TORONTO (Reuters) - The Canadian Auto Workers union and Chrysler Group LLC are far apart in talks for a new contract, with Chrysler wanting to eliminate a cost-of-living increase and adjust lump-sum payments the CAW negotiated in contract deals with General Motors and Ford last week, the head of the union said on Tuesday.
Chrysler, part of Italy’s Fiat SpA group, is the last of the Detroit 3 automakers without a contract deal in Canada. Ford Motor Co workers ratified their deal last weekend, and General Motors Co employees will vote on Wednesday and Thursday.
“We’re still incredibly far apart,” CAW President Ken Lewenza said after a morning meeting of the union’s Chrysler caucus. “It is a tug of war, quite frankly.”
The union, which represents more than 20,000 workers at the Canadian units of the Detroit 3 automakers, said late in the afternoon that it had not yet received a formal economic proposal from Chrysler.
Chrysler, which has more than 8,000 unionized workers in Ontario, declined to comment.
The union said Chrysler wants to remove a cost-of-living increase set for the final year of the Ford/GM framework deal, and forgo an hourly pay increase of 33 Canadian cents introduced in the last quarter of the current contract.
“The proposal from Chrysler, and from the other companies, was just to stop paying that 33 cents. That represents a cut in everyone’s wage,” said CAW economist Jim Stanford. GM and Ford had the same demand when they started talks, he said, but later dropped it.
Chrysler also wants flexibility over the timing and structure of C$9,000 ($9,200) in lump-sum bonus payments, the CAW said.
Chrysler has been the most vocal of the Detroit 3 automakers in arguing that Canadian labor costs are the highest in the world and must drop to match those of the United Auto Workers in the United States.
There were no cost-of-living or base-pay increases in the 2011 UAW contracts with Ford, Chrysler or GM, but those deals included profit-sharing and signing bonuses.
UAW workers at Chrysler got a $3,500 signing bonus paid in two parts, compared with lump-sum payments of $5,000 at GM and $6,000 at Ford. Chrysler workers were to get a $1,750 signing bonus and $1,750 after the company achieved debt ratio financial targets.
The UAW said the structure was needed to help Chrysler, the weakest U.S. automaker, regain its financial footing.
Tony Faria, a University of Windsor professor and auto industry expert, said Chrysler might persuade the CAW to break bonus payments into smaller, more frequent installments, instead of the Ford/GM C$3,000 signing bonus followed by three lump-sum annual bonuses of C$2,000.
He did not see the CAW willing to make the bonuses contingent on corporate financial targets.
The cost-of-living increase and bonus payments were established in the CAW’s framework deal with Ford, which set the pattern for talks with GM and Chrysler. Pattern bargaining is a union strategy meant to ensure that no company has a labor cost advantage over its rivals.
“Our intent is to make sure that we follow pattern, and I understand that pattern is all a part of cost, and again that could include splitting up payments, but that’s not our intent,” said Dino Chiodo, chairman of the CAW’s Chrysler master bargaining committee.
“We’re doing everything we can to make sure that we maintain a collective agreement that looks almost identical to what was established at Ford and GM.”
Under the framework deal, wages are frozen until June 2106, when a cost of living increase is introduced. That follows a pattern in the previous deal, when the increase was introduced in the final year.
The agreement also starts new hires at a lower wage, earning 60 percent of the highest hourly rate of C$33.85, down from 70 percent previously. It will take 10 years to reach top pay, up from six years.
The CAW was adamant that new employees eventually reach the top of the pay scale, unlike their U.S. counterparts who work under a permanent two-tier pay structure.
New employees will also have a hybrid pension plan that mixes elements of defined benefit and defined contribution plans. The defined contribution plan for current employees was unchanged.
The union has said it could give 24 hours’ notice of a strike if the talks, being held at a downtown Toronto hotel, stall. “In terms of giving them strike notice, no I‘m not there yet. But I may be forced to do that this week,” Lewenza said.
Editing by Janet Guttsman; Leslie Adler and; Peter Galloway