Auto workers face pay, job cuts under U.S. bailout

This is from the Star.

One aspect of the crisis that is little emphasized is the manner in which it enables corporations to attack union benefits. To be competitive with foreign automakers that are established in US states with very weak labor legislation the Detroit workers will have to give up all the benefits they have spent years fighting for. The recession and the bail out terms have achieved what the corporations could never achieve on their own.
Also, the financial crisis has offered up some opportunities for concentration of capital by buying out distressed firms at firesale prices. Apparently Harper will also sell some of our crown assets into this distressed market at all making sure his friends get bargains.

Notice the difference in the treatment of autoworkers and the financial wheeler dealers who brought on this mess. They are still getting bonuses that actually add up to billions to ensure that they stay on over the crisis period!

Auto workers face pay, job cuts under U.S. bailout

TheStar.com - Business - Auto workers face pay, job cuts under U.S. bailout

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'There will be pain,' concedes union chief as McGuinty, Harper poised to offer aid
December 20, 2008 Tony Van AlphenBUSINESS REPORTER
Thousands of auto workers in Canada face the prospect of pay and job cuts today after the U.S. government offered a $17.4 billion (U.S.) aid package to teetering General Motors and Chrysler that contemplates significant concessions by American employees.
Ken Lewenza, president of the Canadian Auto Workers, acknowledged yesterday his members at GM, Chrysler and Ford won't be able to avoid concessions under terms of the U.S. rescue package, which calls for more restructuring, downsizing and cost cutting by the money-losing auto giants south of the border.
Those terms will put pressure on the CAW, which represents about 28,000 workers at the three automakers in Canada, to bargain reductions so they remain competitive and not lose future plant investment and jobs to other countries, he said.
"We recognize the employers will demand comparable treatment in Canada," Lewenza said in an interview. "Absolutely. If total compensation goes down in the U.S., it puts tremendous pressure on us in the Canadian industry. There will be pain."
Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty plan to announce an aid package in Toronto this morning.
Provincial officials confirmed the package would be 20 per cent of the $17.4 billion (U.S.) total announced by U.S. President George W. Bush yesterday, which means the Canadian deal would be worth about $3.5 billion (U.S.), or $4.2 billion in Canadian funds.
Despite the pending aid, Lewenza also conceded that plunging demand for autos could lead to further job losses as automakers shrink their operations.
In turn, that would mean big job cuts for thousands of Canadian workers in the large auto-parts sector that supplies the automakers, he said.
In addition to compensation cuts at the automakers, the U.S. aid package calls for new deals between them and parts companies to lower costs.
Before yesterday's announcement, Lewenza had insisted Canadian auto workers have a productivity advantage that negates any need to reopen contracts and cut wages.
He had noted the union negotiated contracts last spring that would generate savings of between $750 million and $900 million at the three automakers during the next three years.
Workers, who earn almost $34 an hour, agreed to a wage freeze, a temporary cut in a cost-of-living allowance, a longer period for new employees to reach top rates and some reductions in benefits.
Although Lewenza had not mentioned concessions, he has consistently said the union would do whatever is necessary to keep the Detroit-based automakers competitive here.
Lewenza agreed yesterday the terms of the latest U.S. rescue plan could adversely affect that critical edge in productivity.
Under terms of the American rescue package, the automakers and the United Auto Workers will need to negotiate a plan by the end of next year whereby pay and work rules are competitive with foreign automakers, such as Toyota, Honda and Nissan, that operate in the U.S.
Workers at those plants earn several dollars an hour less in wages and benefits than their unionized counterparts at the three automakers.
Industry watcher Dennis DesRosiers said the U.S. package will probably result in significant cuts in wages and benefits for auto workers in Canada.
Total compensation for an average worker, including pension costs, at the three automakers here is about $70 an hour, he estimated.
DesRosiers said the three automakers will be pushing for any concessions in Canada that their U.S. parents get from the United Auto Workers south of the border.
"If the CAW doesn't move, then it will be `bye, bye' for any future investment, and all the plants will eventually be gone, too," he said.
Lewenza would not discuss areas in the current contracts where the union could reduce costs for the companies.
However, special absence days (SPA), legal aid, tuition assistance and some health-care expenses are among the benefits that are vulnerable, according to industry sources.
Meanwhile, UAW president Ron Gettelfinger said the labour conditions in the package are unfair to workers and the union would work with the incoming administration of U.S. President-elect Barack Obama and Congress to remove them.
But Obama endorsed the package, calling it a necessary step to dodge a major hit to the U.S. economy.
Lewenza, who replaced retiring CAW president Buzz Hargrove in the fall, said he is hopeful Obama would eventually alter some of the conditions.
"It is absolutely clear that George Bush and his friends in the Republican Party are trying to punish organized labour, drive down wages and destroy the middle class," Lewenza added. "Obama will take office in the middle of the time frame to restructure operations, so he will have an opportunity to change this."
The Bush administration's package follows the refusal by Senate Republicans to accept a rescue plan last week that raised the spectre of collapse by one or more auto makers within weeks. It would cause a ripple effect that would cost more than one million jobs and a much deeper recession.
The package authorizes $13.4 billion (U.S.) worth of loan guarantees for the Detroit-based automakers, with a further $4 billion in February. They will have to pay back the money eventually – or by March 31, if the companies fail to meet the terms.
Ford Motor Co., which is also struggling, has requested a standby line of credit, but doesn't need it now.
However, if one of the other automakers failed, it would damage Ford badly because the company relies on the same suppliers.
Under terms of the package, the U.S. government's debt would have priority over any other creditors.
GM and Chrysler must also reduce their debts by two thirds through an equity exchange; eliminate dividends until repayment of loans; limit executive compensation; and open up financial records.