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Canadian union chief says he expects Chrysler deal today

Automotive News | April 24, 2009 – 12:01 am EST


Canadian union chief says he expects Chrysler deal today

TORONTO (Reuters) — The head of the Canadian Auto Workers union said he expects to have a cost-savings agreement completed with Chrysler LLC by early today. "With a good effort from everybody, we should have this done sometime by tomorrow morning," CAW President Ken Lewenza told reporters on Thursday night.

"We are wrestling with an number of issues. Not issues that are showstoppers, but issues, quite frankly, that you have to have confirmed in writing to dot the ‘i’s and cross the ‘t’s," he said.

Chrysler has just one week left to strike deals with all its stakeholders and prove its viability in order to qualify for billions of dollars in emergency loans in Canada and the United States.

The company is currently surviving on C$1 billion ($813 million) in short-term loans from Ottawa and $4 billion from Washington.

It has requested an additional C$3 billion in Canada and could be eligible for at least $6 billion in extra U.S. funding if the governments approve its restructuring plan.

One of the conditions set by governments in both countries was that the company must obtain significant concessions from its unions.

Strategic partnership

The labor deal would help clear the way for Chrysler to form a strategic partnership with Italian car maker Fiat SpA, another government requirement for Chrysler to receive funding.

Fiat CEO Sergio Marchionne recently said his company would not align itself with Chrysler if the Detroit automaker could not cut its labor costs, adding that the CAW was the most resistant to significant cost reductions.

"I’ve had the opportunity in the last couple of hours to talk with some representatives from Fiat that have a real keen interest in participating with Chrysler, but they clearly indicated to me that we have to have this agreement in place before they could sign up to a potential agreement in the United States and Canada."

Chrysler and Fiat have been demanding the union cut its hourly labor costs by C$19 an hour.

Lewenza said that after the Chrysler deal was complete, the CAW would go back and renegotiate the collective agreement with the Canadian unit of General Motors that the two sides reached last month.

"Obviously, there’s a lot of issues going on with GM and once we get this done, I’m assuming the government will put the same process in place as they put in here for Chrysler."

GM said the deal it reached with the CAW on March 11 would eliminate nearly C$1 billion of costs related to its retired workers from its books, on top of cutting active labor costs by more than C$7 an hour.

The Canadian government said the deal fell short of what was required to make GM viable. Chrysler, and Ford Motor, which is not seeking government assistance in Canada or the United States, said they could not accept a deal patterned on the GM agreement.

GM has until the end of next month to prove its viability to qualify for long-term Canadian and U.S. funding.

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