CAW could be days away from reaching agreement with Chrysler, says Lewenza

The Canadian Auto Workers hopes it’s just days away from successfully concluding talks with Detroit’s Big Three automakers by reaching a collective agreement with Chrysler, though it has been reluctant to follow a pattern deal reached with its rivals.

“I’m optimistic that within the next three or four days we can get the job done,” CAW president Ken Lewenza said in an interview Friday.

Negotiations with Ford and General Motors suggest that Chrysler needs the time to hammer through terms of the framework agreement and also address specific issues affecting Chrysler, which has the largest presence in Canada of the three.

Lewenza said the tone of conversations Friday was constructive and respectful but added he has no illusions that the final efforts won’t be tough. Chrysler has been the most vocal in demanding concessions and breaking away from pattern bargaining.

The union boss has asked for a written proposal from the car company to focus discussions and says Chrysler is fully aware that following the pattern set by its American rivals is essential for the union.

“We’ll try to get it done. But if it breaks down in any way, we’ll give the 24-hours notice and we’ll utilize the tool but I’m anticipating we won’t need to do that in the next three or four days.”

Industry experts say Chrysler has no choice but accept the general terms of the framework agreement since it can’t afford a strike that would cripple its Canadian operations that account for about 25 per cent of its global production.

“I think we should see an agreement with Chrysler in the next 24 to 48 hours,” said Tony Faria of the University of Windsor Odette School of Business.

“Chrysler full well knows they can talk around the edges of the contract a little bit but there’s going to be no adjustments made to the main provisions,” the auto expert said in an interview.

The company declined to comment but said for now they are still in discussion.

More than 100 union leaders from Ford met in Toronto on Friday to familiarize themselves with the tentative agreement in order to answer member questions ahead of ratification voting Saturday and Sunday.

Ratification meetings for GM employees will be held on Wednesday in Oshawa, Ont.

Lewenza said the tentative deal reached with General Motors of Canada on Thursday incorporates all the points reached with Ford earlier this week.

The GM and Ford deals will see new hires paid a lower rate, $20.40 an hour, which equals 60 per cent of current base pay and progressing to full pay in 10 years, longer than the six years agreed upon in the last agreement. They will also be converted to a hybrid pension plan, which is less burdensome to the company than the current defined benefit plan that current employees receive.

All employees at both automakers will receive a $2,000 annual cost of living lump sum payment and a $3,000 ratification bonus.

The GM deal will also maintain 1,750 jobs that had been in question — so that total employment at the company will remain at about 7,000 through 2016.

That includes 900 jobs created or maintained through the addition of a third shift at the flex assembly plant in Oshawa, Ont., beginning early next year, and at least 750 jobs through the extension of the life of the consolidated plant in Oshawa.

The plant had been slated to close and put the 2,000 employees out of work in 2013. Instead, the company will continue to operate at least one shift until June of 2014, extending at least 750 jobs and potentially more if a second shift is also extended.

In addition, about 100 new positions will be created at its plant in St. Catharines, Ont.

The company also committed to $675-million in investments over the term of the agreement.

The Ford deal will give 800 laid off employees a chance to get back to work, partially through the creation of 600 new jobs at its Canadian operations. Most of the those positions will be at Ford’s assembly plant its Oakville, Ont.

Faria said CAW members should heartily support the agreements, which impose some pain on future hires but barely affects active workers.

“The bargaining committee of the CAW has done an excellent job for the active workers and pulled out the best contract they could possibly get,” he said.

The contract followed the exact pattern set in 2008, with Ford being the first to negotiate an agreement, followed by GM and Chrysler.

Lewenza credited Ford with stepping up first, but Faria said the automaker had the least the lose from the agreement since its Canadian operations are the smallest. It may have also sought to gain some competitive advantage if the deal hurts its rivals more.

While the framework is good for existing Canadian workers, Faria said it could thwart any new investment by the Detroit-based companies in Canada because the contract fails to narrow the cost gap between the two countries.

Plants are reopening in the U.S. and in Mexico but Canada’s share of North American auto production is falling to 15.9 per cent from 17.9 per cent two years ago.

“I think it is possibly a short-term win for the CAW but a longer-term loss,” he said.

“I think we will continue to see continued erosion of CAW jobs in Canada and Canada losing its place in terms of North American production.”

But Lewenza said he doesn’t believe the agreements weaken Canada’s prospects of attracting future investment since fixed costs are stabilized. Labour accounts for less than five per cent of the cost of manufacturing a vehicle.

“If you look at the overall pie, I think Canada will continue to get their share of investment.”

CAW chief economist Jim Stanford said in a televised interview Friday that Chrysler could benefit immediately from the lower wage scales for new employees because it doesn’t have to recall any laid-off workers at the old wage scale.

“Remember, Ford and GM have layoffs to deal with before they can bring on the new hires,” Stanford said on BNN, a specialty business TV channel.

“So I think, if anything, Chrysler has the most to gain from this agreement.”

He dismissed Chrysler’s warnings that it could pull out of Canada, where it has manufacturing plants in Windsor near Detroit and in Brampton west of Toronto.

“It is not a short-term risk at all,” Stanford said. “Chrysler is very successful in the market right now. They need that production.”