The Truth About Cars » contract negotiation 2012 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Tue, 15 Jul 2014 13:19:48 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » contract negotiation 2012 CAW Workers Ratify Chrysler Agreement As The Countdown To 2016 Begins Mon, 01 Oct 2012 14:19:49 +0000

Workers at Chrysler plants in Windsor and Brampton, Ontario ratified the CAW’s labor agreement by an overwhelming majority, despite a lack of new product or investment at either plant.

A new paint shop and a third shift at the Brampton Assembly Plant were rumored in the run-up to the deal, but neither materialized. While current jobs are protected under the agreement, what happens after its expiration at the end of 2016 is now the question on the minds of everyone from plant workers to industry observers.

When we last left off, I put forward the theory that Chrysler could move production of the LX cars to Italy, alongside the rumored baby Jeep that is thought to be part of their plan to export Italian-built cars to North America. TTAC readers suggested that this was a stretch, and the more likely candidate was Mexico. This isn’t out of the realm of possibility, but the question of “what will be built in Italy?” is a big question mark staring us all in the face.

In the mean time, CAW President Ken Lewenza will pursue his “National Auto Policy“, which demands that the government devalue the Canadian dollar, suspend free trade talks with Japan and South Korea and take equity stakes in OEMs. When the CAW’s Auto Policy initiative was first floated back in April, The Globe and Mail dubbed it “retrograde“, and some of its tenets, like devaluing Canada’s currency, seem totally implausible to the point where it’s difficult to take the proposal seriously. At best, it’s merely a distraction from the lack of meaningful gains with Chrysler in the areas of product and investment. At worst, it’s a foolish idea with little grounding in reality that will only serve to expedite the process of sending jobs abroad.

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CAW And Chrysler Reach Deal: Marchionne May Get The Last Laugh Thu, 27 Sep 2012 12:30:15 +0000

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.

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Fiat Confirms Italian Built Exports As CAW Deal Expected Today Wed, 26 Sep 2012 15:09:10 +0000

With a CAW labor contract expected to be announced today, Fiat has confirmed that cars built in Italy will be exported to markets like the United States, as Fiat looks beyond its ailing home market for growth.

While specific model plans for the exports weren’t announced, the rumor mill has included everything from domestic Fiat models to Chryslers and unreleased compact Jeeps. Reuters reports that Fiat plants in Italy are running at around 50 percent capacity, well below the 75 percent needed for a plant to make economic sense. On the other hand, Chrysler plants in North America are running at full capacity. TTAC readers with experience in automobile manufacturing – I know you’re out there – please lend us your expertise on this matter. Would Chrysler be able to take a plant making Fiat Pandas and tool it up for Chrysler LX cars in a relatively short time frame?

Meanwhile on our shores, the CAW and Chrysler are apparently close to a deal, with CAW President Ken Lewenza telling The Globe and Mail

“I absolutely think it’s possible…There’s still some very, very minor issues around the pattern that have to be dealt with. We’re going to keep working at it over the course of the day.”

Given Chrysler’s tough talk, and the insistence of industry experts that an agreement between the two sides would have to follow the “pattern” set by Ford and GM (much to the displeasure of Chrysler), the agreement, when announced, is going to be very interesting – but not as interesting as what Sergio will decide to do afterwards.

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CAW Workers Ratify Ford Agreement, No Deal With Chrysler Mon, 24 Sep 2012 14:38:52 +0000

CAW members ratified an agreement with Ford with 82 percent in favor of the four-year labor deal that brings an overhaul to the automaker’s pension plan for assembly plant workers, and extends the new hire wage climb process.

GM workers will vote on their contract later this week, while Chrysler remains the sole automaker to still be negotiating with the CAW.

CAW President Ken Lewenza told the Windsor Star that a deal with Chrysler “…should not take more than five or six days…” to be hammered out. As of Monday morning, there was no indication of an imminent agreement. The rumormill suggests that Chrysler is unhappy with the signing bonuses and COLA payments that are a part of the “pattern agreement” with Ford, with the Star saying

Chrysler informed the CAW Friday that the Ford pattern was too expensive. It is particularly opposed to the reinstatement of the cost of living allowance in the last quarter of the four-year deal, which expires September 2016.

The company doesn’t like COLA because it is a fixed cost that kicks in regardless of profitability, and compounds and adds to wage rates over time.

