CAW Deal reached
Posted in the Chrysler Forum
#1 Apr 24, 2009
"Chrysler-CAW deal cuts costs by $240M annually, protects base wages
TORONTO An exhausted and emotional Canadian Auto Workers President Ken Lewenza announced late Friday night that his union reached an unprecedented deal that will provide Chrysler with $240 million a year in cost savings without cutting workers' base wages.
Despite massive concessions, Lewenza called the deal a victory for the union, which he said had a "gun to its head" but still managed to protect workers' salaries.
"I think it's a victory considering what we've been through and considering the alternatives and the consequences if we didn't reach a deal," he said. "Most importantly, we are living to fight another day."
Chrysler said it "deeply appreciated" the union's efforts to cut its labour costs to a competitive level.
"The CAW leadership worked around the clock for its membership to hammer out the details during an extremely complex negotiation," Chrysler's chief bargainer, Al Iacobelli, said in a statement.
"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."
The agreement - which CAW members will vote on this weekend - finds cost savings totalling $19 an hour through cuts to workers' benefits.
It reduces paid relief time, cuts some supplementary unemployment benefits, increases prescription drug fees, eliminates semi-private hospital coverage and gets rid of the employee car purchase and tuition rebate programs, among other things.
Under the agreement, the salaries of new workers will also increase more slowly than they do currently, and more room will be made for part-time and contract workers in Chrysler plants.
Lewenza said the agreement with Chrysler will also help reduce its legacy costs by giving it 10 years instead of five top up its pension fund.
And the union has agreed to negotiate a health-care trust fund that will help administer the benefits of retired workers.
These concessions are in addition to cuts already agreed to with General Motors in an deal reached last month, which freezes wages until 2012, reduces paid time off by 40 hours per year, scraps an annual $1,700 bonus, cuts company contributions to union-sponsored programs and requires CAW members to contribute $30 a month to their health benefits.
Breaking from the pattern set with GM is a substantial departure for the CAW, which usually negotiates similar deals between all three of the Detroit-based automakers.
But Lewenza said he knew that wouldn't be an option this time.
"The agreement is not the same as the agreement we negotiated almost two months ago at General Motors," Lewenza said.
"That agreement at General Motors was abolished when President Obama and our own governments rejected the GM restructuring plan. We knew it was back to the drawing board."
Chrysler now has until the end of the month to negotiate a partnership with Italian automaker Fiat and to reach deals with its U.S. workers, bondholders and other stakeholders in order to receive long-term bailout loans from governments in Canada and the U.S.
Government officials were supportive of the agreement, but stressed that there's plenty more to be done before the April 30 deadline.
"While this agreement is an important step toward achieving a restructured and viable company, further work remains to be done," stated federal Industry Minister Tony Clement.
"In addition to securing a competitive labour agreement, we expect the company's revised long-term plan to include an alliance with Fiat, and retention of Chrysler's Canadian share of production, investment, and research and development. "
And Ontario Economic Development Minister Michael Bryant said the agreement is "encouraging" but "just one step in the process."
#2 Apr 24, 2009
"Without a restructuring plan that governments deem acceptable, Chrysler will likely be forced to file for bankruptcy protection or even liquidate its assets.
Lewenza said Chrysler told him it plans to split into two parts if it files for bankruptcy protection: one that will continue to operate with the help of an alliance with Fiat, and another that will liquidate its assets.
He said he has been assured that all of Chrysler's Canadian plants will continue to operate under such a scenario.
And Chrysler also guaranteed the CAW that it will not ask for further concessions if it finds itself in bankruptcy court.
The CAW will now negotiate a similar deals with Ford and GM to maintain fairness and competitiveness among the Detroit Three automakers.
Chrysler Canada employs about 10,000 hourly workers and 1,000 white collar employees at its assembly plants in Windsor, Ont., and Brampton, Ont., and a casting plant in Toronto."
#3 Apr 24, 2009
"Canada union: Tentative deal with Chrysler
TORONTO (AP) The Canadian Auto Workers say they reached a tentative agreement on a new labor deal with Chrysler.
CAW President Ken Lewenza says the deal was reached Friday evening.
