More Auto Industry talk...

[ForeverAutumn]

I know that the fallout could be catastrophic for the province in which I live, but when it's my tax dollars that are being asked for it's just soooo tempting to say Screw You! to the CAW Union and let the chips fall.

Let's put the billions in Employment Insurance, re-training, and creating new jobs instead. I'm just sooo tired of the Union holding us by the proverbial balls.


Union rejects Chrysler Canada demand ahead of talks

TORONTO (Reuters) - Just hours before restarting concession talks with Chrysler on Monday, the Canadian Auto Workers union said it would not agree to cut its members' wages and benefits by the C$19 ($15.32) an hour that the company and the Canadian government have demanded.

The concession talks were set to resume on Monday, 10 days ahead of a deadline set by the Canadian and U.S. governments for Chrysler to present an acceptable restructuring plan to qualify for billions of dollars in government aid. Formal CAW-Chrysler negotiations have not been held since the beginning of April.

CAW President Ken Lewenza told reporter that the governments of Canada and the province of Ontario had contacted the union over the weekend to say a deal needed to be done "sooner than later".

However, Lewenza lashed out at Canadian Industry Minister Tony Clement, who last week joined Chrysler in saying that the company would not be viable with out a reduction of C$19 an hour, or over 20 percent, in labor costs.

"That's just not feasible," Lewenza told reporters. "We are not dealing with a unilateral number."

Lewenza refused to speculate about the outcome of the talks.

The union said its talks with Chrysler had been suspended in early April so that Chrysler, which like other automakers has seen it sales sideswiped by the global economic crisis, could focus on the details of a proposed alliance with Fiat SpA .

A spokeswoman for Chrysler, which employs around 9,400 people in Canada, about 8,000 of whom are CAW members, said the company looked forward to the talks resuming, but that it had no other comment.

[GMichael]

$15.00/hr is only 20%?! That would be more like 60% for me.

[Feanor]

$15.00/hr is only 20%?! That would be more like 60% for me.

This is why it's hard to feel all that sorry for the UAW. This is even allowing that C$95/hr is salary and benefits.

[3-LockBox]

Many unions have become the very elitists they pretend to rail against.

[markw]

Many unions have become the very elitists they pretend to rail against.

One would think that they might consider taking a wage cut that would bring their remuneration more in line with what's realistic in today's marketplace as opposed to losing 100% of it when the plants are closed down.

I think that's commony known as cutting off ones nose to spite ones face.

We're still waiting for the other shoe to drop on GM. On a word-wide scale, GM is pretty well situated. It's only here in NA that they are having financial problems. They could easily cut off this gangrenous appendage and still remain healthy, if not better off without the albatross of the UAW on their backs.

Chrysler, OTOH, is not so strong globally. Didn't Chrysler already threaten to close down Canadian manufacturing facilities for some reason or another?

[Feanor]

...

Chrysler, OTOH, is not so strong globally. Didn't Chrysler already threaten to close down Canadian manufacturing facilities for some reason or another?

Yes, they did at one point, unless they've recanted that position. Perhaps, unlike GM as I gather, their more modern plants are in the U.S.

[ForeverAutumn]

I found a copy of a memo from Chrysler Canada to it's employees, outlining the situation and what Chrysler is asking of the Union. The cut in costs that the Canadian Gov't (not Chrysler) is asking for is based on the current benefits paid by Toyota Canada. Chrysler is proposing a decrease in health and other benefits to cover the costs so no one is actually being asked to take a pay cut...just a reduction in ancillary benefits.

I know of other companies who have made similar reductions in group benefit plans and arranged for cost sharing of some benefits with their employees in order to reduce costs. So this request is not unusual in industries that are hurting at this time.

A Message to Chrysler Canada Employees from Bob Nardelli and Tom LaSoarda

Dear Employees,

Today, we are at a crossroads in the history of Chrysler. Let’s take a look at what’s happened in the past few weeks. On February 17 and February 20, Chrysler submitted its Viability Plan to the U.S. Treasury and U. S. Administration; and to the Canadian governments, respectively.

On March 30, U.S. President Barack Obama stated that Chrysler’s Viability Plan was unacceptable. “It’s with deep reluctance but also a clear-eyed recognition of the facts that we’ve determined, after careful review, that Chrysler needs a partner to remain viable.”

