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Canadian Autoworkers Join New Union

CAW merges into new Unifor.

by on Sep.03, 2013

Unifor Pres. Jerry Dias comes from the communications side of the new union - with no experience in the automotive world.

This story has been updated to reflect the prior automotive experience of new Unifor Pres. Dias.

The Canadian Auto Workers Union is gone, having completed a merger with the Communications, Energy and Paperworkers Union of Canada to create a new union that will go by the name Unifor.

As part of the merger, CAW national president Ken Lewenza, a veteran of negotiations with Detroit’s automakers, and CEP president Dave Coles opted to step aside for new leadership team. Unifor’s new president, Jerry Dias, who was installed during a convention in Toronto,was one of Lewenza’s administrative assistant at the CAW, and has participated in negotiations with Detroit’s automakers.

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He’ll have to face off with automakers who have increasingly complained about rising labor costs in Canada – and who have been threatening to transfer work and jobs back to the U.S. or even Mexico.

Dias, however, said during his acceptance speech that organizing will be one of the new union’s top priorities. The old CAW had organizing efforts in place for several months at plants in Ontario operated by Toyota and Honda. The new union boss said he would uphold Unifor’s promise to dedicate 10% of its revenues to organizing workplaces and adding new members.


Chrysler Deal Sidesteps Possible Strike in Canada

Canadians avoid two-tier wage system.

by on Sep.27, 2012

As part of its new contract with the CAW, Chrysler will maintain three shifts at its Windsor minivan plant.

The Canadian Auto Workers Union has reached a tentative settlement with Chrysler Canada by agreeing to a tentative contract that basically follows the pattern set during the union’s earlier negotiations with General Motors and Ford Motor Co..

The agreement, if ratified by Chrysler workers, will bring another four years of labor peace to the Canadian auto industry’s biggest carmakers and its 21,000-member unionized workforce. The CAW also can claim a measure of victory in a difficult bargaining environment, having basically preserved jobs in Canada despite having the highest labor costs in North America.

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While accepting cuts in starting wages, the CAW protected the principal that that workers will eventually grow to wage parity with veteran colleagues. New hires will start at a lower wage — $20 an hour instead of $24 — and will take 10 years instead of six to reach the top rate, currently $34. They will also receive a weaker pension plan that combines the existing defined-benefit plan with a new defined-contribution plan.


Canadian Workers Settle With GM

Automaker gives in on "pattern" contract.

by on Sep.21, 2012

GM will maintain some Impala production in Canada.

Days after coming to terms with Ford Motor Co., the Canadian Auto Workers Union has reached a settlement with General Motors heading off a potentially costly strike.

Despite concerns that GM would demand a unique settlement it largely settled for the same pattern contract negotiated with Ford earlier in the week. That leaves only Chrysler to settle on a new 4-year agreement – though the maker has consistently argued it needs to break pattern and come up with a contract that reflects its own unique needs.

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“We met the entire Ford pattern,” boasted CAW President Ken Lewenza following settlement on the GM contract.

The agreement will result in GM getting some significant concessions on labor costs but also ensure that no senior workers are on layoff for the first time in two decades. The maker has also agreed to significant new investments at two key Canadian GM plants.


Canadian Auto Workers Settle with Ford, Now Target GM, Chrysler

Ford agrees to increased investments but new workers will get lower pay.

by on Sep.18, 2012

A strike by the CAW could have disrupted production of the Ford Edge and other crossovers.

A last-minute deal between Ford Motor Co. and the Canadian Auto Workers Union has averted a threatened strike by thousands of workers that could have disrupted production of vehicles such as the Ford Edge and Lincoln MKT.

But walkouts still look for the other members of the Detroit Big Three.  Chrysler and General Motors Corp. now must negotiate their own settlements with the CAW – which the union expects will follow the pattern set at Ford.  Both GM and Chrysler are asking for more time to study the terms of the Ford deal, postponing a possible confrontation.

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The CAW Monday wrapped up a four-year contract with Ford that froze the wages of current employees and reduced the starting pay for new employees, who will now have to wait 10 years to reach full parity with senior workers. But the union did achieve one key victory: it was able to prevent the creation of a full, two-tier wage structure like the one now in place on Ford assembly lines in the United States.


Canadian Workers Reject Demand for Concessions

Has Canada become “the most expensive place in the world to build a car”?

by on Aug.15, 2012

High Canadian labor costs have led GM to move production of the Chevrolet Equinox from Oshawa, Ontario to Spring Hill, TN.

