Chrysler Canada and its union are set to re-enter labour negotiations Monday in a final attempt to reach an agreement that could save the company from bankruptcy or even liquidation, and the two sides have never been farther apart.
And with both federal Industry Minister Tony Clement and potential Chrysler partner Fiat saying the company will have to lower labour costs by $19 an hour to remain competitive, Chrysler has little room to manoeuvre.
Because of this, the Canadian Auto Workers’ insistence that they will stick to the pattern established in a deal reached with General Motors Canada in March, which reduces that company’s labour costs by about $7 an hour, may seem futile.
But analysts say the union does have some wiggle room.
Chrysler Canada has been given until the end of the month to reach an agreement with the CAW and provide the federal and Ontario governments with a viable restructuring plan in order to receive long-term government bailout money.
Chrysler has threatened the union several times by saying it will pull out of Canada or go out of business entirely if it can’t reach an agreement, most recently in a letter from president Tom LaSorda and CEO Bob Nardelli to employees on Friday.
But Charlotte Yates, a labour analyst and dean of social sciences at McMaster University in Hamilton, said Chrysler needs the CAW just as much as the CAW needs Chrysler.
“Chrysler itself needs this deal to survive,” Yates said in an interview. “At the moment it seems all the momentum is against the union, but the company actually needs the union.”
Workers just want to keep their jobs, and many CAW members are wholeheartedly entrusting their union to negotiate the best possible deal for them.
Bob Stewart, an employee of Chrysler’s minivan plant in Windsor, Ont., for 25 years, said he feels like workers already gave up a lot in a contract negotiated with the Detroit Three companies a year ago. That contract froze wages to 2011 and cut paid time off by a week a year, among other things.
But he said he’d be willing to give more if the union thinks it’s for the best.
“It seems like the leadership in the union seems to believe we might be overdue to contribute to some of the prescription drug costs and some of that, so maybe it is time,” Stewart said in an interview from the Windsor plant.
“I don’t get to look at the numbers and do the math like economists do, so I put it in the hands of the leadership of this union. If (CAW president) Ken Lewenza and his team think it’s good for me, I wholeheartedly believe that it’s good for me because I know the guy’s in it when it’s hard and the guy loses sleep for every guy that’s outta here, laid off.”
Stewart criticized Chrysler and the government for placing all of the company’s problems on the backs of its workers.
“I can’t see how taking the money away from the labourers is really going to solve the issues when the people who make the multi-million-dollar cheques are the ones who make all the decisions. We’re just soldiers in an army that they actually run,” he said.
“And I’m not too impressed with the Canadian government taking sides in these issues whereas Mr. Clement’s not taking a pay cut or a pension cut or anything to that effect. This man works for the people, which is all of the people that work in this factory, not a corporation that’s based in another country.”
Mostly, though, Stewart just wants to keep his job.
“I feel like my world is crumbling down from every direction,” he said. “It’s extremely stressful for me.”
The company and governments have said many times that Chrysler needs to slash its labour costs to remain competitive, but no one seems to agree about who exactly the company needs to be competitive with. Is it UAW plants in the United States? Or non-unionized Honda and Toyota plants in Canada? Or is it non-unionized plants in the U.S?
Yates said the CAW should push Chrysler to define who exactly their competitors are. GM CEO Fritz Henderson has said more than once that his company’s deal with the CAW is competitive with non-unionized plants in Canada, and the union has used this claim as its primary reason why it shouldn’t have to give more to Chrysler.
Another factor affecting competitiveness is the Canadian dollar. If Chrysler is comparing its Canadian plants to facilities in the U.S., unionized or not, it needs to factor in the exchange rate, which increases the competitiveness of Canadian plants as long as the loonie stays low, Yates said.
“Why should the company reap all the benefits of a lower Canadian dollar?” she asked.
Chris Piper, a business professor at the University of Western Ontario in London, suggested the union ask for a stake in the company in exchange for long-term concessions.
“Give them so many shares per dollar that they earn based on the current price of the share or even a discounted price of the shares, and that way you’re going to benefit in the long-run if the company survives,” he said.
But Piper said this only works if the union thinks Chrysler will survive.
“If you don’t believe that the company will survive, then that’s a whole other story, then you really ought to be making wage concessions to make sure that at least for the short-term you’re able to at least have a job and not nothing,” he said.
He added that the state of the auto industry may dictate that the union has to give more if it wants to keep production in Canada.
“All the terms that are used, ’We’ve already made sacrifices and we’re giving back,’ that’s not the point. The point is you’re working for a bankrupt company that nobody will lend money to except possibly the government and then only maybe,” Piper said.