Third Detroit automaker to reach deal with Canadian union

9/27/2012
REUTERS
CAW National President Ken Lewenza listens to a question at a Canadian Auto Workers' news conference to announce the union has reached a tentative agreement with Chrysler, signaling a successful culmination of labor negotiations at all Big Three automakers without resorting to a strike.
CAW National President Ken Lewenza listens to a question at a Canadian Auto Workers' news conference to announce the union has reached a tentative agreement with Chrysler, signaling a successful culmination of labor negotiations at all Big Three automakers without resorting to a strike.

TORONTO — The Canadian Auto Workers said on Wednesday it had reached a tentative four-year labor contract with Fiat SpA’s Chrysler Group LLC, the last of the Detroit Three automakers to agree to a new deal with the union.

CAW National President Ken Lewenza said the tentative contract mirrored agreements reached last week with Ford Motor Co and General Motors Co, despite Chrysler’s early insistence that those deals were too costly.

“We achieved the entire pattern, intact,” Lewenza said at an evening news conference in Toronto.

Union negotiators had pushed hard for Chrysler to invest in building new vehicle models in Canadian plants, but the company made no such promise in the deal. The Ford and GM agreements also included no new investment.

Pattern bargaining, where the union uses its agreement with the first of the Detroit automakers as a strict template for the next two deals, is a longstanding strategy meant to ensure the companies do not compete by lowering wages.

But Chrysler had been the most vocal among the automakers in arguing that Canadian labor costs are too high and should drop to match those of the United Auto Workers in the United States.

Chrysler had also criticized the union for negotiating its pattern deal with Ford, noting that Ford has significantly reduced its Canadian operations in recent years.

On Wednesday, Chrysler said it would not comment in detail on the deal until after it is ratified.

“We’re pleased to have reached an agreement, and we’re looking forward to the ratification process,” Al Iacobelli, Chrysler’s vice president of employee relations, told reporters.

PATTERN DEAL

Ford workers ratified their deal at the weekend, while GM employees will wrap up voting on Thursday. Chrysler workers will vote on Saturday and Sunday, the union said.

Chrysler submitted a written proposal on Tuesday night that reignited the difficult talks, Lewenza said earlier on Wednesday. Negotiators worked past 5 a.m. Wednesday, he said at the news conference, breaking only for ratification meetings with GM workers.

The pattern agreement freezes wages until June 2016, when a cost of living increase will be introduced.

The union said the agreement with Chrysler includes a C$3,000 bonus for members after ratification and cost of living lump sum payments of C$2,000 in 2013, 2014, and 2015.

New hires will start at 60 percent of the highest hourly rate of about C$34, down from 70 percent in the last contract. It will take 10 years to reach the top of the pay scale, up from six years.

The CAW had insisted that new employees eventually reach the top pay scale, in contrast to their U.S. counterparts at the United Auto Workers, who have a permanent two-tier wage structure.

NO NEW JOBS

Unlike Ford and GM, Chrysler did not commit to create any new jobs in Canada. But when it comes to employment, Chrysler workers are in better shape than their peers.

Ford has some 800 workers on long-term layoff, and the new jobs are expected to ensure that no one with seniority is still out of work by the end of the contract, the union has said.

Similarly, new positions at GM are expected to offset the planned shutdown of the “consolidated line” in Oshawa, Ontario, which now employs about 2,000 workers, nearly a quarter of the CAW’s workforce at GM.

Chrysler has about 80 employees out of work in Brampton, but no one on long-term layoff, said CAW spokeswoman Shannon Devine.