Ford And Chrysler Reject GM-CAW Deal

by Edward Niedermeyer

March 13th, 2009 10:15 PM

As a condition of its government-funded restructuring, GM was supposed to wrangle concessions from its unions and bondholders. So far, the General has struck out with the major bondholder committee and the UAW, and has only had its agreement with the Canadian Auto Workers to crow about. But now that agreement appears to be in peril, as Reuters reports that Chrysler and Ford are rejecting the terms of the GM CAW restructuring. “The current agreement with GM is unacceptable and we have to break the pattern,” Chrysler’s Robert Nardelli told Canada’s House of Commons. “We believe the recently negotiated agreement between General Motors Canada and the Canadian Auto Workers will not keep Ford’s Canadian operations competitive in today’s global economy,” concurs Ford Manufacturing Maven Joe Hinrichs. While GM claims that its CAW deal brings labor costs in Canada in line with US transplants, Nardelli claims “the union agreement with GM, if applied to Chrysler, would not eliminate even half the labor cost gap Chrysler Canada has with its Asian competitors in Canada.”

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Windswords on Mar 14, 2009

Well Ford has chimed in to back up Chrysler in saying the GM/CAW agreement is not good enough. According to Auto News: Now Ford has piped up in Chrysler's corner, saying "We believe the recently negotiated agreement between General Motors Canada and the Canadian Auto Workers will not keep Ford's Canadian operations competitive in today's global economy."

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Windswords on Mar 14, 2009

I don't understand why Canadian Union labor costs are so high compared to the US. I thought socialized medicine was supposed to be the big equalizer and save employers lots of money. So if the US gets it will our labor cost be as high as Canada's?

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Psarhjinian on Mar 14, 2009

So what's Chrysler going to do? Shut down the plants that make two of the three product lines (the minivans and the 300/Charger/Challenger) that anyone cares about? Because that's what shuttering the Canadian ops means. Let's see, that leaves... what? The Sebring/Avenger? Durango/Aspen? Calibre/Compass/Patriot? Other than the Wrangler and maybe the Ram, Chrysler Canada's products are more or less the only ones that matter. LaSorda's either bluffing, or Chrysler as a whole is done. GM is another story: they don't make dick in Canada that they couldn't (and likely wont, or haven't already decided to) shift elsewhere. Once the bloom is off the Camaro's rose, I'd expect that to be about it for their Canadian ops.

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Psarhjinian on Mar 14, 2009
I don’t understand why Canadian Union labor costs are so high compared to the US. I thought socialized medicine was supposed to be the big equalizer and save employers lots of money. So if the US gets it will our labor cost be as high as Canada’s? There's two reasons: * Canada has a marginally higher tax rate and more stringent environmental laws than, say, the southern US. * Canadian skilled labour costs more because, well, it's generally better than what you'd get in right-to-work states in the lower US and Mexico. This is both a good and bad thing: good in that Canadian workers train up faster (Toyota found this out when it started comparing Kentucky's step-up time versus Cambridge, Ontario's), bad in that they demand more. Socialized medicine helps a lot, but the reality is that, with the Canadian medical system rotting from the inside out (because it's being turned into a nickel-and-dime hell like the US), the differences aren't as extreme. The items that cost (drug, dental, vision, value-add hospital services) apply to both.

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