Sept. 22, 2015—After negotiating since July, the United Auto Workers (UAW) and Fiat Chrysler Automobiles (FCA) have reached a tentative agreement that gives workers a raise and invests $5.3 billion to update plans, but would shift some vehicle production to Mexico, according to a report by USA Today.
The $5.3 billion investment is part of the automaker’s five-year production plan and will involve changing where many Chrysler, Dodge, Ram and Fiat vehicles are made. Many of the pickups and SUVs, including the compact Dodge Dart and the midsize Chrysler 200 will move to a plant in Mexico.
The 40,000 production employees that are represented by the UAW union are preparing to vote on the tentative agreement with FCA, knowing that the agreement includes pay increases, profit sharing and bonuses, but will move some production to Mexico.
Ford also plans on shifting some of its small-car production out of its Michigan plant, possibly to Mexico. So far, GM has been the most reluctant of the three to move small-car production from the U.S. to Mexico. The UAW wants to make sure it does not lose any GM jobs to Mexico over the length of its new contract.
In 2014, automakers announced $18.25 billion in additional investments in North America, with $10.5 billion for the U.S., $7 billion in new projects for Mexico, and one $750-million project for Canada, according to the Center for Automotive Research in Ann Arbor. This investment is on top of the 18 plants already located in Mexico, and the five more planned or currently under construction. Mexico has seen a 40 percent increase in auto jobs since 2008 and the the U.S. has seen an increase of only 15 percent in the same amount of time.
"Moving cars to Mexico makes sense," said Haig Stoddard, industry analyst for WardsAuto, according to USA Today. "It makes sense to build less-profitable vehicles in Mexico and more-profitable ones in the U.S."
Workers at FCA will have to make the decision whether or not shifting production to Mexico is a good idea when it comes time to vote. Each UAW worker will receive a signing bonus of $3,000 and raise increases by voting for the agreement.