Chrysler has until April 30 to reach deals with its unions in Canada and the U.S. to cement a technology-sharing alliance with Fiat. It also needs to provide a restructuring plan to governments in both countries that will enable it to qualify for government loans to keep it afloat.
Chrysler told the CAW that it wanted concessions from the union that would make the labor costs competitive with non-unionized Toyota in Canada. It wasn't immediately clear if the deal does that.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
TORONTO (AP) The Canadian Auto Workers union says it is hoping to cement a deal with Chrysler Canada on Friday.
Union spokeswoman Shannon Devine said she is hopeful a deal will be reached after CAW leadership representing all of Chrysler's Canadian plants wrap up their meetings Friday afternoon.
"We were hoping to have a deal yesterday, but the members are still plugging away at talks so we are hoping a deal will be reached today," Devine said.
Chrysler and the CAW have been negotiating since Monday to reach a labor agreement that can be ratified before an April 30 deadline.
Chrysler has until then to reach deals with its unions in Canada and the U.S. to cement a technology-sharing alliance with Fiat. It also needs to provide a restructuring plan to governments in both countries that will enable it to qualify for government loans to keep it afloat.
Chrysler has told the CAW that it wants concessions from the union worth 19 Canadian dollars ($15) an hour so that it can compete with other automakers operating in Canada. Chrysler Canada employs about 10,000 hourly workers and 1,000 salaried employees.
The union, which represents about 8,000 production workers and skilled trades people at Chrysler, has said it will offer the same 7 Canadian dollars ($5.76) an hour in concessions it recently gave General Motors of Canada Ltd.
However, CAW president Ken Lewenza may have bent from his earlier bargaining position after Canada's Industry Minister Tony Clement said the CAW's agreement with GM does not meet the eligibility conditions for long-term government loans.
Clement has asked the two parties to further cut labor costs so they can qualify for between 9 billion Canadian dollars and 10 billion Canadian dollars in loans from the federal and Ontario governments to stay alive and recover from the North American auto market crash.
The federal and Ontario provincial government have so far given Chrysler 750 million Canadian dollars ($612 million) of a 1 billion Canadian dollars ($817 million) loan. Both governments have said they will proportionally match whatever the U.S. government provides to the struggling company to maintain Canada's share of production.
If governments in Canada and the U.S. don't accept Chrysler's restructuring plan, the company may be forced to file for bankruptcy protection.
As talks continue, Chrysler and the Treasury Department are preparing paperwork for bankruptcy filings, one as a reorganization in Chapter 11 with government funding and the other as a liquidation if no government money is available, two people briefed on the talks said Friday. Both spoke on condition of anonymity because the fast-moving negotiations are private.
McGuinty said the Canadian governments would be willing to help Chrysler even if it finds itself in bankruptcy court.
"What I do want to provide by way of reassurance is that whether there is a restructuring that takes place outside of court, or under court supervision, we intend to play our part," he said."
#4 Apr 24, 2009
"Chrysler reaches deal with CAW
"Chrysler and its union have broken historical pattern bargaining in the auto industry with a deal for deep worker concessions to keep the teetering company alive here.
In around-the-clock, high-stakes bargaining, negotiators agreed on a deal Friday night for much more concessions than what workers accepted at General Motors, another reeling automaker, last month.
Ken Lewenza, president of the Canadian Auto Workers, also revealed if Chrysler slips into bankruptcy court protection in the U.S. and Canada, operations here would not be liquidated and remain among the company's "good" operating assets. Workers would also not face further concessions if there is a bankruptcy, he said.
Lewenza, who described the negotiations as "torturous and unfair," said the deal would lead to about $240 million in annual savings for the company but not reduce wages and pensions.
"We will live to fight for another day," he said.
He also disclosed that the company and the CAW will work to develop a retiree health care trust fund which will eventually transfer responsibility of costs to the union. It would be similar in concept to a U.S. plan at Chrysler.
The union would not disclose how much the savings represent in so-called "all in" labour costs but officials said privately the concessions meet company demands of reducing expenses by $19 an hour.
Among the concessions beyond an earlier deal at GM, Chrysler workers will lose semi-private hospital coverage, tuition programs, Christmas bonuses, savings on vehicle purchases, some drug dispensing fee protection and partial pay during layoffs.
