• Apr 18, 2009
It boils down to this: In 12 days, Chrysler's fate is likely to be sealed, one way or another. Both the United States and Canadian federal governments have told the automaker that in order to get continued funding, it must restructure dramatically. After consulting with his task force on the auto industry, President Obama made it abundantly clear at the end of March that this meant a Fiat deal needed to be in place within 30 days, otherwise it's basically curtains for Chrysler as we all know it. Without the inter-continental partnership, bankruptcy is a lock. It's just a matter of which number follows the letter C.

Complicating matters further for Auburn Hills is the fact that the Fiat deal is by no means guaranteed, either. This week, Fiat CEO Sergio Marchionne said that taking a stake in Chrysler is only a 50-50 proposition right now, and that for a deal to happen, Chrysler's labor costs would need to be cut down to a point where they're in line with the Asian and European transplant automakers, who happen to run non-union shops. With the April 30th deadline hanging over Bob Nardelli and co. like the Sword of Damocles, the Chrysler execs made a plea for concessions from the Canadian Auto Workers via a letter delivered yesterday. These include cost-saving reductions in health and prescription coverage, the elimination of life insurance, and the elimination of other "non-traditional" benefits such as tuition reimbursement, among other things. (A copy of the letter is pasted after the jump.) The letter also includes dire language that essentially states the concessions are required for the company's survival.

The Windsor Star reports that the letter was not well received by some CAW workers at the Windsor, Ontario assembly plant, who responded to it by gathering outside at lunch hour on Friday, whereupon they proceeded to burn the letters during an impromptu rally. And so the stage is set for what are sure to be contentious negotiations between Chrysler and union brass, which are set to begin on Monday. As Bob Nardelli and Tom LaSorda said in their letter to the CAW rank-and-file: "The clock is running."

[Source: The Windsor Star]

Letter from Chrysler to CAW employees:

Dear Employees,

Today, we are at a crossroads in the history of Chrysler. Let's take a look at what's happened in the past few weeks.

On February 17 and February 20, Chrysler submitted its Viability Plan to the U.S. Treasury and U. S. Administration; and to the Canadian governments, respectively.

On March 30, U.S. President Barack Obama stated that Chrysler's Viability Plan was unacceptable. "It's with deep reluctance but also a clear-eyed recognition of the facts that we've determined, after careful review, that Chrysler needs a partner to remain viable."

He went on to state: "I'm committed to doing all I can to see if a deal can be struck in a way that upholds the interests of American taxpayers. And that's why we'll give Chrysler and Fiat 30 days to overcome these hurdles and reach a final agreement -- and we will provide Chrysler with adequate capital to continue operating during that time. If they are able to come to a sound agreement that protects American taxpayers, we will consider lending up to $6 billion to help their plan succeed. But if they and their stakeholders are unable to reach such an agreement, and in the absence of any other viable partnership, we will not be able to justify investing additional tax dollars to keep Chrysler in business."

U.S. President Obama has made it clear that our company must attain competitive labour rates: "Now, what we're asking for is difficult. It will require hard choices by companies. It will require unions and workers who have already made extraordinarily painful concessions to do more ... It will require efforts from a whole host of other stakeholders, including dealers and suppliers."

Also on March 30, the Honourable Tony Clement, Minister of Industry, said, "While the restructuring plans represent progress, they do not go far enough to ensure the long-term viability of these companies. Therefore, we are not certifying their proposals. Together with our U.S. counterparts we believe that further fundamental changes are needed."

Just this week, Fiat CEO Sergio Marchionne has made it clear that an alliance is contingent on the UAW and CAW meeting transplant all-in labour rates: "Absolutely, we are prepared to walk. There is no doubt in my mind," Marchionne was quoted as saying. "We cannot commit to this organization unless we see light at the end of the tunnel."

The Canadian government has been very supportive of our viability, providing a loan of $1 billion (CDN, $750 million drawn to date), with an agreement to provide additional support in proportion to the loans received from the U.S. Treasury.

On April 14, the Canadian governments, both federal and provincial, invited the CAW and Chrysler to attend a meeting in Toronto where they laid out four specific guidelines that must be met for providing further financial support. Their "asks" were:

1. That labour costs be reduced to a level equal to those of Toyota Canada. We believe that a Canadian benchmark is the appropriate one for you to achieve. We ask that you jointly demonstrate to us that the agreement you reach attains this benchmark.

2. That Chrysler complete an alliance with Fiat that, in return for equity participation gives Chrysler access to Fiat management, Fiat technology, Fiat sales and distribution outside of NAFTA, and distribution of Fiat products inside NAFTA.