He went on to state: “I’m committed to doing all I can to see if a deal can be struck in a way that upholds the interests of American taxpayers. And that’s why we’ll give Chrysler and Fiat 30 days to overcome these hurdles and reach a final agreement — and we will provide Chrysler with adequate capital to continue operating during that time. If they are able to come to a sound agreement that protects American taxpayers, we will consider lending up to $6 billion to help their plan succeed. But if they and their stakeholders are unable to reach such an agreement, and in the absence of any other viable partnership, we will not be able to justify investing additional tax dollars to keep Chrysler in business.”

U.S. President Obama has made it clear that our company must attain competitive labour rates: “Now, what we’re asking for is difficult. It will require hard choices by companies. It will require unions and workers who have already made extraordinarily painful concessions to do more … It will require efforts from a whole host of other stakeholders, including dealers and suppliers.”

Also on March 30, the Honourable Tony Clement, Minister of Industry, said, “While the restructuring plans represent progress, they do not go far enough to ensure the long-term viability of these companies. Therefore, we are not certifying their proposals. Together with our U.S. counterparts we believe that further fundamental changes are needed.”

Just this week, Fiat CEO Sergio Marchionne has made it clear that an alliance is contingent on the UAW and CAW meeting transplant all-in labour rates: “Absolutely, we are prepared to walk. There is no doubt in my mind,” Marchionne was quoted as saying. “We cannot commit to this organization unless we see light at the end of the tunnel.”

The Canadian government has been very supportive of our viability, providing a loan of $1 billion (CDN, $750 million drawn to date), with an agreement to provide additional support in proportion to the loans received from the U.S. Treasury.

On April 14, the Canadian governments, both federal and provincial, invited the CAW and Chrysler to attend a meeting in Toronto where they laid out four specific guidelines that must be met for providing further financial support. Their “asks” were:

1. That labour costs be reduced to a level equal to those of Toyota Canada. We believe that a Canadian benchmark is the appropriate one for you to achieve. We ask that you jointly demonstrate to us that the agreement you reach attains this benchmark.

2. That Chrysler complete an alliance with Fiat that, in return for equity participation gives Chrysler access to Fiat management, Fiat technology, Fiat sales and distribution outside of NAFTA, and distribution of Fiat products inside NAFTA.

3. That Chrysler and Fiat submit revised plans to Canadian governments and U.S. Treasury based on appropriate assumptions that show clearly Canadian production, product mix, capital investment and R&D.

4. That Chrysler and Fiat commit to maintain Canada’s proportion of North American production and to invest over the medium term that same share of total capital investment and R&D expenditure in Canada.

Let’s keep in mind, the all-in labour costs at Chrysler Canada are $76 per hour while the Toyota Canada all-in rate is approximately $57 per hour.

While we have made some progress with the CAW, it falls significantly short of closing the $19 gap. And yet, as recent as Wednesday this week, the CAW continues to ignore this clear mandate from the government stating that they will not go any further. This unwillingness to work within the government’s guidelines jeopardizes the future of Chrysler and our operations in Canada.

We have made several proposals to the CAW to offset these costs, without affecting base wages and pensions. Some specific examples include:

Prescription drug dispensing fees, by eliminating the cap results in estimated savings of $2.16 per hour.

Elimination of out-of-province health care coverage (snowbirds), with employees and retirees assuming responsibility for any coverage results in a cost savings of $1.00 per hour.

The change from semi-private hospital room coverage to “ward” coverage saves an estimated $0.97 per hour.

Elimination of life insurance for current and future employees results in a cost savings of $1.54 per hour.

The reduction of shift premiums to 2.5 percent results in a cost savings of $.80 per hour.

By increasing health care premiums would save an estimated $1.04 per hour.

The elimination of non-traditional benefits such as child care, legal services, tuition reimbursement, dependant scholarships and extended health care coverage (chiropractic services, massage therapy, naturopath, orthotics, etc.) results in a cost savings of $0.73 per hour.

Unfortunately, the CAW has been opposed to these solutions – however, we are open to alternative ideas. Next week, we plan to meet with the CAW to attempt to reach an agreement that is acceptable to Fiat and the Canadian government.

