REPORT: Chrysler considering pulling out of Canada
According to The Canadian Press, Chrysler may elect to pull all manufacturing operations out of Canada if it cannot come to an agreement with the Canadian Auto Workers by month's end. The embattled automaker is looking negotiating with the CAW in part to reduce wages from an average of $76 to $57, and as part of a contingency plan/ bargaining chip, it is reportedly architecting a wholesale pullout from America's northern neighbors.
The pullout would jeopardize some 10,000 jobs at the company's two plants in Ontario and another facility in Toronto. It would also mean that production would have to shift (or end) for a number of key Chrysler products, including the company's minivans (and Volkswagen's Routan), as well as the Chrysler 300, Dodge Charger, and Dodge Challenger. The likely alternatives, say analysts, would be to push minivan production back to the St. Louis plant that produced them up until last year, and potentially move the LX-platform cars to facilities in Michigan or Mexico,
For its part, Chrysler is looking for more concessions from the CAW than was recently given to rival General Motors last week. That labor agreement reportedly cut labor costs by around $7 an hour – far short of what Chrysler says it needs to return to profitability. Part of those concessions could come in the form of benefit cuts, as in several areas CAW employees enjoy even better benefits than their UAW counterparts. According to The Canadian Press, CAW workers receive a maximum of six weeks paid vacation (versus five for UAW workers), as well as "substantially more break time per shift." Of course, the automaker's benefit costs are kept down because of Canada's socialized medicine.
If Chrysler does decide to pull its manufacturing base out of Canada, it could risk a countrywide consumer boycott, so watch for Auburn Hills to tread carefully as it negotiates with CAW officials. Either way, expect some sort of resolution by month's end, lest it risk passing deadlines for the further $2.3 billion in aid it expects. Top tip, LIP!
[Source: The Canadian Press via Wheels.ca | Image: Bill Pugliano/Getty]
Reader Comments (Page 1 of 3)
TigerMil 10:04AM (3/18/2009)
As if! Chryberus will not risk a boycott...all they have to do is lower the price of cars sold in Canada! LOL. And if they successfully lower production costs by fleeing Canada, they WILL be able to do just that! Poutine, anyone?
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Temple 1:07PM (3/18/2009)
There is no formal boycott threat at the moment, rather its speculation from an analyst from the linked article. While I'm sure pulling out of Canada won't help their Canadian sales, they really aren't a company that has many options. They have production overcapacity, moving out of Canada is feasible.
However, this is all just a game. Its raising the stakes so that it can receive US$2.3 billion in bailout money from the Canadian government. If it pushes hard, it might get a concession from the CAW plus the bailout money. If it fails, at worst it will have the exact same deal with the CAW that GM had.
Avinash machado 10:09AM (3/18/2009)
The pullout would jeopardize some 10,000 jobs at the company's two plants in Ontario and another facility in Toronto.
Maybe the fear pf losing so many jobs might motivate the Canadian government to intervene.
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ronEbear 10:30AM (3/18/2009)
I hope not, 10,000 jobs is peanuts compared to the 129,000 jobs lost in January 2009. I sincerely hope that my government refuses to give a single penny to those asshats at Chrysler.
sw 10:47AM (3/18/2009)
Take your ball and go home Chrysler, it's about time. This threat reeks of desperation. The money is available, provided they have a viable long term plan that also benefits Canada. Besides, after getting the new Toyota plan I think officials should be courting the new prettiest belle of the ball. Hyundai, I'm sure they'll want to build North American factories sometime.
Iwa 2:32PM (3/18/2009)
Hyundai has built a North American plant in Montgomery, Alabama. I'm not sure if they want to return to Canada, as they closed their Quebec plant in 1993.
Jens 2:47PM (3/18/2009)
This is just Cerberus/Chrysler's ploy to get further concessions from CAW and more importantly, get the Canadian gov to drop its outstanding back taxes case against Chrysler.
Even if Chrysler gets what it wants, the Canadian operations will still be wound down. (provided that the company actually continues to exist) If production costs is the only criteria, then the answer is clear. Lowest production costs can be achieved in Mexico.
Chad 11:49AM (3/19/2009)
Last time I checked, Toronto is in Ontario.
