Chrysler says CAW deal is too pricey: union leader

Reuters News

9/21/2012 1:35:19 PM - Reuters News

By Nicole Mordant

(Reuters) - Chrysler Group LLC and the Canadian Auto Workers had constructive talks on a new contract on Friday, the head of the union said, but remained apart with the automaker complaining the union's template deal was too expensive,

Fiat SpA's Chrysler is the only Detroit Three automaker without a labor contract in Canada after the union reached a four-year tentative deal with General Motors Co. overnight following Monday's agreement with Ford Motor Co.

The Ford deal set the union's bargaining pattern with the other two companies, and Ford workers will vote on it this weekend.

"Today we have had constructive discussions with Chrysler... We are obviously apart in terms of their initial position relative to the pattern," CAW National President Ken Lewenza said.

Pattern bargaining is a CAW tradition under which the first deal reached in negotiations with the automakers becomes the template for deals with the other two. It is meant to ensure that no company has a labor cost advantage over the others.

"Chrysler is still saying the pattern is a little bit expensive, we have to have some discussions about whether we can tweak it or not tweak it. Maybe we can do some things creative," Lewenza said in an interview.

"For example, they look at the C$3,000 signing bonus and say 'Jeez that's a big chunk for us to absorb all at once, and can I be flexible?", he said.

The union, which represents about 20,000 workers at the Detroit Three, has asked Chrysler for a written proposal in response to the Ford deal.

Talks with Chrysler at the master bargaining level, which involve Lewenza, will slow over the weekend because senior CAW officials will travel to Ford's plants in southern Ontario, where workers will vote on their contract.

Sub-committee discussions will continue over the weekend at a downtown Toronto hotel, where talks have taken place for more than a month. Lewenza said he was hopeful of getting a deal "early next week". Earlier CAW secretary-treasurer Peter Kennedy said he would be "very happy if we can wrap this thing up on Monday".

TOUGHEST TALK FROM CHRYSLER

Of the three automakers, Chrysler and its chief executive, Sergio Marchionne, have taken the hardest line on labor costs in Canada, insisting that they must come down to match those of the United Auto Workers in the United States.

The Detroit Three say Canada is the most expensive place in the world to assemble vehicles. Marchionne has threatened to move production out of Canada if labor costs don't come down.

Even so, Chrysler will ultimately have to accept the pattern agreement or face a costly strike that would halt the production of some of the automaker's key products, said Tony Faria, a University of Windsor professor and auto industry expert.

Chrysler's Windsor, Ontario, plant, is the sole source of its minivans in North America, and its Brampton, Ontario, plant, assembles the company's popular Chrysler 300 Series, Dodge Charger and Dodge Challenger sedans. These products make up 15-20 percent of Chrysler's sales, Faria said.

"They can't afford a shutdown of those products. If Sergio Marchionne were to push Chrysler into a strike in Canada all that would happen is that he would lose whatever number of days of production and ultimately end up agreeing to the same deal anyhow," Faria said.

"It is up to him from there what he is going to do, if he is going to follow through on looking at possibly moving some activities out of Canada into the U.S. or Mexico. But he is going to have to make the decision as he is definitely going to have this contract," he said.

Although the Detroit Three's previous contracts expired last Monday night, the CAW said it would continue talks as long as progress was being made. If negotiations falter, it said it would serve 24 hours' notice of a strike.

On Thursday night, the CAW and GM agreed on a deal that adds a third shift and 900 jobs to the "flex" line at its Oshawa, Ontario, assembly plant and creates 100 positions at its St. Catharines, Ontario, engine and transmission plant.

As at Ford, the agreement includes a wage freeze for existing workers for the first three years of the contract. Workers will get a cost-of-living adjustment in the fourth year, and a series of lump-sum bonuses. New hires will start at a lower hourly rate than under the previous contract and take longer to reach the top level of the pay scale.

"Tweaking and meeting the pattern are two different things. I don't want to close the door to (Chrysler's) suggestions but they know how important the pattern is to us," Lewenza said.

Results of the Ford ratification vote should be known by late Sunday afternoon, the CAW said.

(Reporting By Nicole Mordant in Vancouver; Editing by Peter Galloway)