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One Down, Three to go in Chrysler Negotiations?

Canadian Auto Workers reach tentative deal with Chrysler.

by on Apr.25, 2009


CAW President Ken Lewenza mantains it's the "very best agreement possible, imposing the minimum possible sacrifice on our members and their families, despite incredibly tough times."

Late Friday night the Canadian Auto Workers union announced that it had reached a tentative agreement with Chrysler LLC to bring labor costs in line with competitors as required by the Canadian and U.S. governments to continue taxpayer loans.

CAW President Ken Lewenza said, “CAW members supported their union right through this process, rather than allowing themselves to be intimidated by crude threats. That has allowed us to bargain the very best agreement possible, imposing the minimum possible sacrifice on our members and their families, despite the incredibly tough times.” 

Base wages and pensions remain as before. It was not immediately clear what the cost cuts amount to. In March, the CAW  reached an agreement with General Motors that cut costs an estimated C$7 per hour. Chrysler Canada said it needed a C$19 an hour reduction to be competitive.

Misleading and self-serving statistics are often cited in debates about the North American auto industry. Canadian autoworkers do not “earn” C$70 (~$58 U.S.) or more per hour, as has been widely asserted in news reports. Production workers in CAW-represented auto plants start work at C$24 per hour, growing to C$34 per hour at full seniority. The cost of current pension, health, and other benefits adds less than C$10 per hour to that, on the basis of a normal working year. Compensation for autoworkers is less than C$45 ($37 U.S.) per hour.

Chrysler and the Auto Task Force are still negotiating with the United Auto Workers Union in the U.S., Fiat, and secured debt holders over further concessions needed to prevent bankruptcy. All three pieces need to come together before May 1, according to the Obama administration, or the loss-making company will be placed in receivership. 

In an explicit endorsement of the anticipated Fiat alliance, the agreement contains unspecified operational changes that will further “enhance productivity” and include the adoption of the “World Class Manufacturing” operating system that is used by Fiat in its global production operations.

The CAW said, “The agreement will result in over $240 million per year in annual cost savings for Chrysler’s Canadian operations, as a result of a combination of benefit reductions, compensation changes, and increased productivity through operational improvements.”  

Subscribe to TheDetroitBureau.comCanada’s largest private sector union noted that members perform 2.5 million hours of work per year for Chrysler Canada, and it is already the company’s most productive union in the world. The union says the agreement meets the benchmark established for the negotiations by the federal and Ontario governments as a condition of their continuing support for the two companies.  (more…)