Despite Fiat threat, CAW says no to more concessions

Despite a threat from Fiat that it may walk away from a merger with Chrysler unless workers make more concessions, the head of the Canadian Auto Workers says the union won’t stray from its previously established negotiation pattern.

Ken Lewenza said the union won’t concede anymore of wage cuts than it did in its recent agreement with General Motors, but is willing to help troubled Chrysler find savings in other ways.

“We always said that the economic pattern is important to the auto industry to make sure that one company doesn’t have an advantage or a disadvantage, but we also said to Chrysler that we’ll use our creativity, the same as we’ve done in the past, to increase productivity and increase the bottom line at Chrysler without touching the economic pattern,” Lewenza told a news conference Wednesday.

The GM agreement is estimated to save the automaker about $7 an hour per worker.

But Fiat CEO Sergio Marchionne told the Globe and Mail the company will renege on a proposed partnership with the struggling North American automaker if the CAW doesn’t cut its compensation package by $19 an hour.

The cut would whittle their wages down to $55 an hour — including so-called “legacy costs” such as pensions and other benefits — the rate Toyota and Honda workers make in the U.S.

Fiat’s hard line to the CAW was immediately repeated by senior Canadian government officials.

“CAW is going to have to realize that Chrysler has to be cost competitive with Toyota and Honda, not just Ford and GM,” Industry Minister Tony Clement said Wednesday.

Speaking on CTV’s Power Play, Lewenza disputed the dollar numbers that Fiat was using and said he was “surprised by the comments.”

“I’d like to talk to Sergio (Marchionne) and ask him where he got those numbers,” he said. “I’m disputing those numbers.”

The Italian automaker has emerged as Chrysler’s best hope for survival after both American and Canadian governments told the company it would not provide a bailout loan until it came up with a satisfactory long-term restructuring plan.

“Absolutely we are prepared to walk. There is no doubt in my mind,” Marchionne told the Globe from Fiat headquarters in Turin. “We cannot commit to this organization unless we see light at the end of the tunnel.”

He said as of now, there is a 50 per cent chance the partnership agreement will go through.

Chrysler has 15 days left to reach a deal with Fiat that would satisfy the federal governments.

A non-binding agreement reached between the two companies in January gives Fiat a 35 per cent stake in Chrysler.

Fiat is not investing money into the company but instead is giving Chrysler access to its successful platforms for small cars and access to fuel-efficent, eco-friendly technology for engines. In exchange, Fiat would gain access to the North American market.

If Chrysler fails to form a partnership with Fiat, the company will go bankrupt and tens of thousands of jobs will be lost.

Tom LaSorda, Chrysler’s president, said the company needs to cut its labour costs by about $20 an hour in order to compete with foreign automakers who also manufacture cars in Canada. Those who work in Canadian assembly plants manufacturing Japanese cars get paid around $47 an hour while those who work for North American manufacturers make around $76 an hour.

If labour costs can’t be cut, LaSorda warned that Chrysler may have to shut down its operations in Canada.

CAW ‘too tough’

Lewenza has said repeatedly that Chrysler’s problems run deeper than the wages of the company’s unionized workers and that it should look at other solutions to restructure the company effectively.

The CAW’s position on negotiations is “too tough,” according to Tony Faria, an auto industry analyst.

Faria, the co-director of the automotive research centre at the University of Windsor, said the CAW might be putting Canadian jobs at risk, particularly if Chrysler is able to reach a better deal with its unionized American workers.

I felt all along that the CAW has been too tough in their negotiations in Canada and that has lost us jobs in Canada to lower labour-cost countries,” Faria said in an interview with The Canadian Press.

One of the concessions the American United Auto Workers union has made is to agree to a two-tier wage system where current employees retain their current wages but new hires will make significantly less in benefits and wages.

“If we ever get to a point in time where the North American market starts turning back up again … they’re going to be hiring back workers at a significantly lower rate based on the two-tier wage system now in effect at their plants in the U.S.,” Faria said.

“That doesn’t bode well for future auto assembly CAW jobs in Canada, and that’s something the CAW just has to recognize: that it may be much, much better to have jobs at a little bit lower labour rate than to have no jobs whatsoever,” he added.

Sourced via ctv.ca