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Discussion Starter #1
Chrysler threatens to shut all Canadian plants

'We have to close labour gap' Wants $2.3-billion loan from Ottawa

March 12, 2009 7:01 AM

Chrysler Canada threatened to close its manufacturing plants in Canada unless it can drop its labour costs in Canada, resolve a tax dispute here, and, on top of that, get a $2.3-billion U.S. loan from the federal government.

Executives said they'd put up factories in Windsor and Toronto as collateral for the loan, and promised to pay back the loan with interest of as much as six per cent.

Tom Lasorda, Chrysler's president and vice-chairman, said his company's labour cost "all-in" was $75 an hour in Canada - $20 higher than some of the company's competitors here and in its own U.S. operations.

"We have to close the gap," Lasorda said yesterday at the House of Commons industry committee. "As a corporation with manufacturing operations in multiple jurisdictions, we cannot afford to manufacture products in jurisdictions that are not competitive."

But MPs challenged Lasorda's figures, using data given to them earlier this week by the senior executives of Ford, Toyota and Honda, as well as from the Canadian Auto Workers.

Chrysler employs about 9,400 people in Canada. The company says 26,000 jobs at dealerships and distribution networks depend on Chrysler.

General Motors recently concluded negotiations with the Canadian Auto Workers that will see wages and pensions frozen for several years.

About 87 per cent of the GM employees voted to accept the new contract late last night.

Normally, when the CAW signs an agreement with one of the Detroit Three automakers, it becomes the pattern for similar agreements with the other two.

Lasorda said GM has a different kind of workforce - it has more retirees, for example, than Chrysler - and, as a result, the GM deal represents insufficient savings.

"It's unacceptable to us, and we have to break that pattern," Lasorda said.

Chrysler also is unique among car companies in that it's involved in a dispute over taxes with the Canada Revenue Agency. Until that dispute is resolved - and Lasorda said that could take up to six years - the CRA has a $500-million lien on Chrysler's Brampton factory, and also is withholding about $300 million Canada owes Chrysler in GST refunds. Lasorda told MPs that dispute is an impediment to Chrysler's continued investment in Canada.

LINK:Chrysler threatens to shut all Canadian plants

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Discussion Starter #2
Chrysler to Canada: Pay up, or we leave

Filed under: Chrysler, LLC., Canada
Chrysler to Canada: Pay up, or we leave

Chrysler LLC President and Vice Chairman Tom Lasorda spoke to Canadian Members of Parliament during a hearing in Ottawa on Wednesday, and based on the account published by, it seems like it was really just a venue at which Lasorda was able to read off a list of demands from his employers.

They were:

1. The Canadian feds must provide the Pentastar with $2 to $3 Billion USD in bailout loans.
2. The CAW needs to visit the barber to the tune of a 25% reduction in pay and benefits.
3. The Canadian Revenue Agency must essentially surrender in its tax battle against the automaker, taking no additional action against it. Presently, the CRA has a half-billion dollar lien against the Brampton plant and has withheld hundreds of millions more in tax rebates.

Failure to meet these demands means that Chrysler starts killing hostages leaves Canada entirely and moves those jobs to the U.S. or Mexico. Lasorda's exact quote was, "The current success and long-term viability of Chrysler's manufacturing operations in Canada is very much dependent on [those] three critical factors." For his part, it sounds like Lasorda's confident that our neighbors to the north will capitulate, saying he feels the criteria presented can be satisfied, and that "we'll be here for a long time once they are addressed."

LINK:Chrysler to Canada: Pay up, or we leave

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Discussion Starter #3
Canadian Tax Fight

Tax fight imperils Chrysler's survival

March 13, 2009 at 10:35 PM EDT

A $1-billion tax dispute between Ottawa and Chrysler LLC is threatening to derail a global deal that is the centrepiece of Chrysler's survival strategy, sources close to the situation said Friday.

The tax fight has put in jeopardy a plan by Italian auto giant Fiat to take a 35-per-cent stake in Chrysler that the Detroit auto maker is touting in negotiations with Washington and the Canadian government as the key to its future.

A Chrysler collapse would wipe out about 60,000 jobs in North America – 9,400 of them in Canada at three factories and a head office – and cause a cascading collapse of parts suppliers throughout the continent, wiping out thousands more jobs.

Sources revealed for the first time Friday how thorny a problem the dispute has become as Chrysler and its parent, Cerberus Capital Partners, negotiate new loans with the governments and a debt-for-equity swap to try to keep the beleaguered auto maker from collapsing into bankruptcy protection. Fiat is proposing to trade its small car and engine technology for a 35-per-cent stake and management control of the third-largest Detroit car company.

Daimler AG retained a 19.9-per-cent stake in Chrysler when it sold the auto maker to Cerberus in 2007. It is proposing to transfer that stake to Cerberus as part of the debt-for-equity swap.

That transfer can't be done, however, unless the tax issue is settled, the sources said.

“The deal is getting Daimler out of the way so Fiat has a clear lane,” said one source close to the situation. “Daimler and Cerberus, the whole package deal can't be concluded until this tax issue is resolved.”

Putting that issue aside for now is one of three critical agreements Chrysler needs in order to maintain its operations and 9,400 employees in Canada, Chrysler president Tom LaSorda told a House of Commons committee earlier this week in statements that were widely interpreted as a threat to pull out of the country unless the company's demands are met.