While Chrysler CEO Sergio Marchionne has previously discussed moving production out of Canada if the CAW doesn’t agree to a UAW-style two-tier wage system, doing so, according to the article, would cost about $2 billion.

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Editorial: Did The CAW Swindle Sergio? Fri, 21 Sep 2012 21:45:18 +0000

As the Friday workday winds down, we’re still without an agreement between the CAW and Chrysler. Ford and GM are waiting on ratification by the CAW members at their plants, and it’s looking more and more like Ken Lewenza and the Canadian Auto Workers were able to outmaneuver Sergio Marchionne.

In the run-up to the talks, Marchionne’s rhetoric was, to use the old cliché, “tough but fair”. Rather than bluster and grandstand, his remarks about the need to reduce fixed costs were grounded in reality, while also padding his verbal blows with deliberate flourishes of magnanimity, telling The Globe and Mail

“People have got to get it through their heads that I’m not Mr. Scrooge here,” he said…I’ve got to run the business and the business says that, if I do well, I’m willing to distribute that wealth…I cannot institutionalize and guarantee you that wealth.”

Couple that with the enormous goodwill that has accompanied his transformation of Chrysler from a a four-wheeled farce to a serious contender in a number of segments. But, to paraphrase Jay-Z “it was all good just two weeks ago”.

As of 5 P.M. Friday, Chrysler remains the sole auto maker not to have reached any agreement, and from this vantage point, it appears that Marchionne has two options.

  1. Come to an agreement with the CAW, using the Ford and Chrysler agreements as a pattern.
  2. Risk a strike

Ford and General Motors have now effectively set the tone for whatever agreement Chrysler and the CAW reach. The “pattern” is not what Marchionne wants; no permanent two-tier wage system, no profit-sharing, a cut in fixed labor costs that doesn’t go as far as he’d like.

CAW President Ken Lewenza told the Windsor Star that

the union would be pressing for product investment at the two-shift operation in Brampton. “Chrysler has been a very stable company in Canada.”

Chrysler’s Windsor minivan plant is currently operating with three shifts, and adding another one to Brampton would be in line with the GM and Ford agreements, which will add new jobs to the Oakville and Oshawa plant. While those jobs will allow for the re-hiring of laid off workers, added jobs at Chrysler would see the new hires start at reduced wages and entitled to a less generous pension plan. But with Marchionne said to be made of sterner stuff than your average man, the alternative could be a strike – one that could have serious blowback for Chrysler.

With as much as 25 percent of their production located in Canada, a protracted strike would harm the record sales years that Chrysler is having in Canada and the United States. His threats of moving production out of Canada are theoretically possible, but their execution would be difficult. Not only would setting up plants in the United States, Mexico or even Europe (taking advantage of excess capacity) take time and effort, but the optics could be disastrous. Chrysler is at risk of a backlash if plants close and too many jobs are lost. GM and Ford could have a field day painting an ugly picture of Chrysler as a company that cares more about outsourcing than Canadian jobs.

If I had to place a bet, I’d say that Marchionne and the CAW will come to an agreement largely in line with GM and Ford’s agreements. The possibility exists that Sergio would move some production from Canada to another locale, but given the success of the Canadian-built minivans and the possibility for a third shift at Brampton, it’s hard to see where cuts could be made.

As one insider told me last week “every negotiation is supposed to be the biggest, the most tense, the strike to end all strikes…so far it’s never happened”. This round of talks failed to live up to the hype; the coordinated strikes at all three OEMs never materialized, nor did a dramatic confrontation that saw the CAW and Marchionne locking horns.

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GM, CAW Reach Tenative Deal Fri, 21 Sep 2012 13:22:35 +0000

The CAW and General Motors have reached a tentative agreement, sticking closely to the “pattern” set by negotiations between Ford and the CAW.

The GM deal retains many of the same elements as the Ford agreement; a 10 year progression to full wages, a revised pension plan for new hires and lump sum payouts rather than wage increases and cost of living payments.

GM will add a third shift to the Oshawa flex line, add 100 jobs to their St. Catharines, Ontario powertrain plant and keep the Oshawa consolidated line open until 2014, rather than closing it in 2013. 1,750 jobs will be either created or maintained via GM’s actions. GM will also invest $675 million into Canadian manufacturing over the four year term.

