Strategy

Auto sector: Kenny's last stand

The new CAW leader is fighting a rearguard action to save an industry in decline.

Ken Lewenza bio
Born July 10, 1954, Windsor, Ont. • National President Canadian Auto Workers union

1972 Hired at Chrysler’s Windsor Assembly plant.

1978 Elected steward, Local 444. Follows his father, Bill, into the union and dedicates his life to the labour movement.

1994 Made president of Local 444, the third-largest in the CAW. Goes on to chair Chrysler master bargaining committee and takes part in five separate rounds of negotiations with the Big Three automakers.

2002 Awarded the Charles E. Brooks Labour Community Service Award, in memory of the late Local 444 legend.

2008 Elected national president, Canadian Auto Workers.

Wet, late-winter winds are buffeting the stark poured-concrete bunker that is the downtown Sheraton Centre Toronto Hotel on Queen Street West. Up on the 31st floor, among a jury-rigged computer network, half-eaten bagels and partially drunk cups of coffee, the brain trust of the Canadian Auto Workers union is hunkered down, trying to hammer out a deal with Chrysler and Ford.

It is Wednesday, March 11. The mood among members of the national bargaining committee is serious. Focused. A little on edge. Let’s be honest: things are looking fairly grim right now for the once mighty union. The Great Recession has driven car sales off a cliff, and work all across the North American auto industry has slowed to a virtual standstill as consumer confidence, shattered by falling stock markets and mounting job losses, has plunged. As a result, two divisions of the incredibly shrinking Big Three, General Motors of Canada Ltd. and Chrysler Canada Inc., have gone on bended knee to the government, asking taxpayers for billions in bailouts and sapping the CAW of the leverage the union normally commands.

Just the morning before this CAW planning session, The Globe and Mail ran an editorial cartoon illustrating a corpse on a gurney with a toe tag reading “Union Clout.” And later in the day, Chrysler LLC president Tom LaSorda will appear before a Parliamentary committee in Ottawa, where he will threaten to pull production out of Canada.

No, it is not looking very good for the CAW. The proud, pushy organization has always fought aggressively — maybe too much so for its own long-term good, say critics — to secure the very best deals it can for its 225,000 members. But it is now on the ropes in a way that even those at the top say they could never have imagined just a few months ago.

General Motors Corp., the industry’s biggest player until recently losing the top spot to non-unionized Toyota, has just announced a stunning US$30.9 billion loss for 2008, its fourth in as many years. Its stock has plunged more than 90%, and its auto sales have hit a 50-year low. This February, the company sold 11,381 vehicles in Canada, 57% less than the same period last year. Output in the auto sector as a whole dropped 22% in assembly, 23% in parts. But, so far, employment is only down 5%. The writing, it seems, is on the wall.

No wonder the new CAW president, 55-year-old Ken Lewenza, is a bit brusque with a reporter and photographer who have just been ushered into the suite.

“Okay, let’s go guys,” he says in his distinct southern Ontario autoworker’s staccato. “Don’t mean to rush you, but….” He lets his sentence trail off. “Your timing is horrible. But we’ll get her done. Anybody want a coffee?”

As the global downturn gains momentum, workers everywhere are struggling. In China, 20 million migrant factory employees have left coastal boom towns to go back to their rural family farms, where they’re subsisting on what little money they saved, and civil disobedience is a growing concern. Here in Canada, by late February we had lost 295,000 jobs since last October, just over half of them in Ontario, where the manufacturing sector has undergone a retreat of its own. But nowhere has the impact of the recession been felt more fully than in Lewenza’s hometown, Windsor, Ont., where its ravages have been more wrenching than many Canadians realize.

“It’s unprecedented what we’re seeing,” says Lewenza, taking a seat at a makeshift conference table fashioned out of two smaller tables covered with a cloth. He tosses his BlackBerry down but keeps it within easy reach. “That’s the only way that you can explain it. Unprecedented.”

If you listen to guys from Windsor, the economy in Canada’s southernmost city, a gritty stretch of industrial sprawl across the river from Detroit, the Motor City, has been in recession for four years now. Dozens of three- and four-man tool-and-die shops have gone under, as have many larger so-called Tier 1, Tier 2 and Tier 3 plants, the ones that make individual auto parts. At the top of the manufacturing heap, some of the bigger assembly plants, like Chrysler’s large-van facility, have also been closed — and that’s causing widespread economic pain. Windsor’s unemployment rate is Canada’s highest at 12.6%, a low-ball offer on a property sale there is a big deal, and the local paper, The Windsor Star, has featured stories of laid-off workers who have had to give up comfortable homes in the suburbs for much smaller spaces in less desirable neighbourhoods. Don’t even talk about retirement.

