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

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Formal negotiation for contracts of U.S. auto workers for the next four 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 (NYSE: FCAU) may be 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 GM and Ford, there is clearly a risk of a short-term strike," Langan began. "One or two days strike from leadership to kind of demonstrate that they're 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're 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."

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