In the immediate future, the CAW and Chrysler will have to come to some sort of agreement. Tony Faria, a professor at the University of Windsor and a noted auto industry expert, told the CBC that “Chrysler will agree to the same pattern, very reluctantly”. Faria also noted rather ominously that the end of these negotiations could be the start of the Big Three looking to move production of their vehicles to cheaper locales.

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Oshawa Consolidated Line Looks Set To Remain Closed As CAW Talks Drag On Thu, 20 Sep 2012 14:02:07 +0000

The Windsor Star is reporting that the CAW “has all but given up” on trying to re-open the Oshawa Consolidated line that was closed earlier this year. The Star quotes CAW President Ken Lewenza as saying

“We’re going to keep raising it until the deal is done…But the reality is vehicle production is based on market and market is based on capacity and GM told us they don’t need the capacity.”

The Consolidated line, which built the Chevrolet Impala, and handled some Chevrolet Equinox production, was shuttered as GM sent production of the two vehicles to the United States, where labor costs are cheap (drastically so, in the case of the Tennessee plant which will now build the Equinox).

The CAW is hoping to secure “restructuring benefits”, such as buyouts, for the 2,000 workers on the line. GM apparently promised to abide by the terms of the 2009 bailout, which states that 16 percent of their North American production must remain in Canada – the closing of the Consolidated line means that GM would only be at 13 percent, leaving open the question of where the extra capacity will come from.

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CAW Reaches Tentative Agreement With Ford, Details Announced Mon, 17 Sep 2012 20:19:44 +0000

Ford and the CAW have reached a 4 year collective agreement to Sept 2016. Details from the CAW press conference below.

Under the proposed terms of the agreement, set to last until September, 2016, the CAW will make some concessions; a two-tier wage progression will be extended from 6 years to 10 years (as was rumored), while the cost-of-living adjustement will be jettisoned, with lump sum payments of $2,000 in years 2, 3 and 4 of the agreement, as well as a $3,000 ratification bonus (to be paid within 4 weeks of members ratifying the contract). The COLA adjustment will return briefly in June 2016.

There will be no base wage increase for CAW members, while active members will not see a change in their pension plan. New hires will get a hybrid pension plan similar to that used by Air Canada, that combines elements of both the defined benefit and defined contribution pension plans.

In return, Ford will re-hire the estimated 800 laid off workers from the St. Thomas, Ontario plant, while adding 600 new jobs at their Oakville assembly plant. A third shift will add 230 jobs, while a new vehicle based on an all-new global platform in 2014 will add 300 jobs.

Lewenza will ask GM and Chrysler to accept this agreement as a pattern, and also stated that Toyota and Honda were watching the negotiations closely. As we know, the second half of that statement is a bunch of horse excrement, along with assertions that Korean auto makers are dumping their product on the Canadian market, while denying access to Canadian made vehicles.

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CAW Is “Darn Close To A Deal” With Ford Mon, 17 Sep 2012 19:32:50 +0000

A press conference at 4 P.M. will serve as a sort of half-time update to the looming CAW strike deadline, set for 11:59 P.M. today – but CAW President Ken Lewenza told the CBC that

“We do not have a deal as of right now but … we’re picking away and we are darn close to a deal,” 

A deal with Chrysler and General Motors seems no further in sight at this point, but a report in the Toronto Star claimed that the CAW was open to keeping talks going past the deadline. Lewenza told the Star that Ford’s position was

“Ford isn’t philosophically opposed to anything other than to say, ‘Folks, keep your costs down, keep it manageable, and (then) we can share in the success with the company together.”

From this vantage point, that seems like a classic case of “it’s not what you say, but how you say it.” The Ford party line isn’t too far off from what Sergio Marchionne has tried to get across, albeit in his usual blunt style. A strike would likely hit Chrysler much harder than Ford – an estimated 25 percent of the company’s global production comes from Canadian plants, but Ford only relies on Canada for about 5 to 6 percent of its volume. Chrysler is also a strong seller in Canada, with the Ram pickup and Dodge Grand Caravan ranking highly in the Canadian sales race. Updates to come as the press conference gets underway.

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With A Strike Less Than 24 Hours Away, CAW Focuses On Ford Mon, 17 Sep 2012 12:00:07 +0000

With the CAW’s strike deadline set for 11:59 P.M tonight, the union will apparently focus on Ford as the target for a collective agreement, while also remaining in talks with Chrysler and General Motors.

