Chrysler, CAW reach tentative agreement on concessions

Chrysler, CAW reach tentative agreement on concessions
 

Accord may spur Fiat alliance, reduce bankruptcy threat



David Barkholz

Automotive News | April 24, 2009 – 10:09 pm EST

 

The Canadian Auto Workers tentatively agreed late Friday to new concessions with Chrysler LLC that will save the automaker $240 million annually and help avoid a bankruptcy filing, union President Ken Lewenza said.

In exchange, the union got Chrysler and potential partner Fiat S.p.A. to agree to keep its two Chrysler assembly plants open even if bankruptcy is unavoidable, Lewenza said at a news conference.

General Motors and Ford Motor Co., which signed new CAW agreements earlier, have indicated their desire to get the same concessions as those negotiated with Chrysler, he said.

The agreement kept wages at about C$35 ($28.92) an hour. But the union gave up break time, bonuses, tuition reimbursement, some supplemental pay and semiprivate hospital rooms. As part of the plan, the union agreed to institute Fiat’s manufacturing processes as well.

The CAW also negotiated the creation of a retiree health-care trust similar to the Voluntary Employee Beneficiary Associations established in 2007 with the UAW.

Terms need to be ironed out, Lewenza said. But Chrysler has agreed to capitalize the fund adequately to support the benefits negotiated, he said. The fund will save Chrysler money because it transfers the obligation to the trust for seeing that retirees get supplemental benefits beyond those offered by Canada’s national health care system.

The agreement also allows students earning considerably less than veteran workers to work additional hours at Chrysler plants.

There was no immediate comment on the deal from Fiat.

Windsor plant losing a shift

"We are extremely grateful to the CAW leadership and to its hard-working members for their openness in this challenging environment to create a new strategy that will lead this company on a path to success," Chrysler President Tom LaSorda said in a prepared statement.

Lewenza confirmed that Chrysler’s minivan plant in Windsor, Ontario, will lose its third production shift as had the assembly plant in Brampton, Ontario, where Chrysler produces the Chrysler 300 sedan and Dodge Charger and Challenger.

He said, though, that Chrysler had agreed to put the plants in the surviving part of Chrysler should the company be forced to seek Chapter 11 reorganization in the United States and bankruptcy protection in Canada.

A Chapter 11 filing could come as early as next week if the Obama administration doubts Chrysler’s viability and withholds an additional $6 billion in federal loans that the company is seeking as it tries to complete a U.S.-mandated alliance with Fiat.

Lewenza said that threat caused the union to bargain "with a gun at our heads." The CAW will share the terms of the agreement with its 10,000 Chrysler hourly members this weekend. He said ratification will be completed by 8 p.m. Sunday ET.

Chrysler wanted $19 an hour in labor savings to bring labor costs in line with those of Toyota Canada. Lewenza would not spell out how the $240 million in concessions translates into hourly savings.

Chrysler needs its stakeholders, including the CAW and UAW, to agree to concessions before an April 30 Treasury Department deadline.

In a letter to Chrysler Canada workers last week, Chrysler CEO Bob Nardelli and LaSorda said that without concessions “Chrysler Canada’s manufacturing operations will not survive long-term.”

Chrysler has received $4 billion in Treasury rescue loans to date and another $1 billion from the Canadian government.

PRESS RELEASE: Statement from Chrysler

Attributed to Tom LaSorda, Vice Chairman and President:

"We are extremely grateful to the CAW leadership and to its hard-working members for their openness in this challenging environment to create a new strategy that will lead this company on a path to success. We also want to recognize the Canadian Federal and Ontario governments for their energy and efforts in helping to move this great Company forward."

Attributed to Al Iacobelli, Chief Bargainer and Vice President – Employee Relations:

"We deeply appreciate the CAW leadership’s dedication and commitment to the process by reaching this tentative agreement. The negotiation process is never easy, especially in these historically challenging times.

The forthright discussions and final decisions made by the CAW not only benefit the Canadian represented employees, but help to ensure the Company’s future competitiveness. The tentative agreement also helps move the Company one step closer to a partnership with Fiat SpA.

The CAW leadership worked around the clock for its membership to hammer out the details during an extremely complex negotiation. Chrysler management values the hard work of its CAW workforce and appreciates the great lengths the CAW management went to in order to pave the way for the Company’s future in Canada."

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