But the sources said Friday they understand Mr. LaSorda was simply trying to make sure the governments and the Canadian Auto Workers union were aware of the facts as they negotiate toward a March 31 deadline to meet the terms Ottawa and Ontario are demanding in return loans.

Ottawa has slapped a $500-million lien against Chrysler's plant in Brampton, Ont., and required it to post cash collateral of $335-million while the tax dispute is examined.

Chrysler needs a letter from the Canada Revenue Agency simply stating that it will not be required to provide any more cash, the sources said.

Negotiations are under way to draft the letter and settle the issue quickly.

The Minister of National Revenue has wide discretion in determining how to handle a specific tax case, said Lorraine Eden, a transfer pricing specialist at the business school of Texas A&M University and a former professor at Carleton University in Ottawa.

“In this financial climate, my guess is that keeping the firm afloat and providing jobs will be more important to the Canadian government – and to Canadians – than any tax liability,” Prof. Eden said.

“When there are the conflicting goals of the different branches of government – CRA wanting tax revenues and Ontario Treasury/Industry Canada wanting jobs and investment, the raising tax revenue goals always come second to jobs and investment.”

Chrysler also wants Ottawa and Ontario to provide $2.3-billion (U.S.) in loans and the CAW to agree to trim hourly labour costs by about $20 (Canadian) an hour from their current level of $76.

The deal the CAW approved with General Motors of Canada Ltd., earlier this week does not cut labour costs by that much and thus doesn't work for Chrysler, Mr. LaSorda said on Wednesday.

The cuts are worth between $7 and $7.30 an hour, sources familiar with the GM agreement said Friday.

Chrysler needs the $20 cut to match concessions its workers in the United States are making, sources said, and they add that the lower value of the Canadian dollar versus the U.S. dollar should not be factored into the equation as it appears to be in the GM deal.

The GM agreement extends the current contract and its wage freeze one year to 2012, eliminates one week of paid time off, diverts $1,700 in annual bonuses from workers' pockets to retiree health care and freezes cost of living adjustments for retired workers.

Costs could come down if another week of paid time off is eliminated, break times at Chrysler plants in Windsor, Ont. and Brampton, Ont., plants are reduced and the contribution CAW retirees make to their health care is increased, the sources said.

Ford Motor Co. has also indicated that the GM agreement is too rich, which means both companies are resisting one of the fundamental tenets of labour negotiations in the auto industry – that a deal reached by a union with one of the Detroit Three sets the pattern for all companies.

“The GM-CAW agreement will not deliver sufficient labour cost savings compared to auto manufacturing operations in the United States,” Joe Hinrichs, Ford's vice-president of global manufacturing and labour affairs, said in a statement.

Ford officials reiterated that stance in what CAW president Ken Lewenza called “a very frank discussion” Friday. “The facts of the matter are we have a pattern agreement in place and the CAW will not break the pattern,” he said. Tax fight imperils Chrysler's survival

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Discussion Starter #4
Chrysler Canada (long)

Executives’ testimony before Canadian parliment committee

Posted Monday, Mar 16, 2009, 9:59 am in Company Employee News

The following is the text of testimony given by Chrysler Vice Chairman and President Tom LaSorda and Chrysler Canada President Reid Bigland before the Canadian parliment last week:

Chrysler Canada
Submission to Automotive Sub-Committee
March 11, 2009

Mr. Chairman,

On behalf of Chrysler, we welcome your invitation to meet with the members of this Sub-Committee on the Canadian Automotive Industry. There is no question that these are very challenging times for the global economy, the automotive industry and Chrysler Canada.

This evening, Mr. LaSorda and I would like to provide you with an overview of Chrysler’s operations in Canada and then speak about:

• Critical Factors to our Competitiveness in Canada
• Future Canadian Plans
• Restructuring and Long-Term Viability Plan; and
• The Fiat Alliance.

Following our remarks, we will be happy to answer any questions from the Committee Members.

Overview of Chrysler in Canada

Chrysler Canada is headquartered in Windsor, Ontario and has a significant presence in Canada and impact on the Canadian economy.

Chrysler operates vehicle manufacturing facilities in Windsor and Brampton, Ontario and a Casting Plant in Etobicoke. In addition, we operate an award-winning Research and Development Centre in Windsor in partnership with the University of Windsor. Over the past 20 years, this Centre has led and supported many advanced technology development programs such as propane fuelled vehicles, natural gas powered vehicles and more recently, electric vehicles.

Chrysler Canada also has office or distribution centres in Toronto, Montreal, Calgary and Red Deer. Including Chrysler Financial Operations, our total direct employment for Chrysler Canada is currently 9,400 employees.

There are also 451 dealer locations throughout the country that employ 25,900 people who are exclusively dependant on the sale and servicing of Chrysler products for their livelihood.

From a supplier standpoint, there are 407 supplier locations that provide parts to a Chrysler manufacturing facility. These suppliers employ approximately 50,000 Canadians. Last year, Chrysler purchased $5.5 B of goods from these companies.

Lastly with 13,000 retirees, in total there are approximately 100,000 Canadians either directly or indirectly dependant on Chrysler Canada for their economic well-being.