Mike 10:10AM (3/18/2009)
As a Canadian I say. "Here's your hat, what's your hurry."
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Brn 10:14AM (3/18/2009)
Apparently, you're employed.
ronEbear 10:28AM (3/18/2009)
Yeah, so am I so suck it!
Epyx 10:14AM (3/18/2009)
What kind of brotherhood is there with the UAW and CAW? Would the UAW accept the jobs at the CAWs loss or would they stand in solidarity for the brotherhood and refuse to work? I doubt it.
I am pretty sure they UAW folks would say "Sorry Canada." Canadians will say "Daytookrjerbs."
Pretty sure this is an idle threat to get the CAW to fold but of course what does Chrysler have to lose, not much. As bad as it would be for the Canadian workers it could be good for some US workers.
If it came down to it I am confident the CAW would not rather be unemployed and will meet the demands.
Could a better Chrysler deal impact GM, or has that ship already sailed?
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aron 10:21AM (3/18/2009)
CAW was the Canadian chapter of UAW up until 1984 when negotiations with GM didn't go the way the Canadians planned resulting in a split up of the union. Ever since, it seems to me that there isn't much collaboration between the two anymore.
foserial 10:14AM (3/18/2009)
substantially more break time per shift?
GM Oshawa gets 40minutes break per 8 hour shift. What do UAW workers get? 20?
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Swede 10:26AM (3/18/2009)
I take those 40 minutes does not include lunch?
foserial 10:31AM (3/18/2009)
Yes, it does include lunch.
Rogue_G 10:15AM (3/18/2009)
Where they gonna go? GM can't even convince the government for more handouts yet, and they have a much better chance of surviving than Chrysler. They're currently clinging to life by a thread, and that thread is Fiat. If they assume the US will gladly pay out more money for their moving and retooling of US factories is poorly misplaced, and previous reports have Fiat as being unwilling to provide anymore money than they have already promised. It's just a power-play for more handouts, specifically from Canadians. Lets see how quickly it takes for Harper to bend over!
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Frank 11:51AM (3/18/2009)
"Where they gonna go? GM can't even convince the government for more handouts yet, and they have a much better chance of surviving than Chrysler."
I wouldn't be too sure of that. GM has a slew of structural problems that prevent them from being profitable with 20% of the market. Chrysler can survive on 10% of the market. GM has survived on it's foreign profits and tech and it may have to give them up. Without some form of bankruptcy to shed brands and dealers GM can't survive. Unless it increases market to above 25% which isn't gonna happen.
ChrisL 10:20AM (3/18/2009)
Lasorda's comments to the Canadian media are a clear cut case of corporate extortion and we're NOT happy with that behavior. Boycott? Sure, but there's a deeper story that CBC, and CTV have been broadcasting for days...
Chrysler owes the Canadian government OVER $1Billion in back taxes, had received hundreds of millions in support and other tax breaks over the years, and yet continues to hold us at ransom? Sca-reeewwwww you. Chrysler is demanding $8Billion from us now - Do the math, that's 10 years salary for every single Canadian Chrysler employee. In other words, Cerebrus is not willing to pay a penny for Canadian employees for the next 10 years anyway.
We're done. G O O D B Y E. ... and we're confiscating $1Billion assets in the form of tooling and factory buildings as you depart. Honda and Toyota have already expressed interest in the factory locations anyway.
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jamie 11:45AM (3/18/2009)
Political posturing 101:
Chrysler says CAW deal not good enough.
CAW says, "That's it; take it or leave it."
Chrysler says, "Tata, goodbye, we'll see ya, eh?"
CBC and CTV says Honda and Toyota might be interested.
Honda and Toyota deny the story and say they are not interested at this time.
Chrysler moves minivans back to St Louis, and Charger, Challenger and 300 to Sterling Heights flex plant.
Canada goes, "Gulp." 10,000 jobs isn't much in the US, but it is a big deal in Canada. Canada attempts to seize Chrysler assets for payment of outstanding debt.
Chrysler sells Brampton and Windsor plants to FIAT for US$1.00 (80 cents Canadian)
CAW cries, "Murder! We're toast!"
FIAT tells Canadian government to back off, so they can begin production.
Canada shrugs and says, "Eh."
FIAT hires non-union laborers...