United Auto Workers leaders from Fiat Chrysler Automobiles NV’s (FCHA.MI) (FCAU.N) U.S. plants on Wednesday recommended approval of a tentative labor agreement that would allow the Italian-American automaker to avoid a strike as it works to merge with France’s Groupe PSA. (PEUP.PA)
Fiat Chrysler (FCA) and PSA, the maker of Peugeot and Citroen, in October announced a planned $50 billion merger to create the world’s fourth-largest automaker.
The tentative four-year agreement with FCA, reached last week, must now be ratified by the 47,200 UAW members at the company, with voting set to begin Friday. The deal follows contracts the UAW already concluded with larger rivals General Motors Co (GM.N) and Ford Motor Co (F.N).
FCA declined to comment on Wednesday.
The UAW previously said the contract included a commitment by the automaker to invest $9 billion, creating 7,900 new jobs over the course of the contract. Of the $9 billion, $4.5 billion was announced earlier this year, to be invested in five plants and creating 6,500 jobs.
The investments include $2.8 billion at Warren Truck Assembly plant to build a new a plug-in hybrid SUV in 2021 and a potential increase of 1,500 jobs.
FCA will also invest $160 million at its Toledo plant to build a new plug-in hybrid Jeep Wrangler next year, and $3 billion at its Jefferson Assembly plant in Detroit to a build a plug-in hybrid Jeep Grand Cherokee in 2021 among other new vehicles.
While the deals with GM and Ford were approved, ratification is not a sure thing, as union members at FCA in 2015 rejected the first version of a contract. In addition, a federal corruption probe related to embezzlement at the union could also raise doubts among union members about the deal’s terms.
UAW members must complete voting by Dec. 11.
The federal corruption probe led GM to file a racketeering lawsuit against FCA, alleging its rival bribed union officials over many years to corrupt the bargaining process and gain advantages, costing GM billions of dollars. FCA has brushed off the lawsuit as groundless.
The deal with GM followed a 40-day strike in the United States that virtually shuttered GM’s North American operations and cost the automaker $3 billion.
Detailed terms of the FCA deal echoed those agreed to with GM and Ford as the union typically uses the first deal as a template for those that follow.
Reporting by Ben Klayman in Detroit; additional reporting by David Shepardson in Washington; Editing by Matthew Lewis and Tom Brown