Chrysler Canada assembles over half a million vehicles a year and sells approximately 230,000 vehicles in the Canadian market. In 2007, Chrysler Canada became the second highest seller of vehicles in Canada, and in the same year, gained more market share and incremental sales than any other vehicle sellers in the country.

With sales revenues of $5 B and manufacturing revenues of approximately $13 B, Chrysler Canada is one of the largest companies in Canada.

The current lack of credit availability in the Canadian market is having a dramatic impact not only on Chrysler Canada, but also on the Canadian economy in general.

In July 2008, prior to the full onslaught of the global credit crisis Chrysler Canada had experienced 23 consecutive months of year-over-year sales growth – an unprecedented event in the history of our company and unmatched by any of the major vehicle sellers in Canada.

Today, Chrysler dealers throughout the country have indicated that upwards of 20% of potential new car buyers are unable to secure financing to purchase a vehicle. Furthermore, lease financing in the Canadian market for many of the automotive manufacturers is currently not available. During the first 6 months of 2008 approximately 50% of Chrysler Canada’s vehicle sales were leased whereas today that number is zero.

Credit for our dealer organization is also under extreme pressure. At a time when the current Bank of Canada interest rate is at an historic low, dealers are experiencing unprecedented increases in the costs associated with “flooring” or financing their new vehicle inventory. Further, it is virtually impossible for a prospective Chrysler dealer to secure flooring which, in turn, results in a drag on the country’s economic activity and prevents the ability for a new dealer to enter into business. It is also very difficult for a Chrysler dealer to secure a mortgage to construct a new facility or finance an amalgamation with another dealer.

The availability of credit is critical for the return of the automotive industry and the Canadian economy to good health. Further, a more stable U.S. economy will also directly impact Chrysler Canada’s success.

Chrysler Canada’s operations are inextricably linked with Chrysler LLC and our United States operations. For example:

• Eighty-five per cent of our Canadian manufactured products are exported to the United States (U.S.);

• Sixty percent of the products sold by Chrysler Canada are produced in the U.S.; and

• Approximately 20 – 27% of Chrysler’s Worldwide Production occurs in Canada.

Therefore, it is unrealistic and improper to examine Chrysler Canada’s operation without consideration for the larger context in which it functions.

Critical Factors to our Competitiveness in Canada

The current success and long term viability of Chrysler’s manufacturing operations in Canada is very much dependant on three critical factors:
• Transfer Pricing Clarity
• Labour Costs
• Government Assistance

Chrysler LLC cannot afford to manufacture products in a jurisdiction that is uncompetitive relative to other automotive jurisdictions.

Transfer Pricing
In the fall of 2007, the Canada Revenue Agency (CRA) issued assessments asserting that, for 1996-1999, Chrysler Canada should have earned greater profits than reported in Canada and, correspondingly, should have reported reduced profits in the United States. When Daimler sold a controlling interest in Chrysler, Daimler agreed to indemnify Chrysler against, among other things, these transfer pricing tax assessments. Under Canadian law, even though Chrysler Canada is duly pursuing challenges to the assessments, the company became obligated to post cash and assets to secure 50% of the assessed amounts. Daimler has stated that it will not pay the indemnity until the contest over the validity of the assessments has been concluded, leaving Chrysler Canada to post the necessary collateral to CRA. This obligation to pay or secure these assessments has severely impacted the Company’s ability to operate at this critical time.

The CRA issue has been referred to a dispute resolution process which includes both the IRS and the CRA and it will determine what the proper allocation of value is between Chrysler’s U.S. and Canadian operations. However, in order to provide Chrysler with the assurance it needs in order to continue to keep Chrysler’s Canadian operations running while this dispute resolution process is underway, Chrysler needs the CRA to provide assurance to Chrysler that during this process, CRA will be satisfied with the existing security provided to it by Chrysler Canada (a lien on our Brampton manufacturing facility and over $335 M of cash collateral) and will not seek additional security until the dispute has been resolved. Once the dispute over the transfer pricing assessments has been concluded, the amount found to actually be due and owing to CRA will be paid by Daimler pursuant to its indemnity obligation.

Labour Costs
Currently Chrysler/CAW all-in labour rates are not competitive. The CAW has been provided alternative approaches as well as a detailed proposal to closing the CAW labour cost gap of approximately $20 per hour (CDN). The labour cost gap is a measure comparing Chrysler/CAW facilities with the Canadian transplants such as Honda and Toyota. It also includes Chrysler/UAW manufacturing operations and transplant facilities in the U.S. As part of the labour cost gap reduction, a 50% reduction of Other Post Employment Benefits (OPEB) is also required. In addition to the considerations outlined herein, it is imperative that the CAW labour cost gap is closed in order to preserve Chrysler’s Canadian manufacturing presence.

Government Assistance
As a result of an unprecedented downturn in automobile demand brought about by the global financial crisis, Chrysler Canada, on December 5, 2008, requested Canadian and Ontario Provincial assistance.

Chrysler Canada requests proportionate support from Canada to what our parent company Chrysler LLC is seeking in the United States on the basis that our two organizations are highly integrated.