Negotiations between Detroit’s three automaker and the Canadian Auto Workers Union have gotten underway in Toronto. And with the CAW’s contract with the automakers expiring in mid-September there could be trouble ahead.

The talks are expected to be difficult because the rising value of the Canadian dollar has made General Motors, Ford Motor Co. and Chrysler plants more expensive to operate – leading the makers to hint they’ll press for new concessions. But CAW leaders are clearly reluctant to depart from the traditional contract elements, such as an annual wage increase, in favor of profit sharing, which the American car makers are expected to demand.

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Ken Lewenza, CAW president, also has indicated he is dissatisfied with the Canadian government failure to come to the aid of the country’s auto industry. Other industrial nations, including the United States, have found ways to help their auto industry, he noted in an opinion piece he wrote for a Canadian newspaper. Canada has done little since participating in the auto bailout in 2009.


The 2010 Union-Made Vehicles List Now Available

Some offshore brands are actually union made.

by on Sep.18, 2009

Look for the union VIN?

Look for the union VIN?

UAW members working in the domestic auto industry, said UAW President Ron Gettelfinger, “are pleased to see a recent Consumer Reports survey, which shows that four out of five new car buyers are likely to consider an American brand when purchasing a vehicle.

The UAW has prepared  a list of 2010 union-made cars, trucks, pickups, vans, CUVs and SUV to help them when shopping..

Union-made vehicles have been recognized repeatedly for quality achievements by industry analysts such as J.D. Power and the University of Michigan Consumer Satisfaction Survey. The problem is that while quality has been improving and people say they will consider domestic products, the majority of actual purchases go to off-shore nameplates, some of which are built in North America in non-union plants.

The last offshore-operated unionized plant, Toyota’s New United Motors Manufacturing Inc., is in the process of being closed, after General Motors and the Japanese company couldn’t reach an agreement on how to keep it operating.

“When customers visit the showroom to look at vehicles made by our members, they’re going to find top-quality cars and trucks in every price range and in every product category.”

Union autoworkers, he said, make vehicles for U.S., European and Asian-based manufacturers, including hybrids, clean diesels and energy-saving advanced transmission and flex-fuel models.


General Motors Restructuring Will Require a Chapter 11 Bankruptcy Filing and a 363 Sale

Obama Administration officials claim that a New GM will now have far less debt and a "world class" balance sheet.

by on May.31, 2009

GM Renaissance Center in Detroit

"Meaningful sacrifice" now includes U.S. taxpayers.

Senior officials in President Obama’s administration confirmed tonight that General Motors will file for bankruptcy tomorrow and proceed with a sale of its productive assets to a New GM, which should emerge from court protection in “60 to 90 days.”

The latest plan reduces GM’s liabilities by well over 50%, but gives taxpayers a 60% share of a once proud and dominant automaker that controlled half of the U.S. market and was the largest automaker in the world. Those times now seem long ago and far way. GM lost $6 billion in the first quarter of 2009 and consumed $10 billion in cash. All told, GM has lost more than $87 billion in the last five years.

The strategy for a New GM is consistent with President Obama’s direction that he laid out in a speech on March 30, 2009, which required GM to rework its business plan, accelerate its operational restructuring and make far greater reductions in its outstanding liabilities.

In the interim, administration officials said General Motors has developed such a plan and has already begun to make progress toward its achievement.

GM has also secured commitments of “meaningful sacrifice” from all of its major stakeholder groups, concessions that are sufficient for The Auto Task Force at the U.S. Treasury Department to allow GM to move forward. As a result, the President has deemed GM’s latest plan “viable.” So Treasury will be making available about $30 billion of additional federal assistance to support GM’s restructuring plan on top of the $20 billion of taxpayer support already supplied.

The Sequel to Chrysler

GM’s restructuringplan is a larger, more complicated version of the Chrysler reorganization that is now winding down in a Federal bankruptcy court in New York City, where a positive ruling on its sale to Fiat is expected tomorrow. Like Chrysler, GM will use Section 363 of the U.S. Bankruptcy Code to eliminate impediments to its successful re-launch.

The “New GM” will purchase substantially all of the assets of the old insolvent GM needed to implement its business plan when it emerges out of a Chapter 11 filing. A crucial part of the plan is the the U.S. Government relinquishing the majority of its loans to GM.

