March 27, 2009 / 3:34 PM / 9 years ago

Union, Chrysler Canada still at odds on labor deal

TORONTO (Reuters) - Chrysler and the Canadian Auto Workers union are still “far apart” in negotiations to reach a cost-saving deal to help the company qualify for government aid, the head of the union said on Friday.

<p>Canadian Auto Workers union president Ken Lewenza explains that Chrysler and the CAW union are still far apart in negotiations to reach a cost-saving deal to help the company qualify for government aid at a news conference in Toronto, March 27, 2009. REUTERS/Peter Jones</p>

CAW President Ken Lewenza said negotiations have been “very frustrating and at times confusing,” because twice within the last 48 hours the two sides were very close to a tentative agreement, but both times it fell apart.

He said that in both cases Chrysler had “moved the goal posts” at the last minute.

“We were inches apart this morning and now we’re potentially miles apart,” Lewenza said, without elaborating on the issues dividing the two sides.

Chrysler said in a statement it needs to close a gap of C$19 an hour between workers in Canada and offshore-based companies in the United States.

“Although we made progress toward ‘closing the gap’, significant issues related to the existing ‘pattern’ remain on the table,” the company said.

The CAW has insisted that Chrysler follow the pattern established by a labor agreement it reached with General Motors Corp earlier in the month.

GM said its new three-year contract will save it nearly C$1 billion ($809 million) in labor costs by freezing wages, shifting more health care costs to employees, cutting paid time off, and suspending or eliminating cost of living adjustments.

Chrysler said all its constituents, from employees to retirees, dealers and suppliers, had been asked to “break pattern” due to the difficult business environment.

“These requests have been made to all of our constituents, including the CAW, to ensure Chrysler’s viability,” the company said.

Canada and the province of Ontario have imposed a deadline of March 31 for Chrysler and GM to come up with plans to make their Canadian operations viable and therefore eligible for government aid.

The companies are seeking billions of dollars in government loans in Canada and the United States to help them survive.

The weak economy has hit the auto sector hard, with sales of new vehicles in North America falling to levels not seen in decades.

Lewenza said the union would continue to negotiate with Chrysler to try to bridge their differences right up until March 31, if necessary.

The CAW is holding a membership meeting in Toronto over the weekend and Lewenza said he had hoped to be able to present it with deal to ratify.

Chrysler has about 9,400 workers in Canada, about 8,000 of whom are represented by the CAW.

Chrysler, controlled by Cerberus Capital Management, warned in recent weeks it would look at closing its plants in Canada if significant concessions from the union cannot be obtained.

The automaker assembles minivans at its plant in Windsor, Ontario, and large sedans at its Brampton, Ontario, plant. Chrysler also has a casting plant in Toronto, which it is looking to sell and will close by the end of 2011 if it fails to find a buyer.

($1=$1.24 Canadian)

Reporting by John McCrank; editing by Rob Wilson

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