None of this hometown misfortune is lost on Lewenza. “I think there is a sense of desperation. I think there is a sense of almost giving up,” he says. “I just sense that people are carrying a heavy burden — and they’re keeping it to themselves. How do I deal with my family? How do I deal with the bills? How do I deal with this mounting pressure?”

Cynics might take the union boss’s comments as a self-serving tug at the heartstrings, exactly what you might expect from a Big Labour leader talking to a reporter in the middle of negotiations. But the game has definitely changed. Just three days earlier, Lewenza and his union worked out a new agreement with GM Canada that saw autoworkers accept wage and benefit freezes until 2012 as a condition for government loans. They will also give up inflation adjustments on pay and pensions, and divert $1,700 in annual individual bonuses to retiree health-care costs.

The union, you see, is making concessions, Lewenza says. It’s coming to terms with global realities. The question is whether it will be enough. Now up are the negotiations with Ford Motor Co. of Canada, Ltd. and Chrysler. The CAW is hoping to use pattern-bargaining (making a deal with one automaker and then applying the same terms to the others), but there are signs this morning that the latest round of talks aren’t going to be as quick as those with GM. Chrysler Corp. is now controlled by a private equity firm named after the mythical dog that guards the gates of Hades, Cerberus Capital Management LP — and the company is growling, not talking.

Lewenza’s BlackBerry goes off — and he interrupts his conversation to take the call. He doesn’t leave the room, and his voice echoes through the suite.

“At least GM shared some information with us,” he says. “That’s interesting. … That’s a bit scary.”

For the industry and union leaders alike, they’re frightening times, indeed.

Born in 1954, Ken Lewenza, like so many working-class kids, dropped out of high school and headed off to work at 16. His first job was assembling fire extinguishers. He was married at 17, and began a family. A year later, he got the break so many labourers in lower-paid jobs in his city have looked forward to over the years: the telephone call from Chrysler Canada. The automaker wanted him to come and work at its Windsor Assembly plant.

At the time, Windsor was expanding along with the auto industry. In the ’60s and early ’70s, the city was filling up with workers, many from Newfoundland and Italy, who bought their first house, got married, and made real money. Lewenza worked on the line, attaching accelerator cables. But it wasn’t long before he followed his father, Bill, a union steward, into Local 444, which organizes the Chrysler plants in the city.

The Lewenza clan — Ken is one of eight siblings — is as union as they get. Their home hosted visits from the legendary leader of Local 444, Charlie Brooks, who led many of the early big-wage battles won by autoworkers. Brooks was gunned down by a disgruntled member in 1977, and today a large ceremonial fountain in Windsor is dedicated to his memory. But 444, the third-largest CAW local in Canada, remains a strong political and social force there.

By 1978, Lewenza himself was a steward in Local 444. He eventually rose to lead the branch, taking a job that was previously held by Frank LaSorda, father of Tom LaSorda, the current president of Chrysler. In those days, the local was still part of the UAW. But when it split to join the breakaway CAW in 1985, Lewenza moved onto the so-called master bargaining committee, where he gained impressive negotiating experience through five rounds of contract talks with the Big Three. Today, he is a household name in Windsor, and his son, Ken Lewenza Jr., is a city councillor there.

When Buzz Hargrove, the 16-year head of the CAW hand-picked Lewenza to succeed him last fall, it was not without controversy. Some complained that Hargrove seemed to manipulate the selection process, retiring earlier than expected and shifting ahead a key convention date in a move that short-circuited the possibility of any challengers getting organized. They worry that Lewenza, an old-style unionist, could be too pushy and too aggressive for the good of the union. But Hargrove later explained that his actions were necessary; the CAW had to get ready for what was to come. A political split, or long drawn-out battle, he argued, would have left the membership weakened for what was about to unfold: the biggest battle in its history. “We are going to go through the most difficult period our union has ever faced,” he told delegates at the convention in Toronto on Sept. 6 that crowned Lewenza.

Lewenza now collects just over $155,000 a year in salary — not bad for someone who started out putting fire extinguishers together for minimum wage — and commands a team of researchers and assistants. But many still remember Kenny, as he is known to his union brothers and sisters, from the early days, when he was your typical autoworker (think union jacket, hockey hair and beefy forearms). Sure, he’s cleaned up a bit since then. There are new and fashionable glasses and a more expensive haircut. But he still sports the odd ropey gold chain.

The company that controls Chrysler is clearly not afraid to push its weight around — and that is becoming abundantly clear to Lewenza. The carmaker seems to be particularly uncommunicative this morning, a worrying signal.

