TORONTO — Chrysler and the Canadian Auto Workers union reached an agreement on labour concessions late Friday night that will save the automaker save about $240 million a year, CAW president Ken Lewenza said.
“This agreement meets the benchmark that was set by the federal government to guide our bargaining,” Lewenza said.
“Some of it comes from reduced compensation, some of it comes from lower legacy costs, some of it comes from increased productivity and efficiencies in the workplace.”
Ratification meetings are to be held on the weekend at Chrysler’s three Ontario plants, which are in Windsor, Brampton and the Toronto suburb of Etobicoke.
Lewenza called the deal, which left base wages and pensions untouched, a victory considering the consequences if an agreement could not be reached.
“We have done our job here. We have met the cost target, not just by tightening our belt, but also by boosting productivity. In the long run, that’s a much better way to keep our plants around in the long term,” he said.
Chrysler had said reductions on labour costs are essential to coming up with a viable restructuring plan.
The automaker must complete a restructuring plan by the end of the month in order to get financial aid from the federal and Ontario governments.
The two sides entered negotiations with very different goals in mind.
Chrysler said it had to cut its labour costs by $19 an hour to remain competitive.
But the CAW initially refused to bend from the pattern established in an earlier agreement with General Motors Canada, which cut that company’s costs by about $7 an hour.
However, Lewenza softened his stance in recent days, saying Monday he didn’t want to speculate on what the union would give up in bargaining.
“The agreement is not the same as the agreement we negotiated almost two months ago at General Motors,” Lewenza said Friday night.
“That agreement at General Motors was abolished when President Obama and our own governments rejected the GM restructuring plan. We knew it was back to the drawing board.”
The deal includes many of the same concessions included in the GM agreement, but also includes the elimination of semi-private hospital coverage and the elimination of the employee car purchase plan and tuition rebate programs next year, among other changes.
Chrysler now has until the end of the month to negotiate a partnership with Italian automaker Fiat and to reach deals with its U.S. workers, bondholders and other stakeholders in order to receive long-term bailout loans from governments in Canada and the U.S.
Without a restructuring plan that governments deem acceptable, Chrysler will likely be forced to file for bankruptcy protection or even liquidate its assets.
Chrysler Canada employs about 10,000 hourly workers and 1,00 white collar employees at its assembly plants.