The union also agreed to reduce relief time in plants, allow more flexibility in use of part-time workers and transfer to a new manufacturing system if Chrysler merges with Fiat SpA of Italy.
-"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," said Chrysler president Tom LaSorda.
Chrysler workers, who earn an average of $35 an hour, will vote on the deal this weekend and the union said it will negotiate similar concessions at GM and Ford in Canada
Chrysler and its U.S. parent must submit restructuring plans to governments in both countries by a deadline next Thursday to receive billions of dollars in loans.
Those plans must contain concessions from numerous stakeholders including bondholders, suppliers, dealers and workers. Chrysler is seeking about $2.9 billion and has already received $750 million.
In addition, Chrysler must complete a merger with Fiat. Fiat has also demanded concessions by stakeholders in both countries.
If the plans don't get government approval, Chrysler will likely slip into bankruptcy in one or both countries.
That would allow Chrysler to reorganize its operations under protection from creditors and emerge as a stronger company. But some parts of the company would likely be sold.
Bankruptcy could also further erode consumer confidence at a time when industry sales are at 30-year lows in the U.S. and sliding here.
In Canada, the federal government pressured the CAW to break a decades-old practice of pattern bargaining where the union traditionally negotiated a contract with one of the big three North American-based auto makers and forced the other two companies to accept it or face a strike.
That would allow the union to negotiate the same improvements for workers at all three companies and not give one of them a competitive edge.
The union initially resisted breaking the pattern deal at GM which will reduce labour costs by about $7.25 an hour by 2012 if the company gets government aid. GM is seeking between $6 billion and $7 billion here.
#5 Apr 24, 2009
But Chrysler said it needed cuts in labour costs totalling $19 an hour to compete with Toyota and Honda in Canada.
In the U.S, parent Chrysler LLC and Treasury Department officials are still driving for deals to keep the automaker out of court.
The Treasury Department is also working on a Chapter 11 bankruptcy filing for Chrysler LLC that could come as early as next week.
The department has an agreement in principle with the United Auto Workers union, whose members' pensions and retiree health-care benefits would be protected as a condition of a bankruptcy filing., according to some reports.
Fiat could also complete its merger with Chrysler while the company is under bankruptcy protection in both countries. A merger is a condition for government aid in both countries.
The federal and Ontario governments had set a "deadline" for reaching a tentative deal on concessions at midnight on Wednesday but talks dragged on the health care trust issue.
Chrysler had sought cuts in health-care benefits, shift premiums, life insurance and child care that would trim labour costs by more than $8 an hour. In earlier negotiations, the union has rejected most of those proposals.
If there is a bankruptcy, a question remains about what happens to Chrysler's lenders, who hold $6.9 billion (U.S.) in company debt.
The U.S. Treasury is also working with GM to prepare a possible bankruptcy case. Some industry watchers have questioned whether the Treasury's actions to prepare a bankruptcy case is an attempt to put more pressure on lenders.
While Chrysler faces an April 30 deadline from the U.S. and Canadian governments, GM doesn't need to submit a plan until June 1.
Under the most probable scenario, the U.S. Treasury will provide the financing Chrysler needs to operate while under bankruptcy protection.
Ottawa will also likely provide aid if the company operates under court protection here.
Earlier Friday, Premier Dalton McGuinty sounded a bittersweet note about the worker concessions by expressing concern that they could spread to union members in other sectors.
"We've always proceeded under the assumption that you would do better than your dad and your kids would do better than you - each succeeding generation would enjoy a higher standing of living and a better quality of life," said McGuinty.
"That's been the great Canadian dream ... and there's been a reset right now. I have not given up on that dream and I don't think Ontarians should either.
"I think what it means is these wages will be reset and that will serve as a new foundation, a new base, and then working together we can make sure that we drive up our productivity, drive up the value added dimension of the work that we do so that we can resume the progress that we continue to make."
McGuinty noted he has also written to Prime Minister Stephen Harper to request a national summit on pension reform in the wake of some of the concerns about the serious shortfalls of pension plans at GM and Chrysler."
#6 Apr 24, 2009
Sorry bout the repost, all. Missed the other "deal" thread.
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