Chrysler Canada issues plant closure warning

Wed Mar 11, 2009 9:41pm EDT
 
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By Randall Palmer

OTTAWA (Reuters) - Chrysler LLC warned on Wednesday it might close its plants in Canada unless it got sufficient labor concessions, as well as government aid and resolution of a tax dispute.

"Failure to satisfactorily resolve these three factors -- the labor costs, government assistance and of course the transfer tax -- will place our Canadian manufacturing operations at a significant disadvantage relative to our manufacturing operations in North America and may very well impair our ability to continue to produce in Canada," Chrysler President and Vice Chairman Tom LaSorda said.

He told reporters after his testimony to the House of Commons finance committee that his direct tone was needed to lay out the facts in a serious situation.

"Bottom line, we needed to be very, very clear, and ambiguity doesn't help the process. These are the things that Chrysler needs," he said. "I thought when I came up here today the Canadian government wanted to hear what are the true facts."

The biggest sticking point appeared to be the cost of labor. He said Chrysler's labor costs in Canada, all inclusive, were C$75 ($58) an hour, C$20 an hour more than at Canadian transplants such as Toyota and Honda.

He said the labor cost gap was being eliminated in the United States but remained high in Canada, and he said the Canadian Auto Workers agreement reached with General Motors Corp over the weekend would not eliminate even half of Chrysler's labor cost gap.

"The current agreement with GM is unacceptable and we have to break the pattern," LaSorda said.

Some analysts have calculated the agreement with GM as yielding C$6 or C$7 in cost savings.   Continued...

 
<p>Workers load newly manufactured Chrysler 300's and Magnums onto trucks at the DaimlerChrysler Assembly plant in Brampton, February 14, 2007. REUTERS/J.P. Moczulski</p>