Chrysler reaches deal with CAW

There seems to be a race for the bottom among auto workers. Although the article says that pattern bargaining is being violated this seems not to be the case but rather a new pattern bargaining system is being developed. The worst contract is now the pattern to be used to force workers with better contracts to give up anything that suprasses the weakest contract that is used to set the pattern. As this article notes the CAW is to negotiate similar concessions to the Chrysler plan with GM and Ford.
There are always great opportunities for capital to weaken labour during downturns. Maybe this is producing some of the green shoots so prized by business commentators and shooting up the ailing stock market.


Chrysler reaches deal with CAW
TheStar.com - Business - Chrysler reaches deal with CAW
April 24, 2009 Tony Van AlphenBusiness Reporter
Chrysler and its union have broken historical pattern bargaining in the auto industry with a deal for deep worker concessions to keep the teetering company alive here.
In around-the-clock, high-stakes bargaining, negotiators agreed on a deal Friday night for much more concessions than what workers accepted at General Motors, another reeling automaker, last month.
Ken Lewenza, president of the Canadian Auto Workers, also revealed if Chrysler slips into bankruptcy court protection in the U.S. and Canada, operations here would not be liquidated and remain among the company's "good" operating assets. Workers would also not face further concessions if there is a bankruptcy, he said.
Lewenza, who described the negotiations as "torturous and unfair," said the deal would lead to about $240 million in annual savings for the company but not reduce wages and pensions.
"We will live to fight for another day," he said.
He also disclosed that the company and the CAW will work to develop a retiree health care trust fund which will eventually transfer responsibility of costs to the union. It would be similar in concept to a U.S. plan at Chrysler.
The union would not disclose how much the savings represent in so-called "all in" labour costs but officials said privately the concessions meet company demands of reducing expenses by $19 an hour.
Among the concessions beyond an earlier deal at GM, Chrysler workers will lose semi-private hospital coverage, tuition programs, Christmas bonuses, savings on vehicle purchases, some drug dispensing fee protection and partial pay during layoffs.
The union also agreed to reduce relief time in plants, allow more flexibility in use of part-time workers and transfer to a new manufacturing system if Chrysler merges with Fiat SpA of Italy.
-"We are extremely grateful to the CAW leadership and to its hard-working members for their openness in this challenging environment to create a new strategy that will lead this company on a path to success. We also want to recognize the Canadian Federal and Ontario governments for their energy and efforts in helping to move this great company forward," said Chrysler president Tom LaSorda.
Chrysler workers, who earn an average of $35 an hour, will vote on the deal this weekend and the union said it will negotiate similar concessions at GM and Ford in Canada
Chrysler and its U.S. parent must submit restructuring plans to governments in both countries by a deadline next Thursday to receive billions of dollars in loans.
Those plans must contain concessions from numerous stakeholders including bondholders, suppliers, dealers and workers. Chrysler is seeking about $2.9 billion and has already received $750 million.
In addition, Chrysler must complete a merger with Fiat. Fiat has also demanded concessions by stakeholders in both countries.
If the plans don't get government approval, Chrysler will likely slip into bankruptcy in one or both countries.
That would allow Chrysler to reorganize its operations under protection from creditors and emerge as a stronger company. But some parts of the company would likely be sold.
Bankruptcy could also further erode consumer confidence at a time when industry sales are at 30-year lows in the U.S. and sliding here.
In Canada, the federal government pressured the CAW to break a decades-old practice of pattern bargaining where the union traditionally negotiated a contract with one of the big three North American-based auto makers and forced the other two companies to accept it or face a strike.
That would allow the union to negotiate the same improvements for workers at all three companies and not give one of them a competitive edge.
The union initially resisted breaking the pattern deal at GM which will reduce labour costs by about $7.25 an hour by 2012 if the company gets government aid. GM is seeking between $6 billion and $7 billion here.
But Chrysler said it needed cuts in labour costs totalling $19 an hour to compete with Toyota and Honda in Canada.
In the U.S, parent Chrysler LLC and Treasury Department officials are still driving for deals to keep the automaker out of court.
The Treasury Department is also working on a Chapter 11 bankruptcy filing for Chrysler LLC that could come as early as next week.
The department has an agreement in principle with the United Auto Workers union, whose members' pensions and retiree health-care benefits would be protected as a condition of a bankruptcy filing., according to some reports.
Fiat could also complete its merger with Chrysler while the company is under bankruptcy protection in both countries. A merger is a condition for government aid in both countries.
The federal and Ontario governments had set a "deadline" for reaching a tentative deal on concessions at midnight on Wednesday but talks dragged on the health care trust issue.
Chrysler had sought cuts in health-care benefits, shift premiums, life insurance and child care that would trim labour costs by more than $8 an hour. In earlier negotiations, the union has rejected most of those proposals.
If there is a bankruptcy, a question remains about what happens to Chrysler's lenders, who hold $6.9 billion (U.S.) in company debt.
The U.S. Treasury is also working with GM to prepare a possible bankruptcy case. Some industry watchers have questioned whether the Treasury's actions to prepare a bankruptcy case is an attempt to put more pressure on lenders.
While Chrysler faces an April 30 deadline from the U.S. and Canadian governments, GM doesn't need to submit a plan until June 1.
Under the most probable scenario, the U.S. Treasury will provide the financing Chrysler needs to operate while under bankruptcy protection.
Ottawa will also likely provide aid if the company operates under court protection here.
Earlier Friday, Premier Dalton McGuinty sounded a bittersweet note about the worker concessions by expressing concern that they could spread to union members in other sectors.
"We've always proceeded under the assumption that you would do better than your dad and your kids would do better than you - each succeeding generation would enjoy a higher standing of living and a better quality of life," said McGuinty.
"That's been the great Canadian dream ... and there's been a reset right now. I have not given up on that dream and I don't think Ontarians should either.
"I think what it means is these wages will be reset and that will serve as a new foundation, a new base, and then working together we can make sure that we drive up our productivity, drive up the value added dimension of the work that we do so that we can resume the progress that we continue to make."
McGuinty noted he has also written to Prime Minister Stephen Harper to request a national summit on pension reform in the wake of some of the concerns about the serious shortfalls of pension plans at GM and Chrysler.
With files from Robert Benzie