A failure to get a deal would result in a strike at the Canadian plants of all three auto makers, an unprecedented move by the CAW. Normally, only one auto maker is targeted.

The Globe and Mail newspaper reported that

“Sources said Ford had been the most flexible company all along – including on the key question of a time limit on lower starting wages for new employees – even as it insisted that its hourly labour costs in Canada match those at its U.S. operations. Ford “have clearly told us they want a deal in Canada that recognizes that Canada is a good place to invest,” CAW president Ken Lewenza said Sunday. “I’ve told General Motors and Chrysler that they better show a desire to get a collective agreement before the deadline because our strategy is to withdraw our labour where we don’t have a deal.”

Meanwhile, Chrysler criticized Ford’s Canadian cutbacks (which led to the demise of the St. Thomas, Ontario plant, and the beloved Crown Victoria). A statement by Chrysler noted that “While we respect Ford as a competitor, we do not think they are in the best position to take on this role given the significant reduction in their Canada footprint in recent years.”

While Chrysler and GM are insisting on a permanent two-tier wage system similar to the UAW, Ford is apparently more felixble with this demand, something that CAW President Ken Lewenza said is unacceptable to the union.

For the CAW, a deal with Ford could mean a third shift at the Oakville assembly plant, as well as significant investment for a new global vehicle. There are currently 1,200 laid off workers from the St. Thomas plant that are looking for jobs, and delivering both the agreement and new jobs for its members might be just the kind of victory that Lewenza needs to make the bitter pill of concessions go down easier.

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CAW Official: “There Is No Two-Tier Structure That We’re Interested In” Fri, 14 Sep 2012 17:49:39 +0000

In this episode of Two Steps Forward, One Step Back , the CAW’s Dino Chiodo, chairman of the union’s master bargaining committee for Chrysler and the President of Local 444 in Windsor, appeared to shut the door on a UAW-style two-tier wage structure for new hires.

Chiodo told the CBC

“The company needs to recognize and realize that we are not taking concessions and we will not be going backwards in this round of bargaining…There is no two-tier structure that we’re interested in entertaining whatsoever at this point. It’s just something that’s against our principles.”

While a temporary two-tier structure was something that has been discussed, the comments are particularly pertinent in light of Sergio Marchionne’s frequent comments in the media regarding his desire to bring labor costs down, and his stated willingness to move production out of Windsor and into plants in the United States and other locales.

Of course, given Marchionne’s rhetoric, it’s not unreasonable to expect that the big dogs at the CAW will fire off some of their own comments as well.

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Marchione: CAW Must Come To “Stark Realization” Of The Facts Fri, 14 Sep 2012 14:11:02 +0000

As negotiations between the Big Three and the CAW continue to grind away, Sergio Marchionne had more strong language for the union.

Speaking at a charity event for the United Way in Detroit, Marchionne told Reuters

“The facts are the facts and I think that ignoring them or sweeping them under the carpet is not going to make anybody’s life better…”My sincere hope is that we all come to the stark realization of where we are and then we move it on from here,” 

Marchionne wouldn’t elaborate on his comments, but having already developed a reputation as being the toughest of the Big Three negotiators, Chrysler is likely digging in their heels for a fight – but maybe not a strike.

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CAW Opens Door For Wage Cuts Thu, 13 Sep 2012 15:50:14 +0000

With the CAW’s strike deadline just four days away, the union has apparently tabled a proposal to reduce wages for new hires, a move that would stop short of a true two-tier wage system, but meet a major demand of the Big Three auto makers.

According to The Globe and Mail, New hires at CAW plants currently start at a lower wage for the first six years of their career. The new proposal would extend that period to 10 years, though it wouldn’t implement a permanent two-tier system, such as the one adopted by the UAW.

Auto makers have been demanding that the labor costs for the CAW and UAW reach parity, while the CAW cites a higher cost of living as one of the main factors for the wage discrepancy. While CAW President Ken Lewenza has adamantly opposed a permanent two-tier system, the compromise is a positive sign that averting a strike is in the interests of both parties.

Furthermore, a compromise that impacts new hires, rather than the current rank-and-file, will be an easier pill for CAW members to swallow come ratification time. The Globe also reports that benefits for new hires may be cut back – a move that, if attempted on the current employees, would be poorly received, to say the least.

