Chrysler LLC ratcheted up pressure on the Canadian Auto Workers to agree to further concessions, sending a letter to employees that outlines the cuts the company says are necessary to keep the company alive.
"Without labour concessions, Chrysler Canada's manufacturing operations will not survive long-term. Thousands of good-paying jobs are in jeopardy, as well as the economic health of communities such as Windsor and Brampton," Chrysler Canada president Tom LaSorda and CEO Bob Nardelli wrote Friday.
"Time is very short. We have only two weeks before a final decision must be made. Let me be clear, our negotiations are about saving Chrysler Canada. We are coming down to the wire in the fight for our company's survival."
April 30 is the deadline for the a deal.
Defiant workers in Windsor, where Chrysler operates an assembly plant, responded by burning their copies of the letter.
The CAW is under pressure to agree to cuts worth $19 worth per hour, in order to reach the $57 per hour labour costs paid by Toyota and established by the federal government as the benchmark needed for bailout money to flow.
Fiat SpA, which has been working on a deal with Chrysler, has also said it will kill the deal if the concessions don't come.
The CAW has reached an agreement with GM to cut its total compensation by about $7 an hour and has refused to go beyond that with Chrysler, wanting to stick with what it calls "pattern bargaining."
In a conference call on Friday, General Motors Corp. CEO Fritz Henderson said that his company feels its agreement with the CAW is good for both sides.
"We certainly believe we've reached a competitive agreement with the CAW," he said.
The government of Ontario is worried about the company's legacy costs such as pensions, he said.
GM is "committed to be part of a dialogue with Ontario and the CAW with respect to pensions," Henderson said.
Chrysler's demands, CAW response
The letter sent to Chrysler employees from outlines the following measures it says could help save the automaker reduce its per-hour compensation costs:
- Eliminate out-of-province health care coverage, saving $1 per hour labour costs.
- Change health care coverage from semi-private hospital room coverage to ward coverage, saving .97 cents.
- Eliminating life insurance for current and future employees, saving $1.54.
- Increasing health care premiums, saving $1.04.
Ken Lewenza, the CAW's president, called the letter merely one in a series of "unprecedented and outrageous" attacks on his membership, and "the most offensive yet.
"Every time we negotiate a new agreement ... the goalposts are shifted by companies who sense an opportunity to inflict long-term damage on the credibility and influence of the union," he said in a statement.
Chrysler is inflating its estimated labour costs by including "non-relevant" factors such as:
- legacy costs
- payroll taxes
- costs of plant shutdowns and layoffs
Lewenza criticized the federal Conservative government for its statements.
"Seeing our own government echoing perfectly the painful demands made on hard-working, tax-paying Canadians by the executives of multinational corporations is deeply troubling," he said.
"Worse yet, by clearly taking sides in private negotiations between an employer and the union, and hence emboldening the company to keep asking for more, the federal government is making it harder to reach a deal."
Ontario Premier Dalton McGuinty urged both sides to cool it and look at the big picture.
"Dealing with this challenge presented by the auto sector here in Ontario, Canada and even North America is a major undertaking, so the first piece of advice I have for all parties concerned is we personally have to keep the temperature down," he said Friday in Toronto.
McGuinty expressed sympathy with the CAW's position, but urged the union to evaluate its options.
"I understand where they're coming from, but on the other hand, look at the options here, because there aren't a lot."
Ontario have already loaned $750 million to Chrysler Canada out of $1 billion promised. More could be coming if Chrysler produces an acceptable restructuring plan.
The company employs about 10,000 hourly workers at assembly plants in Brampton, Ont. and Windsor, Ont., along with a casting plant in Toronto.
GM's parallel plans
Henderson said his company is working on parallel restructuring plans, one of which involves bankruptcy protection.
That option isn't the preferred one, but it is probable, he said Friday in a conference call with reporters.
Such a decision would be made by GM's board of directors in conjunction with the U.S. Treasury Department, but Henderson said the government isn't pressuring the company to go the bankruptcy route.
"I felt several weeks ago that it would be more probable that we would need to go through a bankruptcy process," he told reporters. "I certainly feel that way. That continues today. But I wouldn't be able to hazard a guess as to what the probabilities would be."
If the company files for bankruptcy, Henderson said he would want to see things happen quickly.
"It's all about speed," he said. "This environment is not helpful for us."
The company is focusing on its viability strategy. As a result, it hasn't engaged in intensive discussions yet with either bondholders or the United Auto Workers.
The UAW's priority is reaching a deal with Chrysler LLC, which has an April 30 deadline to both restructure and/or reach a deal with the Fiat Group SpA of Italy.
A restructured GM plans to keep four core brands -- Chevrolet, Cadillac, GMC and Buick, Henderson said.
Henderson described the company's sales so far in April as "okay," but didn't provide details.
In Canada, GM sold 24,989 vehicles in March, down 17 per cent from March 2008. Year-to-date sales to March 31 are down almost 40 per cent for combined car and truck sales, combined to the same period in 2009.
With files from The Canadian Press
