Clement takes tough line with Chrysler union
By Nicolas Van Praet, Financial Post
April 16, 2009 12:05 PM
Source: Clement takes tough line with Chrysler union
The Canadian government is hardening its stance towards organized labour, saying
it will not use taxpayer dollars to support Chrysler LLC unless the Canadian Auto
Workers makes significant concessions the union has already rejected
“The CAW has to recognize that in order for Chrysler to survive in this country,
Chrysler has to be competitive in the Canadian market,” Mr. Clement said
“If there’s no [labour] deal in place, there’s no deal with the
Chrysler wants the union to lower all-in pay and benefits costs from the current
range of about $76 to $57, which is what Toyota Motor Corp. pays its Canadian
factory workers, according to sources familiar with the discussions. The CAW is
adamant that it will not make up the $19 per hour gap but has said it is willing to
The Canadian government has pledged $1-billion to Chrysler to help it stabilize its
two manufacturing plants in Canada and restructure its business. Ottawa will recall
the loans if Chrysler fails to strike a new labour deal by April 30 as part of a
planned commercial partnership with Italian automaker Fiat SpA
, Mr. Clement told
reporters in Toronto Thursday.
Fiat, seeking to steer Chrysler to a new life through an initial 20% investment in
the automaker, said this week that unions in both the United States and Canada
must lower costs more
or it will walk away
from the alliance.
“With April 30 looming very closely on the horizon, the CAW has to do its part,”
Mr. Clement said. “This is not an easy thing, but the alternative is, there’s no deal
And if there’s no deal in place, there will not be long-term funding
arrangements with the government of Canada, and in fact we have the right to
call our loans.”
The CAW wants to offer Chrysler a variation of the new labour deal it has already
struck with General Motors Corp. through a system known as patttern bargaining
Industry sources estimate the savings of that deal at $7.25 per hour, short of what
Chrysler and Ford Motor Co. need to justify building cars in Canada.
The CAW has always insisted on pattern bargaining as a way to offer roughly the
same labour deal to all three Detroit automakers and prevent one from having an
advantage over the other. But Mr. Clement said pattern bargaining is dead
“We’re beyond that now. It’s about competitiveness,”
he said. “I am not
GM, which has been promised $3-billion in federal and provincial aid, will also
to renegotiate its contract with the CAW, Mr. Clement said. Asked if the
government would be willing to take an equity stake in the automakers to protect
its investment, he said “Everything is on the table.” No government funds have yet
flowed to GM.
“Compromises have to be made” on labour contracts, said Rob Wildeboer,
executive chairman of Canadian auto supplier Martinrea International Inc., whose
workforce is partly unionized.
“The key for the supply base is that we get paid,” Mr. Wildeboer said when asked
about a potential Chrysler or GM bankruptcy protection filing. He said he believes
critical suppliers, comprising the vast majority of suppliers, will be paid in a
creditor protection situation.
“In the automotive industry, all suppliers are critical... You can't ship a car without
a gas pedal.” The key issue is what the court decides to do with any oustanding
receivables owing before the filing is made, he said.
Ken Lewenza, CAW President, said Wednesday that given all the billions of debt and
complicated talks Chrysler is having with lenders and other stakeholders, labour
alone would not make or break the Chrysler-Fiat deal
. He said the CAW expects
to resume bargaining with Chrysler on Monday.
Mr. Clement was in Toronto to announce details of a new $145-million five-year
auto research fund, designed to support research and development in alternative
fuels and other technology. The fund’s project office has been set up and has
begun working with potential applicants.