Now, the only question is, will there be two-tier union dues?

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CAW Leaflet Leaves Door Open For Compromise, Strike Avoidance Tue, 11 Sep 2012 13:00:16 +0000

For all the rhetoric being passed back and forth between the OEMs and the CAW in this round of contract negotiations, the overwhelming feeling from our commenters is that there will be no strike, compromise will be had, and somehow, both sides will play it off as a victory. The latest bulletin from the CAW seems to support that notion.

The CAW published this copy of a leaflet, apparently handed out to the rank and file. The leaflet lists some of the automaker demands, including

 eliminating the 30-and-out pension;
creating a two-tier workforce, mirroring the UAW agreement;
moving to a Defined Contribution pension plan even for current workers;
permanently eliminating the Cost of Living Adjustment (COLA);
further reducing benefits, including access to prescriptions.

The corporations are also refusing to commit to any new investments, which puts members’ jobs in jeopardy. Each
company has also insisted that any reward or bonus will be paid for by additional cuts to other areas of the agreement

Of course, not all of these demands will go through. But the CAW is already covering their own ass as far as compromises go. And we should expect some hefty ones.

The last paragraph continues this theme. Following a bit about how the union has “no intention of making these kinds of deep cuts again,” it reads

“A week from the deadline, anxiety levels are understandably high and rising. The bargaining committees will do
their best to keep members up to date on the status of negotiations. As September 17 approaches, it is increasingly
important that members at all facilities, in all local unions support their bargaining committees. To reach a deal, it’s
crucial that members continue having faith in their elected representatives and support their bargaining committees.”

And then we have the kicker. The one clause that basically undoes the entire (albeit necessary) “rah-rah solidarity” language of the bulletin

“As the landscape continues to shift, the bargaining committees will also strategically shift approaches with the goalof best protecting members’ interests.”

If that doesn’t say “we are totally willing to compromise to avoid a strike/save our jobs/save our plant” then I don’t know what does. There couldn’t be a better example of corporate doublespeak, buried right below a Fox-worthy tract of “us-versus-them” prose that it almost seems ironic.


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Marchionne: Chrysler Has “Other Options” Beyond Canada Mon, 10 Sep 2012 14:01:45 +0000

With the CAW’s strike deadline looming, Chrysler CEO Sergio Marchionne is taking a harder line in the media, pushing his vision of a profit-sharing agreement between Chrysler and the CAW, while boldly stating what everyone knows, but is afraid to say; auto makers have “other options” when it comes to building cars.

Chrysler, in particular, has plenty of unused capacity in Europe, thanks to slow sales of brands like Fiat and Alfa Romeo. On paper, the underutilized European plants could fill in for Canadian factories should things go south, though the logistical realities are much more complex.

Marchionne, along with other automakers, are said to have been pushing for a Canadian labor contract similar to the 2011 agreement between the auto makers and the UAW; labor costs in Canada would be brought to the same level as American plants via a two-tier wage system (with new hires making about 50 percent less than current employees) and a profit-sharing system would replace guaranteed wage hikes. One source at a Big Three automaker told TTAC that the unions are apprehensive regarding profit-sharing, due to fears that a vehicle could flop due to factors beyond their control (such as a botched marketing campaign or a similar screw-up), causing them to lose out on the bonuses.

Speaking to The Globe and Mail, Marchionne was adamant in presenting his proposal as the most equitable solution

“People have got to get it through their heads that I’m not Mr. Scrooge here,” he said…I’ve got to run the business and the business says that, if I do well, I’m willing to distribute that wealth…I cannot institutionalize and guarantee you that wealth.”

Chrysler is looking to add a paint shop to their assembly plant in Bramalea, Ontario, where the full-size LX cars are built. The $400-million investment would add another decade to the plant’s lifespan while adding 1,000 new jobs, but Marchionne is hesitant to invest in the plant given the current climate

“You need to deal with the question of the disparity of the Canadian manufacturing environment and the American one,” Mr. Marchionne said. The question is: Do you commit capital when your overall [cost] structure is higher than it is in the best alternative, which is the U.S.”

