Fiat Chrysler Automobiles NV and the United Auto Workers (UAW) union on Saturday declared a tentative agreement for a four-year labor contract, which is good for the automaker as it works to merge with France’s Groupe PSA.
Fiat Chrysler and PSA had earlier announced a planned $50 billion merger to form the world’s fourth-largest automaker.
The tentative agreement with Fiat Chrysler, which is subject to ratification by the union members, comes after contracts that the UAW already concluded with Ford Motor and General Motors.
The deal with GM resulted in a 40-day strike in the United States that virtually shuttered GM’s North American operations and cost the automaker $3 billion.
The UAW on Saturday stated the contract with Fiat Chrysler consists of a commitment from FCA to spend $9 billion, creating 7,900 new jobs over the course of the four-year contract. Of the $9 billion, $4.5 billion was announced previously this year, to be invested in five plants and creating 6,500 jobs.
Detailed terms of the tentative agreement were not provided, but they are expected to echo those under the new contracts with GM and Ford, as the UAW generally uses the first deal as a pattern for the others.
“FCA has been a great American success story thanks to the hard work of our members,” stated Rory Gamble, the acting President of UAW. “We have achieved substantial gains and job security provisions for the fastest-growing auto company in the United States.”
Ratification is not a sure thing. Rank-and-file UAW members at FCA in 2015 declined the first version of a contract. Other than that, a lawsuit related to a federal corruption probe could also raise doubts among union members regarding the terms agreed.
The federal corruption led GM to submit a racketeering lawsuit against FCA, accusing them of bribing union officials over many years to corrupt the bargaining process and gain benefits, costing GM billions of dollars. FCA has rejected the lawsuit as groundless.
Under the UAW’s deal with GM, the automaker agreed to spend $9 billion in the United States, including $7.7 billion directly in its plants, and to generate or retain 9,000 UAW jobs.