In the United States, we requested a $7 B working capital loan to support our short term restructuring and long term viability in a December 2nd, 2008 submission to the U.S. Congress. This request was based on a 2009 Seasonally Adjusted Annual Rate (SAAR) of sales of 11.1 million units. On January 2, 2009 the United States Treasury advanced $4 B of our requested amount and required Chrysler to submit a restructuring plan to achieve long term viability. On February 17th 2009, Chrysler submitted to the U.S. Treasury a viability plan that revised our SAAR projection for 2009 down to 10.1 million units for 2009 and assumed more gradual growth in the out-years. As a result of the continued deterioration in the U.S. market, we requested an additional $2 B in bridge loans beyond the original $7 B.

On December 20, 2008, the Canadian and Ontario governments pledged a C$1 B interest bearing, repayable loan to Chrysler Canada. The governments, recognizing that we are an integrated company and industry, also indicated that they too wanted their support to “be parallel (in form and conditions) and proportionate (in amount) with U.S. support.” To this end Chrysler Canada continued to mirror, where applicable, the restructuring and transformation efforts required of the U.S. Treasury.

Failure to satisfactorily resolve these three factors will place our Canadian manufacturing operations at a significant disadvantage relative to our manufacturing operations in North America and may very well impair our ability to continue to produce in Canada. As a corporation with operations in multiple jurisdictions, we cannot afford to manufacture products in jurisdictions that are not cost competitive.

Future Canadian Plans

As previously indicated, Canada has always been an important manufacturing and sales market for Chrysler. It is significant to note that Canada is the largest vehicle sales market for Chrysler outside of the United States, and that no other vehicle manufacturer has a larger portion of its total manufacturing in Canada than Chrysler.

Currently, Chrysler Canada builds the Dodge Grand Caravan, Chrysler Town & Country and Volkswagen Routan at our Windsor Assembly Plant. As well, we produce the Chrysler 300, Dodge Charger and Dodge Challenger at our Brampton Assembly Plant.

Subject to achieving the three critical factors outlined by Tom, Chrysler envisions a bright future for our Canadian operations.

Specifically, Chrysler Canada intends to continue with current investments in Windsor and Brampton Assembly Plants.

• Windsor investment includes:
o 2008 Minivan program (including domestic right hand drive) = $969 M
o 2008 Windsor Paint Shop = $236 M
o 2009 Minivan - subject to market demands, manufacture vehicles for the international market = $41 M
o 2011 Windsor Assembly Plant products= $153 M

• Brampton investment includes:

We would continue to move forward with the investment for the next generation of Chrysler 300 and Dodge Charger vehicles at our Brampton Assembly Plant beginning in the 2010 calendar year. These platforms would also be adapted for international markets, including right hand drive production.

o Total investment for the 2008 Dodge Challenger program = $332 M
o Total program investment for the 2011 Brampton products = $1.056 B

Restructuring and Long-Term Viability Plan

Since Cerberus Capital Management assumed a controlling interest in Chrysler in August 2007, Chrysler took immediate action to redesign its business model, enhance its product portfolio, and create a more competitive cost structure.

We were on target with our transformation plans until the liquidity crisis hit. We were unable to access credit for our customers and our dealer network last summer.

As a result, Chrysler undertook significant actions to reduce operating costs.

• Fixed costs were reduced by $3.1 B.
• Our workforce was reduced by 32,000 employees.
• Our manufacturing capacity was reduced by 1.2 million units by cancelling 12 manufacturing shifts and closing two manufacturing plants.
• Discontinued four vehicle models.
• Sold $700 M in non-earning assets.
• Closed the Vancouver, Winnipeg and Moncton distribution centres.

In addition, all our key Chrysler stakeholders were required to make concessions to ensure the long term viability of our company. We are continuing our restructuring initiatives through our Viability Plan which calls for concessions by all stakeholders to be implemented by March 31, 2009.

They include:

Executive/Management Concessions
Chrysler will fully comply with the restrictions established under section 111 of the U.S. Emergency Economic Stabilization Act relative to executive privileges and compensation. In addition, the company has suspended 401k match, performance bonuses, merit increases and eliminated retiree life insurance benefits.

Dealer Concessions
Chrysler will achieve cost savings and improve cash flow through a number of initiatives including reduced dealer margins, elimination of fuel fill reimbursement and reduction in service contract margins. These concessions represent over $30 M annually from our Canadian dealers alone.

Union Concessions
As previously indicated, discussions are currently underway with the CAW. In the U.S., the term sheets for the Labour Modifications and Voluntary Employees’ Beneficiary Association Modifications fundamentally comply with the requirements of the U.S. Treasury Loan and once realized, will provide Chrysler with a workforce cost structure that is competitive with the transplant automotive manufacturers.

Supplier Concessions
The Company has initiated a dialogue with its suppliers and believes that it will be able to obtain substantial cost reductions.

2nd Lien Debt Holders Concessions
The holders of the 2nd Lien Debt have expressed a willingness to convert 100% of their debt to equity.

Current shareholders have also indicated a willingness to relinquish their current equity position to support our Viability Plan.

Additionally, the viability plan includes a further reduction of outstanding obligations from certain creditor groups by $5 B. In addition to strengthening the Company’s balance sheet for the long-term, this reduction will also provide immediate cash flow via interest savings of between $350 M and $400 M annually.