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CAW Looking To Add New Product At Ford’s Windsor Engine Plant Sat, 08 Sep 2012 17:09:19 +0000

Conventional wisdom would have it that the CAW is looking to ensure the future of Ford’s Oakville plant. The Flex and Edge are built at the facility, and there has been a heated debate over whether the government of Ontario should invest money into the plant to help secure new product. But according to the CAW, the number one priority for them is a few hundred miles down the road.

The CAW’s Gary Beck told the Windsor Star

“Windsor is the No. 1 priority in our discussions right now,” said Beck, president of CAW Local 707. “We want to make sure all those people on layoff get back to work.”

Of the nearly 1,000 laid off Ford workers in Ontario, 600 of those were from the Windsor plant, and the CAW not only wants to get jobs back for them, but they are hoping to secure some new product, to ensure that the plant is safe from closing. Unfortunately, a revival of the 351 Windsor doesn’t seem to be in the cards.

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CAW May Try New Tactic Of Simultaneous Talks With Automakers Thu, 30 Aug 2012 12:00:47 +0000  

The CAW may abandon their tactic of using negotiations with one automaker as a precedent for other negotiations, and conduct simultaneous talks with Ford, Chrysler and General Motors.

The CAW is holding separate talks with the Big Three automakers in Toronto, and the union is staying mum about a possible “target automaker”, in the apparent hopes that the simultaneous talks are successful. The CAW’s contract expires at 11:59 P.M. on September 17th, and CAW President Ken Lewenza told Reuters that any decision regarding a target company would come at least five days beforehand.

The new tactic isn’t entirely unheard of; the UAW used the simultaneous negotiations move in 2009, though they ultimately settled on GM as their target. Given the incredible tough climate for both the CAW and the automakers, this could be a way for both of them to reach a compromise while mutually saving face. All three automakers are looking to reduce labor costs, while the CAW, at least publicly, is dead set against concessions on the part of the workers.

Speaking to the Windsor Star, Lewenza said that

“If I have it my way, I won’t have to announce a target company…If one of the companies will signal that we can get a deal, if we can get the framework of a deal in the next 10 days and I share that framework with the other companies, there won’t be a need for a target company,” he said.

Given Lewenza’s recent tone (which may be understandably firmer in the run-up to negotiations) this seems fairly pragmatic. And how about this nugget, also reports by the Star

If the companies “agree that workers are entitled to share in their success in a modest way, we can get a deal,” said Lewenza.

What does that mean? An open door for profit sharing…?

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CAW Approves Strike Mandate As Talks Resume Today Mon, 27 Aug 2012 14:59:05 +0000

Members of the Canadian Auto Workers union have voted overwhelmingly in favor of a strike mandate as talks between the union and the Big Three resumed today.

Workers at Chrysler, General Motors and Ford were 99, 98 and 97 percent in favor of striking respectively. The CAW hasn’t gone on strike since 1996, but President Ken Lewenza’s stated promise of no further worker concessions, along with a strong desire to cut costs by the auto makers, will inevitably lead to tough negotiations.

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Chrysler’s “Wildcard” In Labor Talks: Marchionne Thu, 23 Aug 2012 17:13:27 +0000

Chrysler is coming off a strong year sales-wise, but negotiations with the Canadian Auto Workers will force the company to make a tactical decision; should Chrysler take a tough line in an effort to reduce costs, or look for a quick settlement in order to hold off a strike, maintaining their sales hot streak.

All of Chrysler’s minivans and rear-drive cars (such as the Chrysler 300, Dodge Charger and Dodge Challenger) are built in Canadian plants/ With 27 percent of its vehicles made in Canada, a strike would have serious ramifications. In its native market, the Dodge Grand Caravan is a top-selling nameplate,while in the U.S., Chrysler’s double-digit sales gain could be in jeopardy.  Chrysler is thought to be the automaker being target for a strike by the CAW, but other observers feel that the company will take a hard line in negotiations.

Chrysler’s potential “wildcard” (as industry observer put it) is CEO Sergio Marchionne. A report in The Globe and Mail claims that

Mr. Marchionne has been vocal about how wage rates at Chrysler’s Canadian operations are uncompetitive and how Canadian workers need to accept so-called two-tiered wages that provide new workers with pay that’s about half of what established workers earn. The $7-an-hour gap between Chrysler’s Canadian and American plants arises mainly from the wage structure in its U.S. factories. Newly-hired Chrysler workers in that country will earn between $15.78 (U.S.) and $19.28 an hour between 2011 and 2015, compared with $29.11 for established workers…The Canadian plants of the Detroit Three also pay lower wages to new employees, but after six years, those workers are brought up to regular union rates.

