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Why UAW workers may be ready to walk

The clock is ticking toward an 11:59 p.m. Eastern deadline that could leave one of the Detroit's Big Three automakers facing its first strike in eight years.

The United Auto Workers union on Tuesday threatened to strike against Fiat Chrysler, after its members voted down their original contract offer and talks appeared to stall.

UAW President Dennis Williams, who is leading contract talks with the Big Three for the first time, originally set a cooperative tone, insisting a strike would be a failure. But he also stressed that he would not shy away from a confrontation, if that's what it would take.

Here are some of the key reasons why the UAW may be ready to strike — and why FCA might be willing to risk a confrontation that one estimate warns could cost it roughly $1 billion a week in lost revenue.

  • A major sticking point for workers is the two-tier wage structure created in 2007 to reduce costs. FCA was willing to sweeten but not eliminate the system, which pays entry-level workers less than veterans.
  • Workers also are concerned about changes planned to what has been described as the gold standard of health-care programs. The fear is that co-pays and other costs will soar.
  • Workers were upset that the contract would have permitted some production to shift from the U.S. to Mexico, even though other products would come back to the U.S.
  • They were also upset about the handling of jobs and production at the critical Jeep plant in Toledo, Ohio.
  • A sleeper issue concerns schedules that have many working 10-hour night shifts for days, then switching almost immediately to early morning shifts.

The nearly 2-to-1 "no" vote on the contract also appears to have reflected rank-and-file frustration with Williams and the rest of the UAW leadership. They've admitted to not doing enough to sell the contract, and Williams has promised more "transparency" during the ongoing negotiations.

As for Fiat Chrysler, the automaker hasn't forgotten the bankruptcy that nearly scuttled the U.S. side of the company. FCA is still considered the weakest of the Detroit-based Big Three.

A Chrysler Ram 1500 truck goes through inspection at the Warren Truck Assembly Plant in Warren, Michigan.
Getty Images
A Chrysler Ram 1500 truck goes through inspection at the Warren Truck Assembly Plant in Warren, Michigan.

The company needs cash, and plenty of it, to help fund aggressive product plans for its many brands, including Jeep, Chrysler, Fiat and Alfa Romeo. It has also been slow to develop the electrified powertrains that will be needed to meet future emissions and mileage rules.

To raise an estimated $1 billion, FCA is set to launch an initial public offering of its ultra-exclusive Ferrari brand.

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Both sides could lose out if there isn't a settlement. Sean McAlinden, chief economist at the Center for Automotive Research, estimates a companywide strike could cost FCA roughly $1 billion in revenues weekly.

UAW workers will take a big risk, as well. They won't receive strike pay — a modest $200 a week — unless and until they're off the job a second week.

Williams and his team recognize that at a time when Americans are less enthralled with unions than in decades, a noisy confrontation — especially one that cripples a major U.S. manufacturer — won't earn much support.

Meanwhile, a strike could make it all the more difficult to convince workers at the numerous non-union plants that dot the South that organizing would improve their lives.