Finally, although it is critical that Chrysler dramatically reduce its operating costs in an effort to weather this unprecedented downturn in automobile demand, an organization cannot solely cut its way to prosperity. That is why we are also investing in ways to transform our company into a more competitive organization by:

Investing in Quality

• 2008 Warranty Claims were down 30%
• 2008 Chrysler had the fewest vehicle recalls in company history
• 2008 Chrysler had the fewest vehicle recalls in the industry

Investing in Fuel Efficiency
• $3 B invested in new fuel efficient vehicle platforms.

Investing in New Products
• 24 product launches over the next four years

Investing in Green Technology
• Five Electric or Range Extended Electric vehicles developed. The first vehicle is forecasted to be production ready in 2010 with others available by 2013.

Fiat Alliance

Chrysler LLC currently has over two dozen joint ventures and partnerships in place. We have publicly stated on many occasions that it is our intent to seek the benefits of global partnerships and alliances. Chrysler has signed a non-binding agreement to pursue a strategic alliance with Fiat which represents an attractive opportunity for significant strategic and financial benefits.

The proposed Fiat alliance would enhance Chrysler’s restructuring plan, provide Chrysler with substantial cost saving opportunities and provide Chrysler with distribution capabilities in key growth markets.

The proposed Fiat alliance would also further help Chrysler achieve fuel economy improvements as Chrysler gains access to Fiat’s smaller, fuel efficient platforms and powertrain technologies. Given that the Canadian marketplace is 42% small and compact vehicles this arrangement would provide a disproportionate benefit to Chrysler Canada and its dealers.


Thank you again for providing us with the opportunity to present at this Sub-Committee hearing. Chrysler LLC and Chrysler Canada are fully aware that the loan we are requesting of the Canadian government and Canadian taxpayers is substantial.

However, the investments we will make in Canada are also substantial. Furthermore, we strongly believe that the governments fully collateralized loan will also deliver a positive return for Canadian taxpayers.

Note: All references noted above to currency are in US dollars, unless otherwise stated.

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Discussion Starter #5
Chrysler Seeking To Cut Canada Hourly Compensation Costs

UPDATE:Chrysler Seeking To Cut Canada Hourly Compensation Costs

March 17, 2009: 06:11 PM ET

DETROIT- Chrysler LLC, racing to secure billions in low-interest loans from the U.S. government, could shut its Windsor, Ontario minivan plant and pull other production out of Canada unless it hammers out a deal to cut union workers' compensation by as much as 25%, people familiar with the negotiations said.

The auto maker, which has held informal discussions with the Canadian Auto Workers union, wants to reduce the total hourly compensation packages - including benefits - to $45 (C$57) an hour from its current rate of $60, according to two people familiar with the discussions. Chrysler is studying its ability to transfer all of its production out of its Windsor minivan plant if a new accord can't be reached. It would take the auto maker about two weeks to shutter the plant once the move starts.

Chrysler needs to meet a March 31 deadline of submitting the U.S. Department of Treasury with a list of its agreed-to cost-cutting actions by its unions, suppliers, executives and dealers in order to access another $5 billion in low- interest loans to keep its operations running and avoid filing for bankruptcy. General Motors Corp. (GM) is also under the same deadline as it looks to secure another $16.6 billion in funding.

The CAW quickly ratified a new accord with General Motors on March 11 that freezes but doesn't cut base wages for its members and pension payments for retirees. Both Chrysler and Ford Motor Co. (F) have been critical of the deal while the CAW is hoping to use it as a pattern for its talks with the other auto makers. The CAW has yet to announce the start of formal discussions with Ford or Chrysler.

But the deal doesn't address Chrysler's wage gap with the other auto makers operating in the region or lower the overall costs of running plants in Canada especially when the United Auto Workers in the U.S. have agreed to a total compensation package, including benefits, of $49 an hour, the sources said.

Chrysler is also open to reducing benefits rather than actual wages. For example, the out-of-pocket expense for health care for a CAW member is $672 while a UAW worker is paying $1,125. Other differences between the UAW and CAW agreements include UAW members receiving a maximum of five weeks vacation while CAW members get six weeks, according to the sources. The UAW has also agreed to a two-tier wage system in which new hires start at lower wages. The CAW doesn't have a two-tier system.

"We are engaged in a process of information sharing and exchange with both Chrysler Canada and Ford Canada, so that both sides can better understand each others' positions and accurately measure our current situation," CAW President Ken Lewenza said in a written statement. "It is essential that this process continue, and we will continue to negotiate with these two companies in a respectful and confidential manner."

LINK:UPDATE:Chrysler Seeking To Cut Canada Hourly Compensation Costs

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Discussion Starter #6
Canadian Chrysler Built VW Routan

Tuesday, Mar 17, 2009

Routan is result of Volkswagen, Chrysler alliance

Volkswagen’s newest minivan is now on the market – you know, the one promoted by the silly Brooke Shields TV commercials in which she suggests that the women in the ads are having babies just so they can buy a van.

To a number, everyone I know who has seen the ads has groaned over them, including some in the auto industry already concerned about the stigma minivans have developed because of their mom-mobile image.

As bad as those ads are, people at least are noticing them, which I suppose is a good thing. As the old saying goes, there is no such thing as bad publicity.

Volkswagen rolled out the Routan, its first minivan for North America since discontinuing the Eurovan in 2003, at last year’s Chicago auto show, and it went on sale this past fall.

