CAW to Chrysler: No more concessions in bankruptcy
TORONTO and OTTAWA -- Forced to make concessions twice in less than a year to Chrysler Canada Inc., the Canadian Auto Workers union is seeking a guarantee that its members won't be targeted again if the company seeks bankruptcy protection.
The union is insisting the auto maker not seek more cuts in labour costs if it files for protection under the Companies' Creditors Arrangement Act, union sources said yesterday.
What's more, the union could use the Chrysler contract to extract a similar promise from General Motors of Canada Ltd., which did not include such a clause in the contract it signed with the CAW in March.
The agreement with GM calls for about $7 an hour in cuts, but Chrysler has been seeking concessions worth about $19 an hour. Chrysler wants to slash benefits by that amount to reduce its overall labour costs to $57 an hour from $76 and match what Toyota Motor Manufacturing Canada Inc. pays its workers.
The union and Chrysler moved closer to an agreement yesterday but by late evening still did not have a deal.
"We are wrestling with a number of issues," CAW president Ken Lewenza told reporters at a Toronto hotel. Although he said none of the issues was a showstopper, bargaining could break down at any time.
Officials from both Ottawa and Ontario urged the two sides to conclude a deal quickly, he said, and it was clear that the union was wrestling with demands from Italian auto maker Fiat SpA, which is seeking a strategic alliance with Chrysler LLC to save it from liquidation.
Both the governments and Chrysler executives said a bankruptcy filing by the company is possible, Mr. Lewenza said.
The union originally stood fast against giving Chrysler concessions beyond what it had provided GM in what is known as pattern bargaining, where an agreement with one company provides a template for deals with the other two.
But that sacred tenet of the auto workers movement is now in tatters.
"There is no pattern any more," Mr. Lewenza said.
If GM insists that any cuts given to Chrysler must be extended to it as well, the CAW will counter that GM also sign a clause not seeking any additional concessions if it goes into CCAA protection, union sources said.
Such a clause could make it difficult to use the CCAA process to dramatically reshape contracts, but not impossible, labour experts said.
"As the CCAA unfolds, the union always has a knife at its throat," said one labour lawyer, who added that Air Canada came back to its unions for cuts several times during its CCAA restructuring.
The New York Times reported that Chrysler and the United Auto Workers struck a deal that will protect health care and pensions for U.S. workers in a U.S. bankruptcy protection.
Sources have said Chrysler Canada and Chrysler LLC are close to a filing for bankruptcy protection in Canada and the United States, with the governments providing the financial backstop - known as debtor-in-possession financing - necessary to keep operating.
Such financing would be in the range of $40-billion (U.S.) to $50-billion, sources and industry analysts have said, with Canadian governments providing about 15 per cent of the money, or about $6-billion.
Industry Minister Tony Clement confirmed that Ottawa is looking at DIP financing, although he called $6-billion "very speculative."
The government has contingency plans, Mr. Clement said, that rank, in order: restructuring outside protection, a restructuring under CCAA, and liquidation.
He said the stress of the negotiations is affecting him. "My mood changes so fast, we'd almost need a therapist. There are ups and downs and good days and bad days and good hours and bad hours," he said.
While the CAW and Chrysler negotiated, hundreds of GM Canada retirees joined a protest at the Ontario legislature in a bid to get the province to backstop their pensions.
Premier Dalton McGuinty triggered concern about the future of GM Canada's pensions two weeks ago when he said Ontario's Pension Benefits Guarantee Fund does not have enough money to bail out the company's plans.
