CAW says Fiat warns that Chrysler bankruptcy likely
By John McCrank
TORONTO (Reuters) - Ken Lewenza, president of the Canadian Auto Workers union, said on Tuesday that he had met with the head of Italian carmaker Fiat SpA, Sergio Marchionne, who told him that Chrysler is likely to seek bankruptcy protection temporarily in the United States.
Fiat Chief Executive Marchionne "was careful, he said: 'You know Ken, a lot of things can happen in two days, but if I was a betting man, I would suggest Chrysler is going to fall into Chapter 11'," Lewenza said.
Lewenza paraphrased Marchionne as saying: "We may need to do that, regardless of all the bondholders and stakeholders coming to the pump, there's still a lot of work that has to be done, but the Canadian plants are about as well positioned as you could possibly be."
He said the meeting with Marchionne, and Chrysler Vice Chairman and President Tom LaSorda, on Monday night at a steak house in Toronto lasted two hours and was very "respectful and cooperative".
CAW members voted late on Sunday in favor of a new collective agreement with Chrysler that cuts the overall labor cost of Chrysler's 8,000 unionized workers in Canada by about C$19 an hour.
Lewenza said Marchionne acknowledged the sacrifices made by the union's members in the concession deal, but added that the deal would allow the Canadian plants to operate in the future under a Chrysler-Fiat partnership.
The concessions were designed to help Chrysler make a Thursday deadline imposed by the U.S. and Canadian governments to prove its viability and qualify for billions of dollars in long-term public aid.
The governments said Chrysler is not viable on its own and said a strategic alliance with Fiat is necessary if the automaker is to receive the government loans. Continued...