CAW agrees to major cuts in deal with Chrysler

CAW President Ken Lewenza speaks during a press conference regarding negotiations with Chrysler Canada in Toronto on Friday, April 24, 2009. (Nathan Denette / THE CANADIAN PRESS)

Chrysler and CAW negotiators reached a cost-cutting deal Friday night, heavy on labour concessions.

CAW president Ken Lewenza says the deal should save Chrysler about $240 million a year. The union negotiation team agreed to a large swatch of cuts across their benefit plan.

"This agreement meets the benchmark that was set by the federal government to guide our bargaining," a tired and downcast Lewenza said at a Friday evening news conference.

"Some of it comes from reduced compensation, some of it comes from lower legacy costs, some of it comes from increased productivity and efficiencies in the workplace."

Neither base wages nor pensions are cut in the deal.

Ratification votes are scheduled this weekend at the three Chrysler plans in Windsor, Brampton and Toronto.

"We are living to fight another day," Lewenza told reporters.

Chrysler, supported by potential partner Fiat, has been adamant it wants a cut of $19 per hour in total compensation to CAW members -- about 25 per cent.

Chrysler said it "deeply appreciated" the union's concessions to help make the company more competitive.

"The CAW leadership worked around the clock for its membership to hammer out the details during an extremely complex negotiation," Chrysler's chief bargainer, Al Iacobelli, said in a statement.

The union's concessions include; reduction in paid relief time, cuts to supplementary unemployment benefits and prescription drug fees, removing semi-porvate hospital coverage, the employee car purchase benefits, tuition rebate programs, among other cuts.

Also, the salaries of workers will increase more slowly, and there will be more jobs for part-time and non-union workers.

The union also agreed to allow Chrysler to have 10 years instead of five to top up the pension fund.

These cuts are in addition to the concessions already with General Motors earlier this year. That deal agreed to freeze wages until 2012, scrapped a $1,700 bonus and cut company contributions to union-sponsored programs.

"The agreement is not the same as the agreement we negotiated almost two months ago at General Motors," Lewenza said.

"That agreement at General Motors was abolished when President (Barack) Obama and our own governments rejected the GM restructuring plan. We knew it was back to the drawing board."

The two sides missed a Wednesday midnight deadline in talks that Lewenza has called the toughest of his career.

Lewenza has said his members wouldn't agree to such a steep cut, adding the actual wage is about $32 to $35 per hour.

The CAW wanted to follow traditional pattern bargaining. It had wanted Chrysler to accept the $7 per hour cut it had negotiated with GM.

"Pattern bargaining doesn't work in these very troubled circumstances, because the needs and capabilities of General Motors and the needs and capabilities of Chrysler were so different," Pochiluk said.

Former CAW president Buzz Hargrove says he can't recall a time when there's been such intense pressure on the workers in the auto industry.

"It's unprecedented in my lifetime," he told CTV Newsnet Friday evening.

Chrysler employs about 10,000 hourly workers and 1,000 salaried employees. It operates assembly plants in Windsor, Ont., and Brampton, Ont., and a Toronto casting plant.

The company must submit a restructuring plan by April 30 that is acceptable to governments in Washington, Ottawa and at Queen's Park in order to get financial assistance.

In Canada, the federal and provincial governments have provided Chrysler with $750 million of $1 billion promised. They have said Canada will match whatever else the U.S. government provides if Chrysler maintains Canada's share of total production.

Bankruptcy protection

On Thursday, reports in the U.S. suggested that Chrysler Canada's parent corporation is heading towards a bankruptcy protection filing. Bliss said the union is receiving assurances that retiree health benefits and workers' pensions would be protected if that happens.

Ontario's Premier Dalton McGuinty said Friday that governments are willing to help Chrysler even if it goes into bankruptcy protection.

"What I do want to provide by way of reassurance is that whether there is a restructuring that takes place outside of court, or under court supervision, we intend to play our part," he said.

However, McGuinty said the negotiations between the CAW and Chrysler appear to be leading to a deal that his government can support.

"I think it's getting closer to what we can justify on behalf of taxpayers," McGuinty said.

It was important the CAW and the U.S.-based United Auto Workers end up with similar deals as Ontario can't lose its competitiveness relative to the U.S., he said.

"We're into a position here where, broadly speaking, if we can't match what they're delivering down there, then we become less competitive, and there's much less incentive to keep our 20 per cent of the production up here," the premier said.

In any event, much remains to be done before Chrysler can be provided with long-term help, McGuinty said.

"We're not out of the woods yet, but there is some good news here," he said.

With a report from CTV Toronto's Paul Bliss and files from The Canadian Press