Chrysler’s Canadian operations are expected to deliver nearly a third of the company’s $3 billion profit in 2012 alone. Aside from vehicle assembly, a strike at the Toronto-area casting plant would put a major crimp in the company’s production pipeline. But with Chrysler looking to cut labor costs while getting workers to accept a profit sharing deal, it’s tough to predict how the showdown between Marchionne and CAW President Ken Lewenza will go down. If Chrysler is the first automaker to negotiate, the deal will likely set a precedent for future negotiations with the other two domestic automakers.


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Report: CAW Will Target Chrysler For Strike Fri, 17 Aug 2012 14:22:53 +0000

The Canadian Auto Workers union is expected to target Chrysler in the event of a strike, but will reportedly wait until Labor Day before taking action.

CTV News reports that

Tony Faria, an automotive expert at the University of Windsor, predicted Chrysler will be chosen because it has the largest Canadian footprint of the Detroit Three and therefore has the most at stake. “They can least afford a shutdown of operations in Canada, so they’re the most vulnerable in terms of a strike threat,” Faria said Wednesday. “But even though Chrysler is not pushing for two-tiered wages, Chrysler is going to push hard for lower starting wages.”

Canada is home to the plants that build some of Chrysler’s key products, including the Chrysler/Dodge minivans, the Chrysler 300/Dodge Charger and the Dodge Challenger. Canadian sales would be especially impacted in the event of a strike, since Canada is a key market for the Dodge Caravan.

CTV News quotes Faria as saying that Chrysler will probably ask for a further reduction in the starting wage, and an increase in the time it takes workers to reach the maximum wage (from six years to eight years).

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CAW, Auto Makers, Kick Off Talks Thu, 16 Aug 2012 17:11:06 +0000

The Canadian Auto Workers and the Big Three have kicked off labor talks, with the CAW taking a hard line against concessions – a position that some say, could lead to a lack of future in investment in Canadian auto manufacturing.

While the CAW wants guaranteed wage and cost of living increases, the automakers want the CAW to accept a deal similar to what the UAW agreed on; no wage or living cost increases, but workers will be involved in a profit-sharing agreement.

One of TTAC’s Big Three sources, who spoke on the condition of anonymity, said that unions are reluctant to accept the profit-sharing agreement because they are concerned that their efforts at building a high quality car could be bungled by a poor decision made by the marketing team, and the product could fail. In that situation, profit-sharing wouldn’t be much of a help.

The CAW made a number of concessions to automakers during the 2008-2009 negotiations, which occured in the thick of the bailout. The union is hoping to gain some ground over what was lost in previous negotiations, and is demanding that auto makers stop asking for concessions from the workers.

Unfortunately, the CAW is in an especially poor bargaining position; a strong Canadian dollar, high labor costs and a willingness by automakers to close Canadian plants doesn’t give CAW President Ken Lewenza much leverage in terms of negotiating a deal with the auto makers. And botched negotiations could have drastic consequences for the future of Canada’s auto manufacturing sector.

University of Windsor professor Tony Faria, an auto industry expert, told CBC News

“I think if the CAW pushes too hard, we’re going to see no new investment in Ontario from the Detroit 3, if they can work out a deal that is more satisfactory to both sides then I think there’s a chance we can get investment here and retain, and maybe grow some jobs.”


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Chrysler Would Be Hit Hardest In CAW Strike Wed, 25 Jul 2012 17:42:46 +0000

With 25 percent of its manufacturing capabilities in Canada, Chrysler would be hardest hit in the event of a strike by the Canadian Auto Workers union.

An article in the Windsor Star outlining the upcoming negotiations between The Big Three and the CAW describes how Chrysler is most vulnerable to a potential strike by the CAW. Tony Faria, professor emeritus of business at the University of Windsor told the paper

“The minivan is still a very important product, even though the segment is down…For Chrysler, the minivan represents about 10 to 12 per cent of its global sales.”

The Chrysler minivans are built solely at the Windsor plant, meaning a strike would cripple one of Chrysler’s core products in both the U.S. and Canada. Faria also noted that

“Ford, however, wouldn’t have much to lose since it’s producing low-selling vehicles, such as the Edge and Flex, and GM could shift at least overflow production of its hot-selling Chevy Equinox to its plant in Spring Hill, Tenn.”