It’s not a Volkswagen product, however. The leading minivan maker, Chrysler, assembles the Routan at its plant in Windsor, Ontario, in a shared-platform arrangement that is common in today’s automotive manufacturing environment.

Instead of developing a van of its own – a process that could cost $1 billion or more – Volkswagen chose an alliance with Chrysler, which likes to bill itself as the inventor of the minivan.

But it actually was Volkswagen that introduced the minivan concept to U.S. consumers with its VW Microbus of the middle 20th century, even though Chrysler is the automaker that developed and made a mass-market success of the modern minivan, beginning with the introduction of the 1984 Dodge Caravan.

Never a great seller, the VW Bus nevertheless is a well-known icon of American culture, as it became the symbol of the hippie/peace/free-love movement of the ’60s and ’70s.

The 2009 Routan is nothing like the original Microbus, however. It’s quite in the same modern vein as the current crop of Dodge Grand Caravan and Chrysler Town & Country minivans, using the same underpinnings.

It does have some of its own unique exterior and interior styling elements, however. And Volkswagen insists that the chassis was "retuned to European driving standards."

Our tester, the midlevel SE version (base price $29,600 plus $690 freight), performed just as though it were one of the Chrysler vans, though, and that’s not a bad thing at all. Chrysler has been selling hundreds of thousands of its minivans each year for the past 25 years for good reason – its vans (at least the newer ones) are quite good products.

Although the Routan is not a real VW, it was added to the company’s U.S. lineup to help Volkswagen of America achieve its goal of moving from its current roll as a niche vehicle marketer here, with sales of fewer than 230,000 vehicles last year, to more than 800,000 a year by 2018.

It can be argued, however, that the Routan isn’t quite as good as the current Grand Caravan or Town & Country, despite prices that are somewhat above those of the Grand Caravan.

Routan base prices range from $25,200-$38,500, while Grand Caravan’s run from $24,480-$28,575. The Routan apparently is positioned more like the Town & Country, which ranges from $26,680-$36,780, or the leading import minivan, the Honda Odyssey, whose prices go from $26,355-$41,105.

Chrysler did not opt to share all of the special features of its newest minivans with Volkswagen, however. The Routan, for instance, does not offer the swiveling middle-row seats that the Chrysler vans offer, which allow the two rear seats to face each other.

Volkswagen, though, not Chrysler, pioneered that arrangement. The arrangement of two rear seats facing each other and a table in the middle was offered in many of the early VW Bus models, and there were VW Microbus campers that even had beds, a pop-up top, a refrigerator and a cook stove.

Unlike the early VW Microbus models – also known as Transporters or Type 2 Volkswagens – the new Chrysler-built models do not have a rear engine. As with the Eurovan and, of course, the Chrysler/Dodge minivans, the engine is up front.

Powering my SE tester was a 3.8-liter, 197-horsepower, V-6 with 230 foot-pounds of torque. This engine also is used in the base S model, but the top-of-the-line SEL model comes with a 4.0-liter, 251-horsepower V-6. Both engines are made by Chrysler, not Volkswagen.

The engines are connected to a six-speed automatic transmission. The lower-powered engine actually has the worse fuel economy than the other one, however. Our tester was EPA rated at 16 mpg city/23 highway, while the 4.0-liter engine has ratings of 17 city/25 highway.

There is room for up to seven people. It has a pair of bucket seats in the front and middle rows, and a three-person bench in the rear. That rear seat can be flipped over to face to the rear for a tailgate party, so people can sit there with their legs dangling out the back – but not while the vehicle is moving.

Power windows/heated outside mirrors/door locks with remote are standard on the Routan SE, along with antilock brakes, electronic stability control, three-zone manual air conditioning, eight-way power driver’s seat, four-way manual front passenger seat, AM/FM/six-disc DVD-CD player with auxiliary jack, leather steering wheel with audio controls, dual front glove boxes, second- and third-row retractable sunshades, and power rear quarter windows.

Safety features include front seat-mounted side air bags and side-curtain air bags for all three rows, as well as a tire-pressure monitoring system (useful during our test driving – see below), and child-seat LATCH anchors.

There were power sliding passenger doors on both sides, but I was disappointed that the heavy, one-piece rear hatch still had to be manually operated. Power would have been nice there, as well – particularly because when the hatch is open all the way, it’s hard for shorter people – especially the women in my family – to reach.

There was another issue with the vehicle, as well – trying to get to the spare tire after having to pull off on a busy freeway with a flat tire. Luckily, I was close to an exit where there was a tire store when the tire went flat.

But even there, it took the employees at the store about a half-hour to figure out how to get the temporary spare out from under the middle of the vehicle – even using the owner’s manual.

Because women are the primary operators of minivans, and VW obviously is pitching this vehicle to young women with small children, the Routan should be fitted with run-flat tires. At the very least, the spare should be easily accessible.

The only options on our tester were a "trim pack" ($1,985), which added a sunroof, power-adjustable pedals, black roof rails and a self-adjusting rear suspension; and heated front seats/remote starting ($445).

Total sticker was $32,720, including freight and options.

