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How GM ended up suing its crosstown rival Fiat Chrysler

DETROIT — Automakers sue each other on occasion, but no one in Detroit can remember one accusing another of bribing union officials to get an unfair labor cost advantage. Yet thatÂ’s what happened Wednesday when General Motors filed a federal racketeering lawsuit against Fiat Chrysler Automobiles. ItÂ’s based on a widening federal investigation into corruption involving officials of the United Auto Workers union, and shortly after the lawsuit was filed, the unionÂ’s president Gary Jones stepped down. The 95-page complaint could affect ongoing contract talks between the union and Fiat Chrysler, the lone automaker of DetroitÂ’s big three thatÂ’s still in negotiations. It also could cause jitters with French automaker PSA Peugeot, which has reached an agreement to merge with the Italian-American automaker. Here are some questions and answers about the lawsuit and its impact: Why did GM sue? GM alleges that Fiat Chrysler senior executives, including now-deceased CEO Sergio Marchionne, paid $1.5 million in bribes to UAW officials for nearly a decade and corrupted the bargaining process with the union in the 2009, 2011 and 2015 contracts to gain advantages over General Motors. The lawsuit says that because of the bribes, which were funneled through a joint UAW-Fiat Chrysler training center, the union allowed Fiat Chrysler to use more lower-paid temporary workers. Also, FCA in 2015 did not have to limit the number of newly hired workers who make less and get lower-cost benefits than older workers hired before 2007. GM contends it couldnÂ’t negotiate similar union concessions that FCA was able to get through bribery. GM could only hire a limited number of temporary and lower-paid new workers, called “second tier” workers, which unfairly increased its labor costs by billions of dollars. It alleges the higher labor costs had another purpose — to force GM into a merger with FCA that Marchionne wanted. GM did wind up with higher labor costs, which until the lawsuit had not been linked to the federal corruption probe. Before contract talks with all three automakers began last summer, the Center for Automotive Research, an industry think tank, determined Fiat ChryslerÂ’s total hourly labor costs including wages and benefits were about $55 per hour, $8 less per hour than GM and $6 lower than Ford. At a Wall Street conference in New York on Thursday, GM CEO Mary Barra said her company can compete on a level playing field.

Stellantis is official: FCA and PSA merger finally sealed

MILAN — Fiat Chrysler and PSA sealed their long-awaited merger on Saturday to create Stellantis, the world's fourth-largest auto group with deep enough pockets to fund the shift to electric driving and take on bigger rivals Toyota and Volkswagen. It took over a year for the Italian-American and French automakers to finalize the $52 billion deal, during which the global economy was upended by the COVID-19 pandemic. They first announced plans to merge in October 2019, to create a group with annual sales of around 8.1 million vehicles. "The merger between Peugeot S.A. and Fiat Chrysler Automobiles N.V. that will lead the path to the creation of Stellantis N.V. became effective today," the two automakers said in a statement. Shares in Stellantis, which will be headed by current PSA Chief Executive Carlos Tavares, will start trading in Milan and Paris on Monday, and in New York on Tuesday. Now analysts and investors are turning their focus to how Tavares plans to address the huge challenges facing the group – from excess production capacity to a woeful performance in China. Tavares will hold his first press conference as Stellantis CEO on Tuesday, after ringing NYSE's bell with Chairman John Elkann. FCA and PSA have said Stellantis can cut annual costs by over 5 billion euros ($6.1 billion) without plant closures, and investors will be keen for more details on how it will do this. Marco Santino, a partner at consultants Oliver Wyman, said he expected Tavares to disclose the outlines of his action plan soon, but without divulging too many details at first. "He has proven to be the kind of person who prefers action to words, so I don't think he will make loud statements or try to over-sell targets," he said. Like all global automakers, Stellantis needs to invest billions in the years ahead to transform its vehicle range for the electric era. But other pressing tasks loom, including reviving the group's lagging fortunes in China, rationalizing its huge global empire and addressing massive overcapacity. "It will be a step by step process, also to allow the market to better appreciate every single move. I don't think we will have all the details before one year," Santino said.

Proposed deal averts strike between FCA and UAW

With the deadline rapidly approaching for a strike, FCA US and the United Auto Workers were able to hammer out a potential agreement late last night to avoid picket lines, at least for now. While the UAW said in a statement that it "secured significant gains," the actual contents of the deal haven't been published yet. Before going public, the offer still needs the consent of the UAW National Chrysler Committee, and that body has a meeting on 11:00 AM Eastern on Friday, October 9, to make a decision. If the Chrysler committee signs off on the deal, it would then go to the union's 40,000 FCA US workers for a vote, according to The Detroit News. "We have made real gains and I look forward to a full discussion of the terms with our membership," President Dennis Williams said in the UAW's statement. FCA US isn't providing any answers about the proposed contract either. In a release about the negotiations, the automaker said: "FCA US confirms that it has reached a new tentative agreement with the UAW. Because the agreement is subject to UAW member ratification, the Company cannot discuss the specifics of the agreement pending a vote by UAW members." The original tentative contract with FCA US promised raises and the creation of a healthcare co-op. However, 65 percent of union members rejected the deal, The Detroit News reports. Workers didn't like that the offer kept a two-tier wage system between veterans and more recent employees. The details of the health plan also weren't explained well, and there wasn't much info on possible production changes. UAW-FCA NATIONAL BARGAINING COMMITTEE VOTES ON PROPOSED TENTATIVE AGREEMENT Featured / News / October 8, 2015 UAW National Chrysler Council Leaders to Convene for Vote on Friday, Oct. 9 — Terms to be announced following Friday vote Detroit, Mich. – After a lengthy bargaining process, the UAW FCA National Bargaining Committee has secured significant gains in a proposed Tentative Agreement with FCA US announced today. The bargaining committee unanimously voted to send the proposed Tentative Agreement to local union leaders who make up the union's UAW National Chrysler Council. The UAW Chrysler Council will meet in Detroit at 11 am on Friday to discuss and vote on the agreement. "We heard from our members, and went back to FCA to strengthen their contract," said UAW President Dennis Williams.