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Chrysler, auto workers union strike deal
Givebacks by Canadian Auto Workers mark key element of auto maker's survival, but questions remain



April 24, 2009 at 7:29 PM EDT

TORONTO — Chrysler LLC nailed down a key piece of its survival plan in Canada Friday, but the critical issue of a tax dispute with the federal government still hangs over the troubled auto maker.

Sources said Friday night the Canadian Auto Workers union agreed to make ground-breaking concessions to Chrysler Canada Inc. after a week of tense, multi-party negotiations that involved the federal and Ontario governments and Italian auto maker Fiat SpA, the would-be saviour of Chrysler LLC.


The agreement, which slices Chrysler's hourly Canadian labour costs through major union givebacks, won't on its own keep the Canadian unit out of bankruptcy protection.

And the tax dispute between Chrysler Canada and the Canada Revenue Agency over taxes dating back to the days when the company was part of DaimlerChrysler AG is also a sticking point in any Canadian deal to provide Chrysler Canada with more money.

Union officials were set to speak about the deal at 8 p.m. Friday at a Toronto hotel.

Chrysler LLC co-vice-chairman Tom LaSorda said last month the auto maker would shut its operations here if it didn't get a union deal that reduced costs and a letter from Ottawa saying Chrysler wouldn't have to put up any more cash collateral in the tax dispute.

There has been “work on that front” a federal official said, but Canada Revenue would not provide such a blanket assurance.

“It depends on the kind of letter that Mr. LaSorda needs,” the official said, when asked if Chrysler's demand had been met.

One source familiar with the auto discussions said federal government and Chrysler officials are “at the table” trying to negotiate a resolution to the long-standing tax dispute.

But the CAW deal does meet a key demand of the two governments, which are keeping the company alive with a loan of $1-billion. The Canadian governments now require that Chrysler LLC complete a strategic alliance with Italian auto maker Fiat SpA before offering additional loans aimed at financing the company's move to profitability.

The Chrysler agreement will also put pressure on General Motors of Canada Ltd. and its CAW workers to renegotiate a deal they signed last month. Six weeks ago, GM and the union trumpeted a deal that will shave about $7 an hour off its labour costs.

But the federal government concluded that agreement did not cut labour costs deeply enough to ensure GM Canada's long-term competitiveness, and ordered the company to present a new plan with greater reductions in labour costs.

It isn't yet clear what concessions the Chrysler agreement includes.

With heavy pressure from the Obama administration, Chrysler and the United Auto Workers in the United States are reportedly close to a deal that would pave the way for an orderly bankruptcy filing there.

LINK:reportonbusiness.com: Chrysler, auto workers union strike deal
 

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Canada Union Announces a Tentative Pact

Canada Union Announces a Tentative Pact With Chrysler (Update1)


April 24 - The Canadian Auto Workers union said it has reached a tentative agreement in talks with Chrysler LLC.

Union members will give up benefits, including tuition rebates and a car-buying program, said Ken Lewenza, president of the union, at a press conference today in Toronto. Base wages and pensions do not change, he said.


Reaching a deal with the union is crucial for the Auburn Hills, Michigan-based automaker to stay out of bankruptcy. Chrysler needed a labor agreement with the Canadian union as a precursor to an alliance with Fiat SpA, which in turn is a requirement for getting additional Canadian and U.S. loans.

Chrysler hasn’t yet steered clear of a bankruptcy, Lewenza said, adding that the automaker said the new pact would hold up through bankruptcy reorganization.

He said he hopes that Chrysler and Fiat are able to team up as proposed.

The Globe & Mail newspaper reported the agreement earlier.

Shawn Morgan, a Chrysler spokeswoman, declined to comment immediately about the CAW announcement.

Chrysler will cut the third shift at its Windsor factory, Canadian Auto Workers union officials said.

