TORONTO - The Canadian Auto Workers union has no plans to stray from a previously established pattern when it sits down again with negotiators from Chrysler next Monday, despite a threat from Fiat that it could walk away from a potential alliance with the troubled automaker.
Ken Lewenza said the union is willing to help Chrysler find cost savings in other ways, but won't give any more labour concessions than it did in its agreement with General Motors, which is estimated to save the automaker about $7 an hour and which GM CEO Fritz Henderson has said makes the company competitive with non-unionized plants.
"We always said that the economic pattern is important to the auto industry to make sure that one company doesn't have an advantage or a disadvantage, but we also said to Chrysler that we'll use our creativity, the same as we've done in the past, to increase productivity and increase the bottom line at Chrysler without touching the economic pattern," Lewenza said in a news conference Wednesday.
The Fiat-Chrysler alliance is widely assumed to be the troubled automaker's last chance to avoid a bankruptcy protection or liquidation, but Fiat CEO Sergio Marchionne has said the deal could crumble if Chrysler can't reduce its labour costs to a level competitive with Japanese and German assembly plants in North America.
Lewenza invited Marchionne to tour Chrysler's Canadian operations before he draws any conclusions about his potential partner's labour costs.
"The question for me today is: Why would Sergio be negative about the Canadian operations when clearly if he took the time we could show him the incredible, positive and constructive reasons to do business in Canada?" he said.
Chrysler employs about 10,000 hourly workers at assembly plants in Brampton, Ont., and Windsor, Ont., and a casting plant in Toronto.
Lewenza reiterated the union's stance that labour only accounts for seven per cent of the manufacturing cost of a vehicle, and said there are much bigger issues that need to be solved at Chrysler.
"Why is it that seven per cent of the costs is creating 100 per cent of the dissent publicly? It doesn't make sense to me," he said.
Chrysler's Canadian arm has said it needs to cut its labour costs by approximately $20 an hour to be competitive with foreign automakers with plants in Canada, like Toyota. And Chrysler president Tom LaSorda has said the company may be forced to shutter its Canadian plants if it can't reduce its labour costs by enough.
Tony Faria, co-director of the automotive research centre at the University of Windsor, estimates there's a $30 gap between the average all-in labour cost for Japanese-run assembly plants in Canada and the $76.14 an hour that Chrysler says it pays in wages, benefits and retiree costs.
Faria said the CAW's insistence that it will stick to the pattern established with GM could cost thousands of jobs, particularly if Chrysler is able to reach a better deal with the United Auto Workers in the U.S.
"I felt all along that the CAW has been too tough in their negotiations in Canada and that has lost us jobs in Canada to lower labour-cost countries," Faria said.
He said the UAW has made deeper concessions in recent labour agreements than the CAW, including the implementation of a two-tier wage system.
Under this system, current employees will keep their current compensation rates, but new workers will make significantly less in benefits and wages. These new workers will only cost their employers $47 an hour all-in, while non-assembly line workers will only cost $26 an hour.
"If we ever get to a point in time where the North American market starts turning back up again ... they're going to be hiring back workers at a significantly lower rate based on the two-tier wage system now in effect at their plants in the U.S.," Faria said.
"That doesn't bode well for future auto assembly CAW jobs in Canada, and that's something the CAW just has to recognize: that it may be much, much better to have jobs at a little bit lower labour rate than to have no jobs whatsoever."
General Motors Corp. (NYSE:GM) and Chrysler LLC have said they need billions of dollars in government loans in order to survive the current downturn. Ford Motor Co. (NYSE:F) hasn't received any bailout money and the CAW hasn't begun renegotiating its labour contract with Ford's Canadian subsidiary.
Chrysler and Fiat said in January that they have signed a nonbinding agreement for a strategic alliance that would give Fiat a 35 per cent stake in Chrysler.
Under the proposed alliance, Fiat wouldn't invest cash in Chrysler but would provide access to its successful small-car platforms, as well as to its more environmentally friendly and fuel-efficient engines.
Chrysler is currently owned 80.1 per cent by Cerberus Capital Management LLP, which acquired its stake for $7.4 billion in 2007 as Germany's Daimler AG dissolved a "merger of equals" made in 1998 between Daimler-Benz and Chrysler Corp. Daimler still owns about one-fifth of Chrysler LLC, which is a privately held company.
