Canada presses CAW to make Chrysler concessions

Thu Apr 16, 2009 4:25pm EDT
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By John McCrank

TORONTO (Reuters) - The Canadian Auto Workers union must accept concessions of C$19 an hour to enable Chrysler to seal an alliance with Fiat SpA, or Canada may have no choice but to cut the automaker's lifeline, the industry minister said on Thursday.

Chrysler has until the end of the month to close a deal with the Italian carmaker as a condition set by the U.S. and Canadian governments to qualify for long-term aid.

Further concessions by the CAW are one of the big stumbling blocks in the Chrysler-Fiat talks, Fiat's chief executive said on Wednesday. Both Chrysler and Fiat have said the CAW must agree to lower labor costs by C$19 ($15.70) an hour, or more than 20 percent, to make a deal happen.

"There has to be a CAW-Chrysler deal in the next two weeks -- the clock is ticking -- in order to allow for Fiat to continue with its partnership with Chrysler," Industry Minister Tony Clement told reporters on Thursday.

"I don't think it is in the interest of the Canadian public to have continued funding to a company if there is no deal with their union and if there is no outside investment, no outside partner in the case of Fiat."

Talks between the company and the union are due to restart on Monday. The CAW said talks were put on hold in early April as Chrysler and Fiat worked out details on a possible partnership.

Ken Lewenza, the president of the CAW, told Reuters on Thursday the labor issues were insignificant compared to the difficulties Chrysler was having in the United States in getting bondholders to make concessions. He said the company also has to deal with issues surrounding the 19 percent share still owned by Germany's Daimler AG and debt associated with the stake.

"All of a sudden, a few million dollars in Canada could make or break the deal? That's absolutely ridiculous," said Lewenza. "This is a government that's, quite frankly, using this global economic crisis to scapegoat workers."   Continued...

<p>Chrysler auto assembly workers leave the plant after their shift ends at the Chrysler Warren Truck Assembly in Warren, Michigan October 14, 2008. REUTERS/Rebecca Cook</p>