Canada’s government has threatened to cut off aid to Chrysler unless the Canadian Auto Workers (CAW) union agrees concessions of C$19 an hour to enable the automaker to finalise its proposed alliance with Fiat.
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“There has to be a CAW-Chrysler deal in the next two weeks – the clock is ticking – in order to allow for Fiat to continue with its partnership with Chrysler,” industry minister Tony Clement told Reuters.
Fiat chief executive Sergio Marchionne earlier this week said Fiat would walk away from the deal unless the CAW made concessions.
CAW president Ken Lewenza said the union would reopen negotiations with Chrysler on Monday but was sticking to its position that it wouldn’t cut labour costs to the level of US and Canadian foreign-owned transplant factories despite Marchionne’s threat.
“I was shocked to wake up to a new boss,” he said after seeing comments Marchionne made in a newspaper interview on Wednesday about needing lower labour costs from both his union, and its US United Auto Workers counterpart, and an end to what the Fiat CEO called a “sense of entitlement” among the unions.
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By GlobalDataCuts in labour costs to the level of Japanese or German automakers in North America would not be made, Lewenza insisted. Chrysler’s Canadian plants don’t compete for investment with Honda and Toyota, he added; they compete with Chrysler’s US operations.
The union had agreed, he said, to maintain its competitive edge against UAW plants, but would not try to match the costs at the transplants.
Both Chrysler and Fiat have said the CAW must agree to lower labor costs by C$19 (US$15.70) an hour, or over 20%, to make a deal happen.
“I don’t think it is in the interest of the Canadian public to have continued funding to a company if there is no deal with their union and if there is no outside investment, no outside partner in the case of Fiat,” Clement said.
Lewenza yesterday told Reuters the labour issues were insignificant compared to the difficulties Chrysler was having in the United States in getting bondholders to make concessions. He also said the company also has to deal with issues surrounding the 19% share still owned by Daimler AG and debt associated with the stake.
“All of a sudden, a few million dollars in Canada could make or break the deal? That’s absolutely ridiculous,” Lewenza was quoted as saying by Reuters. “This is a government that’s, quite frankly, using this global economic crisis to scapegoat workers.”
The deal the CAW has offered Chrysler so far is the same deal struck with General Motors last month. GM has said the deal would permanently eliminate nearly C$1bn in costs related to retired workers and would also cut labour costs of active workers by C$7 and hour.
“With April 30 looming very closely on the horizon, the CAW has to do its part,” added Clement.
“This is not an easy thing, but … if there’s no deal in place, there will not be long-term funding arrangements with the government of Canada, and in fact we have the right to call our loans.”