Treasury is also prepared to provide approximately $30.1 billion of financing to support GM through an expedited Chapter 11 proceeding and transition New GM through its restructuring plan. In exchange for the $20 billion already committed by the U.S. Treasury and the new injection of $30.1 billion, the U.S. government will receive approximately $8.8 billion in debt and preferred stock in New GM as previously stated, and approximately 60% of the equity of the New GM. The U.S. Treasury will also have the right to appoint the initial directors in New GM other than the one that will be selected by the VEBA and the one from the Canadian government.

Canada Supports

The Governments of Canada and Ontario will lend $9.5 billion to GM and New GM. They will receive about $1.7 billion in debt and preferred stock, and approximately 12% of the equity of the New GM. Based on its “substantial financial contribution,” the Canadian government will also have the right to select one initial director to the board.

This means a majority of New GM board members will be , well, new.  Since managements serve at the discretion of the board, more senior executive changes — beyond the resignation of now former Chairman Rick Wagoner– will likely be coming. 

Treasury as Reluctant Shareholder

Administration officials were adamant that the government is now a “reluctant shareholder” and will sell its stake as soon as practical; and that GM can succeed at the current annual sales rate of under 10 million units in the U.S. No further government support is contemplated, they insisted.

As a result of this restructuring, GM lowers its break even point to a 10 million annual vehicle sales rate (SAAR). Before the restructuring, GM’s break even point was in excess of 16 million annual car sales.

Obama administration officials also emphasized that the UAW made important concessions on compensation and retiree health care that will help save jobs for active employees, as well as preserve the pensions and health care  benefits for retirees. The GM qualified pension plans for both hourly and salaried employees will be transferred to the New GM as part of the purchase process.

“In virtually every respect, the concessions that the UAW agreed to are more aggressive than what the Bush Administration originally demanded in its loan agreement with GM,” said a senior official.

UAW Concessions

The UAW’s existing VEBA agreement where GM previously owed $20 billion, now will be funded  with a $2.5 billion note,  payable in three installments ending in 2017 and $6.5 billion  worth of  9% perpetual preferred stock. The VEBA will also receive 17.5% of the equity of New GM and warrants to purchase an additional 2.5% of the company. Whether the UAW can continue to maintain health care at current levels is questionable.

The VEBA will have the right to select one independent director and will have no right to vote its shares or other governance rights.

Bondholders Have No Choice

Bondholders representing at least 54% of GM’s unsecured bonds have agreed to exchange their portion of GM’s $27 billion in unsecured debt for their pro-rata share of 10% of the equity of new GM, plus warrants for an additional 15% of the New GM. The bankruptcy process will be used to impose this deal for those bondholders and other unsecured creditors that failed to accept or did not participate in the offer.

GM will announce that it will close 11 plants and idle another 3 plants. As we have previously reported, New GM will also build a new small car in an idled UAW factory. This will increase the share of GM’s U.S. production for U.S. sale from its current level of about 66% to more than 70%. The UAW successfully waged a public campaign by lobbying Congress  to change GM’s plans to bring in small cars from Asia. Importing cars from Korea, China or Japan – all closed markets  to U.S. autos – with taxpayer dollars is politically controversial, to understate the issue that the  Obama Administration has now defused for the moment.

Customers, Employees, Suppliers

GM will continue to honor consumer warranties. Last week, Treasury made available $361 million in funds under the Warranty Support Program to GM to provide “a backstop on the orderly payment of warranties for cars sold during the restructuring.”

Administration officials said that from an operating perspective, the day after tomorrows’ filing will not be materially different from today. Employees will get paid salary, wages and ordinary benefits. Assuming the sale moves forward as predicted, Pension Plan and VEBA funding will be transferred to New GM. As with Chrysler, GM will seek authority at its “first day” bankruptcy hearing to continue to pay suppliers. In addition, Treasury’s Supplier Support Program will continue to operate.

GM will also seek authority at its “first day” hearing to continue to honor its dealer incentives for those dealers who are expected to continue to be part of GM’s distribution network going forward. Fired dealers will be offered an agreement to orderly wind down their operations during the next 18 months.

Chrysler Bankruptcy Proceeding Apace

Court approves process for transaction with Fiat and creation of a new Chrysler. Dissident creditors withdraw.

by on May.08, 2009

NY Bankruptcy Court Seal

The order is signed, and unless another bidder emerges, the Fiat takeover is about to be sealed and delivered.