The clock is running. Without labour concessions, Chrysler Canada’s manufacturing operations will not survive long-term. Thousands of good-paying jobs are in jeopardy, as well as the economic health of communities such as Windsor and Brampton.

Canada has always been an important manufacturing and sales market for Chrysler LLC. It represents the largest vehicle sales market for Chrysler outside of the U.S. and no other vehicle manufacturer has a larger portion of its total manufacturing in Canada than Chrysler.

However, these are not normal business circumstances and all Chrysler constituents have been asked to “break pattern” – employees, retirees, dealers, suppliers and others.

Time is very short. We have only two weeks before a final decision must be made. Let me be clear, our negotiations are about saving Chrysler Canada. We are coming down to the wire in the fight for our company’s survival – and we need your support.

[GMichael]

Do ya think Toyota will take me?

[ForeverAutumn]

Here we go...

[kexodusc]

Here we go...

I should caution this is routine for companies in such situations...but as the saying goes where there's smoke, there's fire. Personally, I think Chrysler needs bankruptcy protection in order to successfully reorganize.

For taxpayers and stakeholders in the long-term (though not necessarily shareholders) Chapter 11 is probably the best thing that can happen to Chrysler or GM.

Now, if it's Chapter 7, we got problems.

[thekid]

I am not one for union bashing but I have to say it amazes me that this industry in Canada and the US is looking into the mouth of oblivion and they still want to stick to old positions. I think there is still people in upper management who want to use this current crisis as leverage for a lot of items they have been trying to get for years but the union needs to save as many jobs (or at least keep them for a little while longer) as it can now and deal with management later.

In some ways I think this is a class struggle as much as anything else. You have the unions whose members have manufacturing/technical skills but most likely have limited education or other market skills which has low demand in the current economy pitted against mostly educated/business skilled management types who (probably falsely) believe that if the business fails they will still find employment in another industry. A gross simplification I know but I think it fits. Both sides have held their narrow views for so long they don't even see the death spiral they are in....

[kexodusc]

I am not one for union bashing but I have to say it amazes me that this industry in Canada and the US is looking into the mouth of oblivion and they still want to stick to old positions.

There are deals to be made here that will save either company, the union is just doing its job trying to find the break-even point. I talked to one analyst the other day who covers the industry and he's of the opinion that if GM and Chrysler's labor rate was $0, they still wouldn't be viable. This sentiment is held by many. Part of the issue here is just the simple fact that a headline like "inefficient dealer network" doesn't sell newspapers as much as "$60/hr union employees reject offer to work for $40/hr".

Let's also consider these employees - they know these companies better than all of us put together. Should we really believe the media's message that they are willing to risk all or nothing at those salary levels? Or do they know that they'll likely only need to concede $15/hr and not $19?

I think there is still people in upper management who want to use this current crisis as leverage for a lot of items they have been trying to get for years but the union needs to save as many jobs (or at least keep them for a little while longer) as it can now and deal with management later.

Big-bath Theory, and you are right. These companies are writing off 30 years of mistakes and debt and blaming it on recent history and external factors instead of their own mistakes.

In some ways I think this is a class struggle as much as anything else. You have the unions whose members have manufacturing/technical skills but most likely have limited education or other market skills which has low demand in the current economy pitted against mostly educated/business skilled management types who (probably falsely) believe that if the business fails they will still find employment in another industry. A gross simplification I know but I think it fits. Both sides have held their narrow views for so long they don't even see the death spiral they are in....

Interesting thoght. You could be right.

I wish I could find you the article I read the other day about how absurd the idea of governments paying to "retrain" these employees was. Thousands and thousands of displaced employees re-entering the workforce in these areas suddenly with new skillsets will only find themselves at the back of the unemployment lines that currently exist...no new jobs are created by switching your skillset. If anything it creates a surplus of labor and puts downward pressure on salaries in other industries. I don't think any of us outsiders want that.

It's a bad situation. Hopefully it works out.

One other article I read made a good point - in bankruptcy fillings in most other industries, unions have stepped up to the plate with offers of participating in corporate ownership (ie, stock-purchases and profit sharing). Not so in the auto-sector, which does suggest that they don't have any delusions about the industry's viability....