3. That Chrysler and Fiat submit revised plans to Canadian governments and U.S. Treasury based on appropriate assumptions that show clearly Canadian production, product mix, capital investment and R&D.

4. That Chrysler and Fiat commit to maintain Canada's proportion of North American production and to invest over the medium term that same share of total capital investment and R&D expenditure in Canada.

Let's keep in mind, the all-in labour costs at Chrysler Canada are $76 per hour while the Toyota Canada all-in rate is approximately $57 per hour.

While we have made some progress with the CAW, it falls significantly short of closing the $19 gap. And yet, as recent as Wednesday this week, the CAW continues to ignore this clear mandate from the government stating that they will not go any further. This unwillingness to work within the government's guidelines jeopardizes the future of Chrysler and our operations in Canada.

We have made several proposals to the CAW to offset these costs, without affecting base wages and pensions. Some specific examples include:

Prescription drug dispensing fees, by eliminating the cap results in estimated savings of $2.16 per hour.

Elimination of out-of-province health care coverage (snowbirds), with employees and retirees assuming responsibility for any coverage results in a cost savings of $1.00 per hour.

The change from semi-private hospital room coverage to "ward" coverage saves an estimated $0.97 per hour.

Elimination of life insurance for current and future employees results in a cost savings of $1.54 per hour.

The reduction of shift premiums to 2.5 percent results in a cost savings of $.80 per hour.

By increasing health care premiums would save an estimated $1.04 per hour.

The elimination of non-traditional benefits such as child care, legal services, tuition reimbursement, dependant scholarships and extended health care coverage (chiropractic services, massage therapy, naturopath, orthotics, etc.) results in a cost savings of $0.73 per hour.

Unfortunately, the CAW has been opposed to these solutions – however, we are open to alternative ideas. Next week, we plan to meet with the CAW to attempt to reach an agreement that is acceptable to Fiat and the Canadian government.

The clock is running. Without labour concessions, Chrysler Canada's manufacturing operations will not survive long-term. Thousands of good-paying jobs are in jeopardy, as well as the economic health of communities such as Windsor and Brampton.

Canada has always been an important manufacturing and sales market for Chrysler LLC. It represents the largest vehicle sales market for Chrysler outside of the U.S. and no other vehicle manufacturer has a larger portion of its total manufacturing in Canada than Chrysler.

However, these are not normal business circumstances and all Chrysler constituents have been asked to "break pattern" – employees, retirees, dealers, suppliers and others.

Time is very short. We have only two weeks before a final decision must be made. Let me be clear, our negotiations are about saving Chrysler Canada. We are coming down to the wire in the fight for our company's survival – and we need your support.

Bob Nardelli

Tom LaSorda



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  • 98 Comments
      • 5 Years Ago
      As far as Fiat waiting to buy assets in Ch7. There's a problem, They won't get the 6 Bil to do it. that money is for Chrysler from US taxpayers. Do you think the US will finance an Italian ca rmaker? The people, not to mention other car makers would lose their minds.
        • 5 Years Ago
        No Snowdog, Someone was saying Fiat should wait and buy assets in CH7 liquidation. There's no incentive for them to do that. You read what you want into posts don't you?
        • 5 Years Ago
        That is a problem? You want to give $6Billion in Tax payer money for a foreign company to take over Chrysler? After that Chrysler won't be any more domestic than Honda.
      • 5 Years Ago
      Chrysler's current 2009 market share is somewhere in the 9.5% - 11.8% range (someone please help w/ that stat). Seems a fairly low overall market share to be offering all of these makes / models: Jeep: Wrangler, Liberty, Compass, Patriot, Grand Cherokee, Commander; Dodge: Ram Trucks, Dakota, Durango (I think it's discontinued), Minivans, Caliber, Journey, Nitro; Chrysler: Minivans, Aspen (I think it's discontinued also), Pacifica, and the PT Cruiser.
      17 different models, not to mention all the trim lines within those model categories.
      All 3 of these brands together offer 8 total CAR models
      The obvious redundancy in the Chrysler truck / van / SUV line up is only one of the major hurdles Chrysler needs to ovecome quickly in the next few weeks.

      I did body work for 13 years during the 80's & 90's, repairing mostly domestic vehicles, and never thought that any of the Big 3 would go under. Here we are in 2009, and the reality is that Chrysler may not be around much longer as we know it.
      • 5 Years Ago
      If Chrysler or GM goes under without the unions making concessions. US and Canada should not give the employed union workers a cent. They're basically quitting there jobs.A lot of workers wish they had a choice. All you Ford boys need to quit dumping on Chrysler in hopes that Ford survive. I for one will buy an import if Chrysler or GM dies.
      Carlos
      • 5 Years Ago
      So long Chrysler
      • 5 Years Ago
      And, on the 6th day, he took over the auto industry. LOL


      • 5 Years Ago
      Aw, you're worried about your massage therapy benefits being cut? Your out-of-province healthcare benefits? Sorry, I didn't realize that someone guaranteed you the best job EVER.

