April 6, 2009 / 5:23 PM / 9 years ago

Chrysler Canada labor talks at a standstill

TORONTO (Reuters) - Talks between the Canadian Auto Workers union and Chrysler to strike a cost savings deal at the automaker’s operations in Canada are at a standstill, likely because Chrysler is focusing on reaching a partnership deal with Italy’s Fiat SpA, the union said on Monday.

<p>Canadian Auto Workers (CAW) union president Ken Lewenza speaks to the media in Toronto March 30, 2009. REUTERS/Mark Blinch</p>

Ken Lewenza, president of the CAW, said he kept his bargaining staff on call all weekend on the assumption that Chrysler would want to get back to the bargaining table. The two sides have been working on an agreement that would allow Chrysler to produce a plan that would satisfy Canadian government demands that it prove it can be a viable company.

The government has set an the end-of-April deadline for Chrysler Canada to come up with such a plan, which would qualify it for billions of dollars in long-term government loans.

The CAW said it came “within inches” of a deal with Chrysler a little over a week ago, but the two sides were unable to reach a final agreement.

A Chrysler spokeswoman said on Monday she could not immediately comment on the situation.

“Nobody has contacted us yet in Canada,” Lewenza said, adding that there have been no discussions in four or five days. “So I‘m assuming there is stuff going on in the United States that I‘m not aware of, including the Fiat merger, obviously.”

An alliance between Chrysler, controlled by Cerberus Capital Management LP, and Fiat, is essential to Chrysler’s future, Washington and Ottawa said last week.

The companies said on March 30 they had reached a framework agreement on an alliance.

General Motors Corp and Chrysler are seeking up to $11.5 billion in total loans in Canada to help get them back on their feet. Ottawa and the province of Ontario have agreed only to provide GM with $3 billion and Chrysler with $1 billion in short-term money.

Last Monday, Canada and Ontario, following U.S. government statements on its unhappiness with GM, said that a restructuring plan put forward by GM in Canada did not go far enough.

GM struck a deal with the CAW on March 11 that the automaker said would eliminate nearly $1 billion in retiree-related costs from its books. Those savings come on top of a reduction of more than $7 an hour for each of GM’s approximately 10,000 active Canadian unionized employees.

Lewenza said he talked to GM Chief Executive Fritz Henderson last week and that both agree the CAW deal puts GM Canada’s costs in line with the company’s U.S. operations and with offshore-based automakers in Canada and the United States.

“Fritz came right out and said that the CAW agreement is very competitive, so I don’t know really what’s going on, but I do know that there’s hopefully a meeting going to take place between the provincial and federal governments, the employers, and us, hopefully within the next week or so,” he said.

Chrysler, which has about 8,000 CAW-represented employees, is seeking more concessions than the GM-CAW deal provides.

Ford Motor Co, with about 7,000 unionized employees in Canada, has said it has enough liquidity to survive the downturn, but that it too wants concessions from the CAW that go beyond the GM agreement.

Meantime, Chrysler said on Monday it was set to reopen its Windsor, Ontario, minivan plant, which has been idled since April 1 due to a dispute with a parts supplier. A Chrysler spokeswoman said the company was waiting for confirmation that its Brampton, Ontario, plant, which was closed on April 2 due to the same dispute, would also reopen soon.

($1=$1.24 Canadian)

Reporting by John McCrank; editing by Peter Galloway

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