Detroit (AFP) - With hours to go before a possible strike is called at Fiat Chrysler's US plants, chief Sergio Marchionne stepped in Monday to try to negotiate a new union contract.
The labor contract at FCA US, the Italian giant's US operations, expires at midnight Monday (0400 GMT Tuesday), and without a deal union leaders are authorized to call a walkout.
"Even a brief strike ... is not a trivial thing," said Harley Shaiken, a labor export from the University of California-Berkeley.
"They are living closer to the edge and they can't make up production of their hot vehicles."
General Motors and Ford are watching closely because whatever deal is reached with FCA will dictate the wages and benefits the United Auto Workers union seeks at the remaining Detroit carmakers.
GM and Ford, however, do not have to worry about a strike because the union has agreed to extend their contracts indefinitely beyond the midnight expiration while focusing on FCA.
The union has historically ensured that the Detroit Big Three automakers do not face competitive disadvantages by negotiating similar four-year contracts with each.
On Sunday the UAW officially tapped FCA as the "lead bargaining company," which means that the deal reached there will be sought at GM and Ford.
FCA was "a logical choice" for the union, which is keenly interested in ending a two-tier wage structure imposed after the auto industry collapsed in the wake of the 2008 financial crisis, Shaiken said.
"It's easier to start with the weakest company. You don't want to negotiate something at General Motors and Ford that's unacceptable" to FCA US, he told AFP.
Marchionne was set to attend the launch of a new Alfa Romero in Frankfurt on Tuesday morning but cancelled those plans "due to other commitments in the United States" FCA said in a statement.
While the automaker declined to comment on the negotiations a source confirmed Marchionne would be involved in the talks.
"It sends the message he thinks he can really get something done," said Kristen Dziczek of the Center for Automotive Research in Ann Arbor, Michigan.
It is likely that the union will agree to an extension of the contraction with FCA beyond midnight if they are within striking distance of a deal, Dziczek said.
UAW President David Williams -- who warned last week that "somebody was going to have a real problem" if there was no deal before the deadline passed -- sounded more conciliatory in a statement Sunday.
"All three companies are working hard toward a collective bargaining agreement," Williams said.
This is the first time that the UAW has been able to use a strike threat to strengthen its hand since 2007. The terms of GM and Chrysler's 2009 bankruptcies prevented the union from going on strike during the 2011 negotiations.
Williams has repeatedly said that he views a strike as a failure.
However, the union is also looking to claw back some of the concessions made in order to help the Detroit Three survive the economic crisis. All three carmakers are now posting massive profits and the industry is booming.
Williams has vowed to end the two-tier system, where newer workers are paid significantly less than long-term employees. Roughly 43 percent of FCA US employees earn about $16.50 per hour, while workers with seniority earn $30 per hour wage.
The union is was looking for a raise for seniority workers, who have not seen a wage increase since 2006 and have lost roughly four percent of their purchasing power to inflation. The union gave up automatic cost-of-living adjustments during the 2009 bankruptcies.
Williams also wants the contact to reflect a commitment to slow or end the flow of auto company investment into Mexico.
Marchionne appears more willing to meet the union's demands than executives at GM and Ford, which this year have announced significant new investments in Mexico, Shaiken noted.