      If I worked at one of these plants, I would be tempted to inflict serious bodily harm on my coworkers who were displaying this level of greed. I would imagine that most of them grasp that "slightly worse job" is better than "no job at all," but these occasional displays of monumental stupidity must be infuriating. The sense of entitlement is staggering.

      I'm waiting for the first headline of "UAW (CWA) Employee Beats Coworker With Wrench For Refusing To Act In Own Self-Interest."
        • 5 Years Ago
        The CAW is NOT a part of the UAW - they split from the UAW in the 1980's because the UAW was negotiating concessions during the Chrysler loan guarantees of the early 1980's. Again, the Canadian Auto Workers are NOT a part of the United Auto Workers.
      • 5 Years Ago
      But what about Cerberus. They are triple-loaded. Maybe as much as 7 billion dolars. Of course if they dumped that into Chrysler then they'd be broke-eh.
      Still there is a dichotomy between willing dumping billions into |Wall street firms and then telling the companies that MAKE things to cram it.
      How bout the govt rolling back all enviro and safety issues to when his Highness, the beloved Bill clinton was first in office- '93,94.
      And keep the rules there for 10 yrs. Get the govt out of making cars for ten years. That is the problem as much as the rest of it.

      For the sake of a few billion why let these jobs go? Get the TARP money back from the banks that wnt to return it, and bail out automakers and the dipstick unions one more time- and buy some time to figure it out.
      • 5 Years Ago
      Cool, close the shop, come to Detroit, hire non union workers at 14 bucks an hour with the benefits your proposing and start building American cars IN America again. As someone who is self employed, I know many union (and non union) workers who have no idea what benefits would cost you if you have to get your own policy. On average, it would be cheaper for me to pay cash to the doctors and negotiate a better price. Really.
        • 5 Years Ago
        Yup, 650 here for my wife and myself plus everything has a small co-pay when you leave and a bill later for what was not covered. When I was a Teamster, I didn't know people had co-pays and bills with medical, not to mention the cost per month for the base policy. I would guess that for the average union worker to get their own medical for their family would cost about a weeks pay if they don't visit the doctor often. Thats hoping they didn't want dental and optical, of course.
        • 5 Years Ago
        Exactly! Those fools have no idea. Health insurance for my small company alone is 1200 a month for just 3 employees. I'll admit because one person is over 60, but still. Its a royal pain in the ass paying that bill plus worker compensation insurance. Working for yourself doesn't even seem worth it some times when I could just go out and get a union job and forget all the hassle.
      • 5 Years Ago
      The idiocy of the way these buffoons are handling this is unbelievable.

      It is simple. Do you want a job or not?

      If yes, then concede.

      If not then, thanks for playing, enjoy your sofa.
      • 5 Years Ago
      So if i'm reading this right, the Canadian auto workers rather lose their entire job, instead of losing some benefits?
      If that's the case, they are idiots.

      I know quite of few people without jobs right now, and i can certainly say these cuts are a hell of alot better than being unemployed.
      • 5 Years Ago
      Is Chrysler really worth saving? Are there not too many car companies and brands on the market place today? The struggle is not just within the current economic crisis, but in the future competing with other companies that may have superior products. With new car sales falling, you can't expect to save every job and keep current production capacity. Somethings got to give, and perhaps Chrysler's going the way of the Dodo will leave a gap that will be helpful for GM and other companies to survive.
      http://www.landrover4x4.com/index.htm
      http://www.southhillshonda.com/
      http://www.viphonda.com/
      • 5 Years Ago
      Take the pay cut folks,and cover your debts as fast as you can because it's going to get a lot worse.
      Steel industry,Lumber industry,plastics,paint,glass etc.etc.

      And finally let's not forget the fat cats in the public service who think there pensions are safe lol.
      Lot's of money going to support the massive unemployment and social services will be needed.
      Massive layoffs coming for the public service/health care/education etc.
      I suspect civil unrest will come soon if the government continues to support public service union demands and let's the rest of us go hungry.
      You better start thinking of a 20 to 30% paycut my public service(PSAC)freinds.If that doesn't happen there will be thousands blocking federal and provincial government buildings and all out war will begin.
      Oh! Heres a thought.Take the 30% pay cut from the public service employee's and use the money to support the Auto industry.
      It's my tax dollars paying for these PSAC fat cats and all ever get when I call for government assistance is an "effin" computer answering machine.


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