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Expect FCA-Peugeot merger plans to be 'elephant' in room during UAW talks

Eric D. Lawrence, Detroit Free Press on

Published in Automotive News

DETROIT -- The real impact of the expected merger of Fiat Chrysler Automobiles and Peugeot will take some time to become clear, but an early test could come as negotiators for FCA and the UAW try to hammer out a new labor contract.

The announcement last week of a proposed 50-50 merger of FCA and PSA Groupe paints a broad picture of a global company intent on maintaining "significant presences" at current head offices in France, Italy and the United States, on saving money and on creating economies of scale.

At the same time, FCA and the UAW are preparing to ramp up contract bargaining as attention shifts from General Motors, where workers have already ratified a new deal following a 40-day strike, and Ford, where workers were to begin voting on their deal this week.

Several experts said they don't expect a major impact, at least in the short term, on U.S. employment by a merged company, but the deal's scope and reasoning have implications that highlight the broad changes underway in an industry seeking a path to a future laden with expensive technological requirements. Part of that future is believed to include vehicle production that simply requires fewer workers.

Marick Masters, a professor of business at Wayne State University, said the merger will be the "elephant in the room" even though it is far from a settled deal.

Negotiations will need to play out as if they were done before the announcement, in part because mergers take time and the deal could still fall apart, he said.

 

"It bodes well for the future (but) it's not going to make the issues (in bargaining) any less difficult," Masters said.

Harley Shaiken, a professor at the University of California, Berkeley, who specializes in labor issues, said the merger announcement will color the talks because of the unknowns it creates.

"I think the union will be looking for more assurance that a new corporate entity doesn't come in and start shifting things around in a way that could be harmful for Chrysler workers," Shaiken said.

The pledge that the merger would save $4.11 billion (3.7 billion euro) annually without plant closures appears meant to reassure those worried about job cuts, but the use of terminology such as "synergies," which appeared in the merger announcement, is often seen as code for shrinking personnel numbers.

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