Chrysler reaches tentative contract deal with CAW
Chrysler Group has reached a tentative agreement with the Canadian Auto Workers on a new four-year contract as the union wrapped up its final round of bargaining with the Detroit 3 without a strike.
Terms of the agreement, reached late Wednesday, were similar to the pattern the CAW established this month with Ford Motor Co. and General Motors.
CAW members get a $3,000 bonus upon ratification, a $2,000 inflation bonus in the second, third and fourth years of the contract, and annual cost-of-living adjustments, CAW officials said in a conference call. But unlike the GM and Ford agreements, Chrysler made no commitments for additional jobs or future investments in Canadian plants.
Further details were not immediately available, and a Chrysler statement said the company would have no further comment until the agreement is ratified.
If ratified, the contract will keep Chrysler plants in Canada churning out such vehicles as the Chrysler 300, Dodge Charger and Challenger, and Dodge and Chrysler minivans as the company rides a 26 percent gain in U.S. sales this year. About 24 percent of the automaker's North American production occurs in Ontario, making Chrysler the most dependent of the Detroit 3 on Canadian output.
About 8,000 CAW members work for Chrysler at its two assembly plants and a casting plant in Ontario. Ratification votes are expected within the next several days.
'Tug of war'
Both Chrysler and the CAW had been locked in what CAW President Ken Lewenza called "a tug of war" in recent days.
On one side, the CAW used earlier agreements with rivals Ford and GM to gain better terms for its members at Chrysler, which had the most to lose in Canada because of its bigger footprint.
On the other, Chrysler used its agreement with the UAW in the United States -- as well as the implied threat of severely under-utilized plants in Italy and Europe -- to pressure CAW members to take a different deal.
A strike by the CAW would also have impacted production of many of Chrysler's products, including those assembled outside of Canada. The company's casting plant in Etobicoke, near Toronto, makes parts including engine mounts for most of Chrysler's North American plants.
Some of Chrysler's most profitable unibody vehicles are built in Canada. The Chrysler 300, Lancia Thema and Dodge Charger sedans are assembled in Brampton, along with the Dodge Challenger sport coupe.
The Windsor Assembly Plant builds the Chrysler Town & Country, Lancia Voyager and Dodge Grand Caravan minivans on three shifts, along with Volkswagen Routan minivans.
Lewenza, during the conference call, said marathon bargaining was suspended with Chrysler at about 5 a.m. EDT Wednesday to allow CAW negotiators to meet with GM workers for their ratification votes.
Without that delay, Lewenza said, the CAW and Chrysler likely would have had a deal Wednesday morning. As it was, he said the union notified Chrysler at 8:30 p.m. that its bargaining committee had voted unanimously to recommend the agreement to CAW members.
"We are satisfied that we have a reasonable deal, satisfied that Chrysler will have the ability to grow in Canada," Lewenza said.
He credited the practice of pattern bargaining -- where the union attempts to get the same terms with all three Detroit automakers -- for getting the best deal for his members.
Ford workers overwhelmingly ratified their contract, reached hours before a Sept. 17 strike deadline, this past weekend. GM employees finish their ratification votes Thursday.
"Chrysler was determined to have a different agreement. They were determined to put themselves in a better position," Lewenza said.
"Why it took us longer is that the corporations have a tendency to resist following the pattern," the CAW president said. "We see Chrysler growing. We see momentum, we see customer confidence, and when you put all those things together, why risk it?"
Though the agreement with Chrysler contains no promises of future investments or additional workers, Lewenza said Detroit's smallest automaker has the fewest workers laid off right now and should be able to take advantage of new cheaper new-hire wages sooner than either GM or Ford. Chrysler has about 75 to 80 workers laid off at its Brampton Assembly plant.
Lewenza said the Windsor plant would continue to make Chrysler Town & Country and Dodge Grand Caravans through the term of the contract. Chrysler-Fiat CEO Sergio Marchionne has said previously that the two minivans would be replaced by a single model, though he has waffled publicly over which would survive.
Windsor was the first assembly plant in North America to earn bronze status under Fiat's World Class Manufacturing system, which grades plants based on productivity and other factors and expresses its operations in a two-digit score. Only Chrysler's Toledo Assembly Complex and Dundee Engine Plant in Michigan have earned a higher score.
"We extend our appreciation to our Canadian workforce for their patience during this pivotal round of collective bargaining," said Al Iacobelli, Chrysler's vice president of employee relations, in the company's statement. "We will not comment on the details of the tentative agreement during the CAW ratification process."
Making money in Canada
Lewenza was asked repeatedly about comments from Marchionne in recent weeks in which the Chrysler CEO called Canada the most expensive place in the world to build cars, and suggesting that the CAW had to lessen those costs to be competitive.
Lewenza said he hadn't spoken with Marchionne during the negotiations, but respected the results he has achieved with turning around Chrysler since its 2009 bankruptcy.
"I think at the end of the day, he works his ass off," Lewenza said. "Mr. Marchionne's got a lot of reason to invest in Canada. I want Mr. Marchionne to concentrate on the problems in Europe, and let us concentrate on making money for the company in Canada."
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