LINK:Routan is result of Volkswagen, Chrysler alliance | G. Chambers Williams III |

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Discussion Starter #7
Chrysler already working behind the scenes to pull out of Canada

Article published March 17, 2009

Sources: Chrysler already working behind the scenes to pull out of Canada

TORONTO — Sources familiar with Chrysler's plans say the automaker has already begun work behind the scenes to pull its operations out of Canada if it can't reach an agreement with the Canadian Auto Workers by the end of the month.

Chrysler Canada has said it needs to cut its labor costs by approximately $20 an hour to be competitive with foreign automakers such as Toyota.

Currently, the company estimates its all-in hourly labor costs — which include wages, benefits and legacy costs such as pensions — to be approximately $76. To be competitive with Toyota plants operating in Canada, it says it needs to reduce those costs to $57 an hour.

Chrysler president Tom LaSorda told a parliamentary committee last week that the company may not be able to continue operating in Canada if it can't reduce its labor costs enough to be competitive.

A source familiar with Chrysler's labor objectives said the company has already started considering "alternative locations with more competitive cost structures" for its Canadian operations, which employ about 10,000 hourly workers at assembly plants in Brampton, Ont., and Windsor, Ont., and a casting plant in Toronto.

"There is very real and significant risk to good paying automotive jobs in Canada, at least as it stands for Chrysler, if in fact (the CAW) continues to hold onto this 1930s vestige of economic pattern bargaining," the source said.

Tony Faria, co-director of the automotive research center at the University of Windsor, said that Chrysler could move its minivan production from Windsor to a plant in St. Louis that produced minivans until it was mothballed last year.

And the company could move production of the Chrysler 300 sedan and Dodge Charger and Challenger muscle cars, currently built in Brampton, to plants in Michigan or Mexico that produce similar-sized cars.

However, Faria said the process of terminating all Canadian employees and mothballing its plants would prove a "costly undertaking" for the company, particularly if it factors in the number of Canadian consumers who will boycott Chrysler products if it does pull out of the country.

"It's not an unreasonable threat that Chrysler is making because they can do what they say they might do, but it's something I do not believe they in any way want to do," Faria said.

He added that Chrysler will probably only pull out of Canada if it can't get anything close to what it's asking from the CAW and therefore can't reach an agreement in time to get the government aid it has requested. However, he said that even if the company and the CAW manage to reach an agreement, Chrysler could pare back its Canadian operations if it doesn't feel it got a good deal.

"I think it might not be unreasonable to presume that if Chrysler doesn't get a good labour deal in Canada, we could be seeing the end of any Chrysler future investments in Canada," Faria said.

"We would see no further money going into Brampton and... we'd probably see Brampton close at some point down the road."

CAW president Ken Lewenza has said there is no way the union will give more to Chrysler than it gave to General Motors Canada in negotiations earlier this month.

Chrysler estimates the agreement with GM, which was ratified by CAW members last week, cuts that company's labor costs by approximately $7 an hour — an amount LaSorda characterized as "unacceptable."

The source said Chrysler Canada believes it can achieve its cost reduction goals without cutting base wages. Instead, the company will look at cutting benefits such as paid time off, unemployment assistance and overtime premiums.

When CAW benefits are compared to those of the United Auto Workers in the U.S., there is plenty of wiggle room, the source said.

For example, CAW employees receive a maximum of six weeks vacation time, while UAW employees only receive five, and CAW workers also receive substantially more break time per shift than their American counterparts.

The source said Chrysler would also consider moving to a two-tier wage structure like that used at its plants in the United States, cutting benefits for retirees and possibly developing a union-administered benefits trust, as well as scrapping other benefits like the company's tuition assistance plan for dependents.

Chrysler Canada must submit a finalized restructuring plan, including a new labor contract, to the federal and Ontario governments by the end of March in order to receive the roughly US$2.3 billion in aid it has requested.

The company has said that if it can't reach an agreement with the CAW it won't receive government aid, thus forcing it to close its Canadian operations. --

Premium Member
230 Posts
...oh, so i thought that they wouldn't even sell anything here anymore if they pulled out...

lets hope that they get this fixed!

CAW: wow

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Discussion Starter #9
CAW to start concessions talks today

Chrysler, CAW to start concessions talks today

Posted Monday, Mar 23, 2009, 1:14 pm in Employee News

The Canadian Auto Workers union said it plans to begin talks today with Chrysler LLC on possible worker concessions.

Automakers seeking Canadian federal and Ontario provincial government support must reach cost-cutting agreements before March 31 to qualify for the money.

The CAW reached a deal with General Motors Corp. on March 8, and workers ratified it March 11.

“Getting to the bargaining table with Chrysler has taken longer than expected,” union President Ken Lewenza said in a statement. “But the CAW fully expects to get the process back on track and work towards reaching an agreement with Chrysler that will secure jobs here in Canada.”

In a statement, Chrysler said, “We look forward to a constructive dialogue with the CAW as we enter this important phase of our discussions.”

The Canadian union has said it wants Chrysler and Ford Motor Co. to agree to the same terms. But Chrysler and Ford have said the GM worker concessions don’t go far enough to make them competitive.

Ford isn’t seeking Canadian or U.S. government aid. However, it wants to renegotiate its CAW labor agreement to be more competitive and bring customers back into showrooms.

