The Canadian Auto Workers tentatively agreed late Friday to new concessions with Chrysler LLC that will save the automaker C$240 million ($198.3 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 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.
The union said the cuts were demanded by Fiat, which said it would not consider aligning itself with Chrysler otherwise. 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 C$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.
http://www.autonews.com/article/20090424/ANA02/904249933/1229 (posted in total, subscription only)
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