CAW Expects Chrysler To Accept Pattern Bargaining

President of the Canadian Auto Workers says union will 'absolutely not' concede more to Chrysler than it did to GM, despite a threat that Chrysler will pull out of Canada.

TORONTO (CP) -- The president of the Canadian Auto Workers says his union will "absolutely not" concede more to Chrysler than it did to General Motors, despite a threat that Chrysler will pull out of Canada if it can't reduce its labour costs by 25 percent.

"There's going to be absolutely no walking away from the pattern bargained," Ken Lewenza said in an interview Thursday.

"If they out-and-out say, 'Sorry Ken, we're not going to meet the pattern,' then we're not going to get an agreement in Canada."

Chrysler president Tom LaSorda told a Parliamentary committee Wednesday night that the troubled automaker could shut down its plants in Canada, putting about 10,000 people out of work, if it doesn't get substantial wage concessions, roughly US$2.3 billion in aid from the federal and Ontario governments and a resolution to a long-running tax dispute.

"Failure to satisfactorily resolve these three factors will place our Canadian manufacturing operations at a significant disadvantage relative to our manufacturing operations in North America and may very well impair our ability to continue to produce," LaSorda said.

But Lewenza said the CAW will stick to pattern bargaining with Chrysler, meaning the union will ask the company to accept a deal similar to that reached with GM last weekend. The GM agreement was ratified by union members Wednesday night.

The contract freezes wages until 2012 and suspends cost-of-living adjustments for both wages and pensions. It also reduces paid time off by 40 hours a year, scraps an annual $1,700 bonus and cuts company contributions to union-sponsored programs by one third.

Under the agreement, CAW members will also contribute $30 a month to their health benefits.

LaSorda described the GM agreement as "unacceptable" to Chrysler.

Lewenza dismissed LaSorda's threats as bargaining strategy and added that the CAW already has a three-year collective agreement with the company that is legally binding until 2011.

"They sent me the message (Wednesday) afternoon that they didn't think the General Motors pattern agreement met the needs of Chrysler, but that was the same message that they've sent our bargaining committee at Chrysler over and over and over following a patterned settlement," Lewenza said. "They do that during good times."

Chrysler's two assembly plants in southern Ontario, in Brampton and Windsor, are state-of-the-art facilities, and it would cost Chrysler a lot of money to transfer its Canadian production to plants in the U.S., Lewenza added.

"It wouldn't make any business sense, because both the Brampton and Windsor assembly plants are very productive plants, they're very profitable plants, the workforce is the highest of quality and the best of productivity," he said, adding that pulling out of Canada would go against Chrysler's plans to cut costs and turn around its operations.

Chrysler needs to submit a finalized restructuring plan to the federal and Ontario governments by the end of March in order to receive the billions in emergency loans it has requested.

In an earlier copy of its restructuring plan, submitted in February, Chrysler did not ask for specific labour concessions or specify the conditions under which it would continue to operate in Canada.

But Chrysler Canada spokeswoman Mary Gauthier said labour competitiveness has always been a goal of the company's as it restructures.

"We have talked all along about the need to be competitive," she said. "We've talked about the need for every jurisdiction to be competitive."

Chrysler has examined several alternatives to help it stay afloat amid slumping auto sales, including an alliance with Fiat and a merger with GM.

Chrysler said in its initial restructuring plan filed with the U.S. and Canadian governments last month that a merger with GM would be the best alternative for the industry but GM has since taken that option "off the table."

The Fiat option, under which the Italian automaker would take a 35 per cent stake in Chrysler, providing access to its small-car platforms and fuel-efficient engines, is still under consideration. However, the alliance won't solve Chrysler's immediate problems because Fiat has said it won't invest any cash in the struggling company.

Chrysler is owned 80.1 per cent by Cerberus Capital Management LLP, which acquired its stake for $7.4 billion in 2007 as Germany's Daimler AG dissolved a "merger of equals" made in 1998 between Daimler-Benz and Chrysler Corp.

Daimler still owns about a fifth of Chrysler LLC, which is a privately held company.

In Canada, Chrysler employs about 10,000 hourly workers at assembly plants in Windsor and Brampton and a casting plant in Toronto.

Both GM and Chrysler need to submit their finalized restructuring plans, including labour agreements, to the Ontario and federal governments by the end of March to receive billions of dollars in emergency loans.

Ford Canada will also renegotiate its contract with the CAW, although the company has said it doesn't need financial assistance from the government. Instead, Ford has asked for incentives to bring consumers back to the showroom floor.

All three companies have been hit hard by declining sales and are struggling to remain viable in the weak economy.

More in Supply Chain