The CAW represents about 8,000 workers at Chrysler plants and offices in Windsor, Ontario, Brampton, Ontario, and Toronto.

In the U.S., talks involving GM, Chrysler and the United Auto Workers union reportedly are going slowly because of a lack of a deal on concessions by debtholders.

GM and Chrysler are nearing a March 31 deadline to get concessions from the union and debtholders as they try to finish restructuring plans required under the terms of their U.S. government loans.

GM and Chrysler are living on $17.4 billion in U.S. government loans and have requested $21.6 billion more. The Obama administration’s autos task force will make the final decisions on the loans as it tries to restructure the troubled U.S. industry.

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Discussion Starter #10
Breaking Chrysler News-CAW Talks Update

Breaking Chrysler News-CAW Talks Update

Posted Saturday, Mar 28, 2009, 2:10 pm in Company, International

Chrysler LLC Statement Regarding CAW Talks Attributed to Al Iacobelli, Chief Bargainer:
“We all recognize that we are in unprecedented times as it relates to the global economy and current financial crisis, which has a direct impact on the automotive industry. After several days of bargaining in good faith, Chrysler and the CAW have not reached an agreement that closes the competitive gap with other automobile manufacturers in Canada, to ensure Chrysler’s immediate viability.

The Company has been very clear in its Canadian Government testimony and position with the CAW: we must ‘close the competitive gap’ of $19 an hour immediately, with a goal of not having to affect base wages and pensions; while contributing to Chrysler’s viability with direct annual savings to the bottom-line in the current year, and each of the remaining years of the contract.

Although we made progress toward ‘closing the gap’, significant issues related to the existing ‘pattern’ remain on the table. These are not normal business circumstances and all Chrysler constituents have been asked to ‘break pattern’ - employees, retirees, dealers, suppliers and others. These requests have been made to all of our constituents, including the CAW, to ensure Chrysler’s viability.

We continue to engage with the CAW to resolve these issues in a responsible manner.”

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Discussion Starter #11
GM back in top sales spot

GM back in top sales spot

Company sold 24,867 vehicles in Canada last month

April 2, 2009

General Motors Corp. has reclaimed its number one sales spot in Canada from Chrysler LLC as Canadians punished Chrysler for threatening to pull its manufacturing operations out of the country, an industry consultant said.

GM sold 24,867 cars and trucks in Canada last month, surpassing Chrysler's 15,846, according to data from DesRosiers Automotive Consultants in Richmond Hill, Ont. Ford Motor Co. grabbed second spot, selling 17,021 vehicles.

In February, Chrysler bumped GM off its perch as Canada's top-selling auto maker, marking a historic redrawing of the country's auto hierarchy. It was the first time since 1949 that GM has been outsold by a rival.

"We are now back to a more normal world in terms of corporate order," Dennis DesRosiers, president of the consultancy, said Wednesday. "Dealers tell me that the buying public reacted very poorly to the threat to leave Canada and this likely cost Chrysler some volume."

Tom LaSorda, Chrysler's president, warned Canadian lawmakers earlier this month that Chrysler would pull its manufacturing operations out of Canada if it fails to win $2.3 billion USin government aid and secure a radically new labour contract with the Canadian Auto Workers union that cuts all-in costs by $19 an hour. The company said it was preparing contingency plans to move production if it was unable to secure those terms.

The federal and Ontario governments this week offered Chrysler $1 billion, to stabilize its Canadian operations.

In percentage terms, Chrysler Canada sales fell 23% in March over the same month in 2008, the same as declines posted by Toyota Canada and Honda Canada. GM sales fell 17.3%.

New vehicle sales for the industry overall fell 15%, better than previous months when sales were down in the mid 20% range.

Honda Canada Inc., whose Civic car has been Canada's top-selling automobile for the past decade, cast a positive light on its dismal performance.

"Our March results, although down from last year's record results, are only off by 13% over the last five-year sales average," Honda Canada vice-president Jerry Chenkin said in a statement. "We are encouraged to see that showroom traffic at our dealerships in March was up over the previous months, and that consumer confidence is showing a gradual upswing."

Nissan Canada said its sales fell 8.8%. Hyundai Canada, which is selling models under $10,000 at 0% financing, saw a 26% sales gain.

Industry-wide sales declined for the fifth straight month, mirroring a volume collapse in the United States. GM and Chrysler, subsisting on more than $17.4 billion US in government loans, will be forced into bankruptcy by June if they cannot make deeper cuts to become viable, the U.S. government said on Monday.

The sales environment is so weak Toyota is now offering 0% financing on its Canadian-built models for the first time in its history, and a program that protects customers in the event they lose their jobs. The company is urging the federal government to act quickly to jump-start sales and boost confidence, saying it could implement a temporary sales tax holiday to get people back into showrooms.

Kia, which is also offering a return program, said its March sales in Canada rose 13% over the same month last year. Audi Canada reported a 25% sales increase for March, proving there is still appetite for certain luxury models.

The sector consensus is that Canadian auto sales will fall 10% this year from 2008, representing 200,000 units lost.

But it could get much worse. Canada could experience the same 42% peak-to-trough auto sales decline hitting the United States. In that scenario, Canadian auto sales would tumble from 1.7 million units to 1 million, worth $20 billion of taxable revenue.

LINK:GM back in top sales spot
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