UAW threatens Fiat Chrysler with a strike; $40M weekly profit at risk

Fiat Chrysler could risk of losing up to $40 million profit a week if the strike scheduled by some 36,000 company's hourly workers goes through. The strike involves all workers working for Fiat Chrysler registered under the Union Auto Workers (UAW).

The estimate was made by chief economist Sean McAlinden of the Center for Automotive Research. He told Reuters that the estimate was based on the number of vehicles sold by the company in the U.S. alone.

The planned strike was confirmed by the UAW president, Dennis Williams and acknowledge by Fiat Chrysler administration according to the New York Times. Workers are dissatisfied with the previous agreement reached between the UAW and Fiat Chrysler in early September.

According to the UAW representative, workers two-third of the members rejected the health care agreement reached by them and also the two-tier wage system. The new talks for renewing agreement start when the four-year contract between UAW and Fiat Chrysler ended.

Workers assert that the current wage system used by Fiat Chrysler is unfair as the company did not specify on how long an employee should be working to not be considered as entry-level employees.

According The Wall Street Journal, currently the entry level employee accounts to more than 40 percent of the total employee and were paid from $16 to $19 per hour while the veteran employee received $28 per hour.

The previous agreement reached saw that Fiat Chrysler agrees to raise the wage for entry-level workers to $25 per hour while the veteran employee will receive up to $30 per hour. Although the raise seems lucrative, however, Fiat Chrysler still does not specify how the entry-level workers could get a promotion to be considered as a veteran employee.

Current labor cost for the Automaker has drastically reduced compared to when the company first enter the U.S market. Current labor cost is around 4 percent of total price of the vehicle sold by the company.

UAW previously said that the new agreement reached with Fiat Chrysler will be used as a model agreement for other Automaker in the US. However, as the agreement was rejected it is still unsure what the union is planning.

This is not the first strike announcement made by the UAW members. Previously members had done a strike during the global financial crisis which saw the government came in to provide a bailout for all automaker.