The U.S. Bankruptcy Court in Manhattan has just entered an order approving a process for the sale of virtually all of Chrysler’s assets. Unless an alternative offer arises, the deal with Fiat will proceed before 60 days have expired from the original April 30, 2009 filing, as the U.S. Treasury Department maintained.

In a clear victory for Main Street, the dissident creditors that were singled out as speculators by President Obama last month also withdrew from the proceedings today. The law firm representing these parties — after months of unsubstantiated claims about how much debt was held, along with an ongoing refusal to reveal what firms held the debt, all the while trying the case in the media — met the real court.  

Earlier this week, Judge Gonzalez ordered White & Case, the law firm representing the dissident debtholders, to reveal who their clients were, what debt they actually held, and how much they paid for it.

“After a great deal of soul-searching and quite frankly agony, Chrysler’s Non-TARP lenders concluded they just don’t have the critical mass to withstand the enormous pressure and machinery of the U.S. government,” said Tom Lauria, the White & Case attorney representing the group. “As a result, they have collectively withdrawn their participation in the court case.”

Hastening the withdrawal, no doubt, was the fact that the group had nowhere near the secured debt that news organizations such as the New York Times or the wire services were publicizing. As a famous jurist once postulated “sunshine is the best disinfectant.”

The momentum for an early resolution of the Chrysler matter now appears to be overwhelming, since the substantial new financial commitments from the U.S. and Canadian governments require the consummation of a transaction with Fiat within 60 days and make Debtor in Possession financing available for only that period.    (more…)

Two Down, Two to go in Chrysler Negotiations?

The Canadian Auto Workers union ratifies a new contract. UAW also reaches tentative deal, subject to member approval.

by on Apr.26, 2009


Bondholders, whose jobs are not at stake, are stopping Chrysler's restructuring.

At the same time as the Canadian Auto Workers union was announcing the overwhelming ratification of a new contract by 87% of its members with Chrysler LLC on Sunday evening, the United Auto Workers union in the U.S. issued a statement saying it, too, had reached a tentative deal with Chrysler that satisfied the U.S. Auto Task Force requirements to make labor costs competitive.

Chrysler has thus reached agreements with both of its unions to modify its contracts to meet the viability tests imposed by North American federal and regional  governments for the continuation of bridge loans to ensure liquidity as the Great Recession marches on.

The UAW deal is pending,  until its membership votes positively on the new four-year contract. Ratification is expected to come by Wednesday. It is also expected that the UAW will become a significant shareholder of 20% or more of the new company in return for giving up at least half of the $10.9 billion in cash payments due to it for the  financing of member health care benefits, due to be administered next year by a Voluntary Employee Beneficiary Association, which was established in its 2007 contract with Chrysler.

The VEBA allowed Chrysler and its venture capital owners to remove health care liabilities from its weak balance sheet and transfer the risk to the UAW. By accepting virtually worthless Chrysler stock now,  instead of cash, the union is in effect becoming  a bigger proponent of free-market capitalism and risk taking than Chrysler bondholders, who want the government to socialize their risk on failed investments and make them whole.

While the latest developments are encouraging for people with sweat equity in the ailing automaker, as opposed to speculators in paper instruments who espouse free market ideology while in fact benefiting from “socialism for the rich” when their investments flounder and they turn to the government for relief,  Chrysler still needs restructuring agreements with Fiat, for an alliance, and secured debtholders, aka the socialists, for drastic cuts in the amounts it previously borrowed.

The agreements are due before this Thursday, May 1, in order to meet the terms for continued taxpayer assistance imposed by President Obama’s Auto Task Force back in February. The administration has said that lacking agreements in all areas, Chrysler will be  placed into receivership. With the stipulated agreements in place, it is prepared to advance Chrysler another $6 billion in taxpayer financed loans. A previous, similar bridge loan agreement between taxpayers with Chrysler under Lee Iacocca resulted in taxpayers making money.

This risk/reward concept applied to Chrysler, and GM, is apparently beyond the grasp of the U.S. Treasury Department when it deals with Wall Street, as it advances billions upon billions of taxpayer money to banks and hedge funds to cover their losses and assume their liabilities at 100% of value of financial instruments that should be trading at pennies on the dollar. No possible upside for taxpayers exists in these cases.

In a separate but related development, General Motors has scheduled a 9 am EDT press conference tomorrow, where it is expected that further plant closings, brand and dealer eliminations, and employee firings will be outlined. GM is facing a later, June 1, deadline than Chrysler, from the U.S. Treasury Department to complete its restructuring.


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…)