Fiat Chrysler Automobiles chief executive officer Sergio Marchionne has said he would seek new methods of lowering expenses or hiking model prices to fend off the additional labor costs stemming from the recently ratified UAW contract.

The new four-year labor agreement between the company and the UAW union might increases FCA expenses by another $2 billion over the life of the contract – the automaker said it now needs to find a suitable strategy to lower expenses or lift vehicle prices, according to the top ranking executive. “The number is actually less than that but it is broadly in line with the cumulative cost increase that we are expecting over the period of time, ” commented Marchionne after pointing out some analysts estimated the tally at around $2 billion. “That number needs to come out either of the market in terms of pricing or it needs to come out of the capital structure — the cost of running this thing.”

On October 22 the almost 40, 000 UAW members working for FCA ratified the second proposed labor contract, which now includes a $3,000 signing bonus for initial hires and $4,000 signing bonuses for veteran workers. It also comes with wage hikes for both tiers, new and potential bonuses and a remixed profit-sharing formula. It also delivers a clear path for new hires to reach the top pay grade in up to eight year in a move to get rid of the much chagrined two tier wage system agreed by the union and the Detroit automakers back in 2007 at the onset of the financial crisis. The UAW has also reached a tentative agreement with GM, which needs to be ratified and continues to negotiate with Ford.



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