Page 25 - ATD19September2015

BUSINESS A25
Saturday 19 September

AP Source: UAW-Fiat Chrysler Yuan devaluation could weigh on

pact raises pay, profit-sharing Chinese buyers of US homes

TOM KRISHER ALEX VEIGA represents about 4 percent off,” said Tan, whose clients
AP Auto Writer AP Business Writer of all sales of previously oc- tend to buy condos priced
DETROIT (AP) — Hourly pay, profit sharing and perfor- Shanshan Wu already owns cupied homes in the same between $1 million and $5
mance bonuses will rise, but car production will move three houses back home period. million.
to lower-cost Mexico and be replaced by trucks and in China. But the 36-year- Of the $104 billion in total That price range is typical
SUVs under a new contract between Fiat Chrysler old has spent the last two sales, Chinese buyers ac- of Chinese investors buy-
and the United Auto Workers, a person briefed on the months in Chicago shop- counted for the biggest ing homes elsewhere in the
deal said. ping for a three-bedroom. portion, $28.6 billion. Half of U.S. And most of them pay
Union leaders will explain details of the four-year pact She’s got cash to spend - those sales involved homes in cash.
to factory-level leaders at a meeting Friday afternoon up to $400,000.
in Detroit. They’ll vote on it, and if approved, it will go And she’s not done. Shanshan Wu, left, goes over real estate listings with her bro-
to FCA’s 39,000 union workers for another ratification “The real estate market in ker, Lisa Li, in Naperville, Ill. Wu, who already owns three houses
vote that’s likely to be finished next week. China is dropping and I’m back home in China, has spent the last two months in Chicago
The deal, reached Tuesday, has been criticized by planning to sell one of them shopping for a three-bedroom home, and she’s not done. Chi-
some workers on social media sites, but UAW President to maybe buy more houses nese have been snapping up U.S. real estate of all kinds, look-
Dennis Williams said it achieves union goals of giving in the U.S.,” said Wu, whose ing for a safer place to put their money than their own slowing
entry-level workers a path to higher pay, rewarding hometown of Yunfu is in the economy.
members for sacrifices made while FCA struggled fi- province of Guangdong in
nancially, and dealing with escalating health care southeast China. (AP Photo/M. Spencer Green)
costs. Chinese have been snap-
Here are some details, according to the person, who ping up U.S. real estate of in Florida, California, Texas “In the last year or two,
asked not to be identified because the contract all kinds, looking for a safer and Arizona. we’ve seen more sales
hasn’t been presented to union members yet: place to put their money Overall, U.S. home sales to pushing $5 to $10 million,”
— Pay raises for longtime workers: Those hired before than their own slowing foreign buyers have been said Tere Foster, managing
2007 would go from $28.50 per hour to $30 per hour economy. Investors from falling - 10 percent in the broker for Team Foster at
during the four-year contract. They haven’t had raises China are now second only 12 months ended in March Windemere Real Estate in
in more than a decade, although they have received to Canadians in the num- compared to the same pe- Seattle.
profit-sharing checks. ber of U.S. homes they buy. riod a year earlier - but the The segment of homes
— Pay raises for entry-level workers: Those hired in In the last few months, amid devaluation of the yuan most in demand by Chi-
2007 or later who now make about half the wages signs that China’s economy makes a slowdown in Chi- nese buyers are those
of longtime workers would see starting pay go from is slowing even more than nese deals unlikely. priced around $1.2 million,
$15.28 per hour to around $17. Top pay would go expected, Chinese inves- That’s one reason it’s likely she said.
from $19.28 to around $25. It is unclear how long it will tors have stepped up their that Chinese who are inter- “That’s where we’re seeing
take to get to the top wage. FCA CEO Sergio Mar- buying even more. The ested in buying real estate a lot of the business,” Foster
chionne said there’s a progression to eventually end government’s decision last won’t pull back now, said said.
the second-tier wage, but gave no details. About 45 month to downgrade the Lawrence Yun, chief econ- Not all buyers are wealthy
percent of FCA workers are paid the lower wage. country’s currency added omist for the National Asso- investors. Some are mid-
— Profit sharing: All workers get bigger checks than in to their urgency, since a ciation of Realtors. dle-income earners with
the past, dependent on Fiat Chrysler’s North Ameri- weaker yuan makes buying So far this year, the yuan kids bound for university in
can full-year profit margins. Workers will get $800 for real estate in dollars more has fallen 2.6 percent ver- the U.S. They will typically
every 1 percent of profit margin once the company expensive. sus the dollar. It now takes buy an apartment or small
hits 2 percent. Profit margins are the percent of reve- “I got a spur of buyers con- about 6.37 yuan to buy $1. single-family home for their
nue that the company gets to keep. Last quarter, the tacting me the past few That’s still better than five kids to live in while they go
margin was 7.7 percent. If FCA could sustain that for days,” said Gloria Ma, an years ago, when 6.77 yuan to college, said Lisa Li, an
a full year, workers would get $6,160. Entry-level work- agent with Re/Max Action bought $1. agent at Re/Max of Naper-
ers could get more in their checks to help bridge the in Lisle, Illinois, who is work- For now, the change in ville, a suburb of Chicago.
pay gap with longtime workers. They’d get another ing with several Chinese the currency is likely not Others will use the home as
$1,000 if margins hit 8 percent, $2,000 for 9 percent homebuyers. “Some of the enough to dissuade well- a vacation property or a
and $4,000 for 10 percent. Workers get nothing if mar- people are selling part of heeled homebuyers from rental.
gins don’t hit 2 percent, insulating the company from their holdings over there China, said Wei Min Tan, It’s not just the U.S. at-
added costs in bad times. and come here and buy.” a real estate broker who tracting Chinese real es-
— Other incentives: Bonuses for meeting certain qual- While purchases by foreign- caters to investors look- tate investment. Australia,
ity and performance metrics would be increased. ers represent just a sliver of ing to buy condominiums other parts of Asia and
Amount unknown. overall U.S. home sales, in Manhattan.“My clients Europe have also been
— Cars lost, trucks and SUVs gained: To help pay for they have impacted mar- may say, ‘OK, I’ll just ne- popular spots for Chinese
the raises and reduce FCA labor costs, car produc- kets significantly in certain gotiate an extra 5 percent homebuyers.q
tion with lower profit margins would be shifted to cities such as New York,
Mexico, where auto assembly wages are around $6 San Francisco, Seattle and
per hour. Plants that lose car production would start Irvine, California. Buyers are
making SUVs and trucks, including new products to also showing up in more af-
preserve jobs. fordable Midwestern areas
— Plant investment: FCA agrees to invest $5.3 billion like Chicago.
in U.S. factories. In the 12 months ended in
— Signing bonus: Workers would get $3,000 if contract March, roughly 209,000 U.S.
is ratified. houses were sold to buy-
— Health care: Stays the same initially. But there’s ers living outside the U.S. or
agreement in principle to form a giant health care immigrants in the country
pool to get bulk discounts from health care providers. for less than two years, ac-
Pool could include the UAW-run trust that pays bills for cording to the National As-
600,000 retirees and spouses, plus 551,000 active em- sociation of Realtors. That
ployees and families from FCA, GM and Ford. Details
to be worked out. q