Article Link:Canada Union Announces a Tentative Pact With Chrysler (Update1) - Bloomberg.com
 

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Chrysler LLC Statement

Chrysler LLC Statement in Response to Reaching a Tentative Agreement with the CAW

Windsor, Ontario , Apr 24, 2009 - Employee News

Attributed to Tom LaSorda, Vice Chairman and President:

"We are extremely grateful to the CAW leadership and to its hard-working members for their openness in this challenging environment to create a new strategy that will lead this company on a path to success. We also want to recognize the Canadian Federal and Ontario governments for their energy and efforts in helping to move this great Company forward."

Attributed to Al Iacobelli, Chief Bargainer and Vice President – Employee Relations:

"We deeply appreciate the CAW leadership’s dedication and commitment to the process by reaching this tentative agreement. The negotiation process is never easy, especially in these historically challenging times.

The forthright discussions and final decisions made by the CAW not only benefit the Canadian represented employees, but help to ensure the Company’s future competitiveness. The tentative agreement also helps move the Company one step closer to a partnership with Fiat SpA.

The CAW leadership worked around the clock for its membership to hammer out the details during an extremely complex negotiation. Chrysler management values the hard work of its CAW workforce and appreciates the great lengths the CAW management went to in order to pave the way for the Company's future in Canada."
 

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Workers vote 87 percent in favor of concession deal

UPDATE 2-Canadian workers accept sweeping cuts at Chrysler
Sun Apr 26, 2009 8:52pm EDT



* Workers vote 87 percent in favor of concession deal

* Cuts labor cost by about C$19 an hour

* Deal cuts benefits and time off, but not base wages




TORONTO, - The Canadian Auto Workers union said late on Sunday its members voted 87 percent in favor of a new collective agreement with Chrysler [CBS.UL] that will save the company about C$240 million ($198 million) annually.

The union made the steep concessions in order to try to help the besieged company qualify for billions of dollars in government aid in Canada and the United States and avoid liquidation.


"The reality is this was probably the most difficult and unprecedented time in the history of auto workers," CAW President Ken Lewenza told Reuters.

"We had probably the best turnout at meetings that I can recall in my career," he said. "So, you could sense the anxieties, but you also sense the mood that there will be a day, quite frankly, that we can turn a corner and make progress for our members again."

The deal cuts the overall labor cost of Chrysler's 8,000 unionized Canadian workers by about C$19 an hour.

"We are pleased that the men and women of the CAW have voted to ratify this contract," Al Iacobelli, Chrysler's chief bargainer and vice president of employee relations, said in a statement.

"We appreciate the hard work and dedication that they bring to the job each day."

Workers agreed to the elimination of their Christmas bonuses, their employee car-purchase program, tuition reimbursement, and semi-private hospital coverage, among other items.

The deal also confirms the elimination of the third shift at Chrysler's minivan plant in Windsor, Ontario.

The leadership of the CAW also agreed to work with Chrysler to create a trust fund to pay for retiree health care modeled on a similar fund that the United Auto Workers union approved for Chrysler's U.S. workers in 2007.

The CAW said the cuts were demanded by the company's potential strategic partner Fiat SpA (FIA.MI), which said it would not consider aligning itself with Chrysler otherwise.

A partnership with the Italian car maker was one of the conditions put to Chrysler by the governments of Canada and the United States to make the company viable in order to qualify for the government funding needed to keep it running. Continued...

UPDATE 2-Canadian workers accept sweeping cuts at Chrysler | Industries | Consumer Goods & Retail | Reuters
 

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Canadian Industry Minister Tony Clement Remarks:

Clement Says GM Needs to Restructure to Get Loans (Update1)



April 27 -- Canadian Industry Minister Tony Clement said that the government can’t give long-term loans to General Motors Corp. unless the company restructures, and said that the agreement reached over the weekend between Chrysler LLC and the Canadian Auto Workers union reduces the risk that the company will have to liquidate.

“At the end of the day, we as a government cannot be supportive in terms of long-term loans unless there is a viable restructuring,” Clement told reporters outside Parliament.

Clement also called the agreement between Chrysler and its unionized workers “a step in the right direction. It’s more likely now than before we will come to a resolution that would not involve liquidation.”

LINK:Clement Says GM Needs to Restructure to Get Loans (Update1) - Bloomberg.com
 
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