MASSE IN THE NEWS: Chrysler's fate on the line; Carmaker demands big concessions from CAW

PUBLICATION: The Windsor Star
BYLINE: John McCrank and Dave Hall

Chrysler's fate on the line; Carmaker demands big concessions from CAW

Chrysler Canada may have put itself on a collision course with the Canadian Auto Workers by demanding much deeper wage concessions than the CAW agreed to give General Motors as the automakers work to secure a government rescue package.

Chrysler president and vice-chairman Tom LaSorda said late Wednesday that the company might shut its Canadian plants if the CAW fails to agree to an estimated cut of more than 25 per cent in total labour costs excluding retirees. That compares with an estimated 10 per cent cut in the GM deal.

The CAW, which traditionally sets a "pattern" in labour negotiations with one automaker that the others follow, is unlikely to go along with Chrysler's demands without a struggle, analysts and union officials say.

"If (LaSorda) wanted to pour gasoline on the fire, he sure did it," said Jim Stanford, the CAW's economist.

CAW president Ken Lewenza said he was "incredibly angry" over the tone of the threats made by LaSorda. "Chrysler has been incredibly successful and profitable in Canada. We've been told by the company year after year that we're profitable and efficient, so to hear this now is discouraging."

LaSorda said the company could quit Canada if it does not receive up to $2.3 billion in loans from Ottawa and Ontario.

That's more than the governments have offered. It also insists on deferring settlement of a tax dispute with the federal government.

LaSorda said the company needs to get total hourly labour costs down to $55 from $75. Labour costs include base wages, payroll taxes, paid time off, downtime, pension contributions, and union-sponsored programs, among other items.

Stanford rejected the idea that the company's labour costs were $75 an hour, saying the figure for the Canadian arms of GM, Chrysler and Ford was closer to $70.

Tony Faria, an auto sector analyst at the University of Windsor, said Chrysler was unlikely to win such significant concessions.

"I can't imagine that they could get their labour costs down to $55 an hour, which would make them, labour cost wise, the lowest of anybody," he said.

"They would have to get so many givebacks, I just can't imagine the CAW would ever agree to that, nor would the workers ever vote positively on it."

Total labour costs for United Auto Workers members at the Detroit Three's U.S. plants were estimated to be around US$70 an hour in 2007, before a move to two-tiered wages.

A labour deal recently struck between Ford and the UAW will push hourly labor costs to US$50 by 2011.

Richard Cooper, executive director for Canada at consultant J.D. Power and Associates, said Chrysler may be in a position to force the union to abandon pattern bargaining.

But both sides will have to give a little, Cooper said.

"If their (Chrysler's) final target is C$55, then we've got a major problem on our hands."

CAW Local 444 president Rick Laporte, who represents the company's 4,400 minivan plant workers, said Thursday LaSorda's comments have changed the tone of negotiations with the company.

"What it's done is turn the mood of our members from scared to angry."

The negotiations ended Wednesday with both sides agreeing to consider changes "and now we're waiting on the company to get back to us," Laporte said Thursday.

Lewenza noted that Chrysler had to decide last year between continuing to produce minivans in Windsor or St. Louis.

"They chose Windsor ... because the company felt we were more efficient, more productive, produced better quality and were cost-effective."

LaSorda, a Windsor native whose father was once head of CAW Local 444, said if Chrysler can't get the labour concessions and government loans it needs in Canada, then minivan production could be shifted to the St. Louis plant the company recently closed.

Assembly work in Brampton, where the company manufactures the Chrysler 300 and other models, could be moved to the United States or Mexico, he said.

But LaSorda also said the Windsor minivan plant is highly profitable and Chrysler would invest millions of dollars in it if the government comes through with loans. It would invest a further $1 billion in the Brampton assembly plant, he said.

SOBERING VIEW

MP Jeff Watson (C-Essex) supported LaSorda's comments, saying they provided a sobering view of the industry.

LaSorda is the first auto company official to appear before the House of Commons finance committee to indicate how much it will have to cut to remain viable, Watson said.

The federal government has made remaining viable, with costs under control, one of the key conditions for GM and Chrysler to get millions of dollars in loans.

"I wouldn't call Mr LaSorda's comments a threat, it's reality," said Watson.

MP Brian Masse (NDP-Windsor West) called LaSorda's comments "essentially negotiating tactics but, at the same time, they are not especially helpful at a time when we are all trying to find a solution to this situation.

"What's largely forgotten in all of this is that greed and mismanagement in the financial sector created a credit freeze which has now brought auto sales to a virtual standstill," said Masse.

"And if people think that skimming a couple of bucks off workers' wages will solve this problem, they are wrong."