UBS On UAW Contract Negotiations : 'There Is Just A Lot More To Fight If You Are Chrysler'

As the formal negotiation for contracts of U.S. auto workers for the next 4 years begin this week between big auto makers and United Auto Workers (UAW) union, according to a recent report from Bloomberg Fiat Chrysler Automobiles NV FCAU maybe the company that faces the most heat from the union.

Colin Langan, UBS auto analyst, was on CNBC Tuesday to weigh in on this.

Chrysler Has A Much Bigger Risk

"I think if you look at General Motors Company GM and Ford Motor Company F, there is clearly a risk of a short-term strike," Langan began. "1 or 2 days strike from leadership to kind of demonstrate taht they are fighting hard for the workers."
He continued, "Chrysler clearly has a much bigger risk and could have a bit longer of a strike just because there is that gap. They are more aligned on the tier-2 workers which the UAW leadership wants to shrink or eliminate. And so, there is just a lot more to fight if you are Chrysler."

Lot In Favor Of UAW

Langan was asked that with the U.S. auto industry projected to sell 17 million units this year , does the United Auto Workers have the kind of leverage right now to get a deal done in their favor. He replied, "I mean, I think, you have a good market, you have GM and Ford at very solid profit levels. So, I think, there's a lot in their favor in terms of this contract negotiation, particularly if you look at the last contract, there was no-strike clauses at both GM and Chrysler. So, that very much limited the UAW's ability to negotiate."