CAW And Chrysler Reach Deal: Marchionne May Get The Last Laugh

Did Ken Lewenza hose Sergio Marchionne and Chrysler? Ask me that a few days ago and I may have said yes. Now that the terms of the CAW and Chrysler have surfaced, I’m not so sure.

A superficial glance at the situation seems to have the scoreboard favoring the CAW. Chrysler agreed to the pattern agreement that includes the $9,000 per worker lump sum payments that Chrysler was dead set against, as well as the return of the COLA payments in Q4 2016. Kenny 1, Sergio 0, right? Not so fast.

Ford and GM all have product and investment guarantees written into their labor agreements. Chrysler’s is noticeably void of them. One of the expected conditions of the agreement was that a third shift would be added at the Brampton Assembly plant that builds the rear-drive Chrysler LX cars. According to the Windsor Star, that didn’t happen

“In Brampton, the CAW could only secure a promise to maintain the two shifts at the plant that manufactures the Chrysler 300, Dodge Challenger and Charger during the life of the agreement. “That plant is incredibly important,” said Lewenza.”

Chrysler will keep the three-shift Windsor plant up and running for the life of the agreement. The minivans are selling like hotcakes in Canada, and dominating in the US minivan market, and Chrysler needs every bit of capacity they can get. Previous reports estimated that further investment in the Brampton plant could add as many as 1,000 jobs and be worth as much as $400 million, but there’s a possibility that rear-drive car production could leave Canada, not for the United States, but Italy.

Here’s the scenario; the next Chrysler 300 and Dodge Charger will use a rear-drive platform that will be utilized across the Chrysler-Fiat empire. Depending on the day, it can be an Alfa Romeo, or a Maserati or an SRT Baracuda. The specific models aren’t as important as the fact that it’s a global platform. And that means products based off of it can and will be built and sold around the globe. Over at Fiat, plants are running at 50 percent capacity and Italy’s economy is in the toilet. Jobs would be brought home, plants could be running at or above the magic 75 percent number and Chrysler sheds the financial burden of assembling cars in Canada.

Meanwhile, the CAW sold 1,000 badly needed manufacturing jobs (the kind they complain are disappearing in Canada) for $9,000 per worker in lump sum payments. Right now, it looks like incredibly short sighted thinking. It may be a “damn good deal” for the current workers at Chrysler, but the lack of any job/investment guarantees likely came as a quid pro quo for Chrysler maintaing the lump sum payouts. What if the CAW agreed to rescind them, in exchange for promises to expand the future of Canada’s manufacturing base?

The odds of that deal getting ratified by workers is about as likely as Sergio not saying “vaffanculo” to Canada and the CAW come 2016.