Of course, this is all assuming there even is a strike. The whole thing could be averted if negotiations between the automakers and the CAW goes well – which is up for debate. The automakers are pushing hard to bring labor costs down to U.S. levels, while the union is looking for wage increases and a cost-of-living-adjustment. Chrysler’s Sergio Marchionne has suggested alternatives, including profit sharing and other lump-sum deals in lieu of wage increases.

Observers, including Faria, feel that Chrysler will most likely be targeted first for negotiations (since the first deal reached with an automaker generally sets the tone for the other agreements), but GM may also emerge as a contender, since the CAW is looking to secure product guarantees for their Oshawa plant. GM CEO Dan Akerson recently claimed that Canada was the most expensive place in the world to build cars.

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GM’s Akerson Asks CAW To Cut Hourly Wage Costs Wed, 13 Jun 2012 18:00:46 +0000

Calling Canada “the most expensive place in the world to build a car right now“, Dan Akerson threw his hat into the “hourly wage costs need to come down” ring at GM’s annual shareholders meeting on Tuesday.

Unlike in the United States, there is no two-tier wage scale for Canadian Auto Workers union members, a decision that prompted GM to close a line at the Oshawa assembly plant, and move production of the Impala and Equinox to plans where workers can make $14 an hour rather than $32 an hour.

GM’s “all-in” labor costs in Canada are estimated to be $60 per hour, whereas the pre-2011 agreement  that GM had signed with the UAW meant that American labor costs pegged at about $56 an hour. Negotiations between the Big Three and the CAW are due once the current labor contracts expire in September. The CAW responded by stating that the strong Canadian dollar and higher labor costs was evened out by increased productivity. GM’s Oshawa plant in particular has a stellar reputation as one of GM’s best plants.

Sparring over things like cost-of-living adjustments has already begun between the two sides, while bonuses based on company profitability are expected to be the biggest sticking point in negotiations.

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A Month Before Talks, Automakers Tell Canadian Auto Workers To Forget About Wage Increases Thu, 07 Jun 2012 14:28:53 +0000

The Big Three sent letters to the Canadian Auto Workers union Wednesday, asking them to forgo a small wage increase as a means of keeping Canadian plants competitive.

The wage hike, known as the Cost of Living Adjustment (or COLA), and represents the first wage increase since 2007. Though it only adds 28 cents to the normal $32 an hour wage, the automakers warn that automatic wage increases like COLA could reduce the competitiveness of Canadian plants, and have suggested lump sum payments and a pay structure tied to company profits.

Talks between the CAW and the Big Three start in July, with some observers suggesting that the unions and the automakers have a long way to go before reaching any kind of common ground. The Big Three are looking to keep their fixed costs in check, with hourly labor costs representing one of the areas that automakers are seeking to keep under control. As a precondition for bailout money from the Ontario and Canadian federal governments, the CAW agreed to freeze COLA as well as their base wage rates until the end of the contract terms signed under the bailout period.

A letter to the CAW from Ford suggested that Canadian plants were operating at a $15 an hour disparity compared to the all-in hourly labor costs at U.S. plants, and a COLA increase would bring that gap to $30. A Chrysler rep said that their plants operated at a $10 disadvantage, while COLA would add another $4.80. CAW President Ken Lewenza dismissed the $30 disparity at Ford as “absolutely ridiculous”. A think tank cited by the Globe and Mail claims that Chrysler has the lowest labor costs in the U.S., at $52 while Ford’s are the highest at $58.

While the CAW has often decried a “race to the bottom” as far as wages go for Canadian workers, the CAW and Canadian plants are in a very weak position, with higher costs and a strong dollar making Canadian plants an increasingly unattractive proposition. With two-tier wages in the US offering automakers the chance to build cars at plants where workers are pay $14 an hour rather than $32, as well as being able to build them in the United States, taking a combative stance against the automakers may not get the CAW too far in accomplishing their goals. At this point, it seems as if Ontario needs the auto plants more than the OEMs need Ontario. A Member of Parliament for the Windsor, Ontario district that is home to many auto workers recently criticized the CAW’s policies as being unrealistic and in danger of sending manufacturing jobs back to America.



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