NEW YORK (TheStreet) -- Fiat Chrysler Automobiles (FCAU) finds itself in a potentially dangerous position with regard to labor costs as industry negotiations are set to begin between the Detroit-based automakers and the United Auto Workers union.
Ford (F) and UAW officials said earlier this week that Ford is best positioned to be the union's negotiating target when talks begin the week of July 13. The union, which hasn't always selected a target, has signaled that it will do so this time. Typically, the target automaker negotiates a deal with the union, after which those terms are brought to the other U.S. automakers for approval.
If Ford is the UAW's target and shapes the pattern of the next labor contract, that new agreement could be on terms that reduce or eliminate Fiat Chrysler's current labor cost advantage over Ford and General Motors (GM). The current contract is set to expire on Sept. 14.
Though it's not certain that Ford will be the target -- nor that it could negotiate a contract that Fiat Chrysler might be averse to signing -- it is sure that Fiat Chrysler's CEO Sergio Marchionne can ill afford a clash with the UAW. He's been combing the world for a merger partner or automotive alliance partner, and anything that highlights union tensions will make that task harder.
Earlier this month, Al Iacobelli, Fiat Chrysler's labor negotiator, abruptly retired and was replaced without explanation. It was a highly unusual development, given the proximity of labor talks.