either GM or Ford because it has more lower-paid recent hires, at about 45 percent. Ford has about 29 percent "second-tier" workers and GM has about 20 percent.


(Additional reporting by Joseph White; Editing by Tom Brown and Lisa Shumaker)