Chrysler will soon claim that the CAW concessions on offer are not even close to what could help it survive the current downturn. It will also announce it is preparing a plan to pull out of Canada once and for all if Lewenza doesn’t break “the pattern.”

Such a move is not on the table, however, Lewenza insists. “We’re not doing anything outside the pattern. We’ll sink before we go outside that.”

But Ford, too, will say that it wants far greater concessions from the CAW than those at GM — and its American cousin, the UAW, recently reached a new deal with the automaker that will see hourly labour costs cut to US$50 from US$55 by 2011. (Average wage and benefit costs at Ford Canada have been estimated to run about $70 an hour.)

The “difficult period” that Buzz Hargrove warned about has arrived.

The days when autoworkers were able to demand ever-larger wage settlements have gone the way of the Edsel. Easy finance has ended, and that’s going to make it tough for consumer spending to stay at the levels it was. The conventional wisdom is that the auto industry, suffering from overcapacity, needs to shrink. In a recent speech, Industry Minister Jim Prentice suggested that for every new auto plant we see open in North America we’ll see two close. Some economists are even worried that Ontario is headed into long-term decline along with the auto sector, a key pillar that provided high-paying jobs, which, in turn, spurred both tax revenue and supply and demand.

Lewenza accepts that the industry has to contract. But he says it’s a shame we’re letting so much manufacturing go. “It was the manufacturing base,” he says, “and in particular the auto sector, that established the middle class in North America.”

Lewenza’s latest thrust is effectively a rearguard action to preserve what jobs can be saved. And he doesn’t for one second buy the notion that Ontario can shift to a service-industry economy, with a class of extremely well-paid finance types and lawyers at one end of the income scale and a whole lot of call-centre employees and casino workers at the other. “That’s what we’re trying to do at GM, Chrysler and Ford right now,” he says. “What we’re saying to the government is provide the loans that are necessary — and they are loans — but in dropping those, make sure you maintain that manufacturing footprint.”

Lewenza’s plan is to help work out a new North American auto pact that would require carmakers selling on this continent to also manufacture here. Talks in that direction have been held through the Canadian Automotive Partnership Council, an auto industry-focused trade group made up of CEOs, politicians and union leaders. He also mentions a new agreement in Windsor that will see Volkswagen use a Chrysler plant and workers to produce 60,000 units of a new minivan. Those kinds of deals could keep people in work, Lewenza predicts, and “you’ll see more of that.” When asked if the CAW plans to organize any of the non-unionized shops, Lewenza is emphatic. “Absolutely,” he says. “It’s non-stop. It’s more pertinent today.”

But that is the longer-term strategy. Right now, the latest talks are fast approaching a breaking point, as the automakers, the workers and the government jockey for position. Some are trying to preserve what’s left. Others seem to be attempting to grab whatever they can.

Many union members claim Chrysler — Cerberus, actually — is trying to radically slash benefits so it can generate a huge return for its shareholders once the economy comes out of recession. And there may be an element of truth to that. After all, that is precisely the kind of things activist private equity firms do, particularly the most return-oriented ones. Lewenza says he has been surprised by Chrysler’s aggressiveness. “I think they’re taking advantage of this global recession to extract gains they never would have gained in good times,” he says. “I’ve been dealing with Chrysler for 37 years. They would never do this.”

At press time, union leaders said the two sides were “worryingly” far apart as a March 31 government deadline for an agreement loomed (although there were some indications it might be extended). And some politicians, including Liberal Leader Michael Ignatieff, who said he “reacts very badly to threats,” were finding the possibility of a Chrysler pullout from Canada troubling.

Lewenza is angry that his union is getting blamed in some quarters for the woes plaguing the entire industry. “The government has strategically put a hell of a lot of pressure on autoworkers,” he says. “They used our wages and benefits as if we were the cause of the financial crisis. And that creates even more animosity and frustration. Labour rates are 7% of the price of a car, but we’re 100% of the problem.”

No longer brusque, Lewenza is in his element. Passionate. The threat to pull Chrysler out of Canada has hit extremely close to home. Local 444 is the epicentre of the very factories the automaker is now threatening to mothball. And it is precisely there that Lewenza can trace his power base back to. So, in a way, this whole round of talks has become a little bit personal.

But there is no mention of the personal today. Ken Lewenza is in full fight mode for his members. “The question we have to ask, as a progressive group, is how do we redirect that frustration and insecurity, to get people thinking community and how to build a community for the future,” he says. “It’s been tough.”

He reflects for a moment, mulling over his words, before continuing. “I think there should be more outrage, more community activism about what’s going on right now.”