• Apr 20, 2009
The top dogs at Chrysler sent a letter to the Canadian Auto Workers union that essentially said that the automaker needed wage concessions of $19 per hour, or else it was Game Over. As a further way to apply pressure, Chrysler's letter frequently referenced the U.S. and Canadian governments as heavies, all of them now waiting for the CAW to provide the necessary "support."

In response, CAW members burned the letter, but not before making notes so it could pen a response of its own. In an official response, CAW President Ken Lewenza calls Chrysler's missive "the most offensive attempt yet" to undermine the CAW, then decries statements made by the Canadian government about the situation. He follows that with a point-by-point defense of the CAW's cost and efficiency, and accuses Chrysler of not only playing with the numbers, but of changing the rules every time a game is agreed upon.

He finishes by stating that instead of looking at the CAW, Chrysler should be speaking to its bondholders who, so far, appear to have been left out of game of sacrifice. You can read those and the rest of his thoughts in the full letter after the jump. Hat tip to Bob!

[Source: CAW]

Letter From the CAW to Chrysler:

PORT ELGIN, ON, April 17 /CNW/ - The past week has seen an unprecedented and outrageous series of attacks on Canadian autoworkers and their union. One after another, business executives and political leaders, working clearly in tandem, have lined up to denounce the CAW's role in the auto restructuring process, and to demand that we accept up to $19 per hour in concessions or else face massive job losses and economic dislocation.

We heard earlier from Fiat CEO Sergio Marchionne, Federal Industry
Minister Tony Clement, and Chrysler Canada CEO Reid Bigland. The letter distributed in Chrysler plants today from Robert Nardelli and Tom LaSorda, a clear attempt to sidestep and undermine the CAW, is the most offensive yet.

Let me remind these businesses and political leaders, and the public at large, of some key facts in this debate:

- Canada has been an incredibly successful and profitable place for Chrysler to do business in. In addition to several billions of dollars in profits generated here over past decades, the company's current activities in Canada are truly enviable. Chrysler enjoys significantly lower hourly labour costs, and higher labour productivity, in its Canadian plants than in its U.S. plants. It enjoys a very high market share among Canadian consumers (in fact, in February it sold more vehicles than any other automaker for the first time in history). Canada's health care system, infrastructure, education system, and research facilities have been and continue to be immensely valuable to this company. Canadians deserve better than to be threatened by a company which has enjoyed billions of dollars in profits here.

- Far from being "inflexible" and "intransigent," the CAW has been pro-active, creative, and constructive in our response to the financial crisis which has enveloped our industry. In May 2008 we negotiated a forward-looking contract, months ahead of the contract deadline, which saved the industry $300 million per year. Then this March, following government instructions that we had to be "part of the solution," we negotiated (for the second time in ten months) the contract all over again. We settled with GM on provisions which will reduce active labour costs by several dollars per hour, and will eliminate a billion dollars of so-called "legacy costs." GM itself confirmed that this contract meets the goal of preserving Canada's investment advantage. Our labour costs will continue to be lower than average of all the suppliers selling into the North American market. On top of that, our productivity is consistently superior.

- Every time we negotiate a new agreement, however, the goalposts are shifted by companies who sense an opportunity to inflict long-term damage on the credibility and influence of the union. We could have reached a valuable new contract with Chrysler, prior to the original March 31 deadline that would have provided substantial savings to the company (including Chrysler-specific productivity and operational changes worth several dollars per hour). But the company, after accepting our offers, always wanted more; with President Obama's announcement on March 30, our talks were put on the back burner.

- Now we face the prospect of our own federal government interfering in our negotiations, which were already complex and difficult to begin with. The federal government has linked arms with the employers to demand exactly the same concessions. Seeing our own government echoing perfectly the painful demands made on hard-working, tax-paying Canadians by the executives of multinational corporations is deeply troubling. Worse yet, by clearly taking sides in private negotiations between an employer and the union, and hence emboldening the company to keep asking for more, the federal government is making it harder to reach a deal.

- We do not accept Chrysler's claim that the work of CAW members costs $76 per hour. This is an inflated and artificial figure that includes many non-relevant factors, such as expenses associated with retirees who have not worked at Chrysler for years, and payroll taxes which are paid to government not to workers. Perhaps most galling of all, Chrysler's number even includes the proportional cost of downtime and lay-offs. In essence, we are being "charged" for our own unemployment. The best way to reduce that artificial $76 number is to put Chrysler workers back to work: that alone would reduce hourly costs by several dollars per hour.

- And we do not remotely accept the claim that there is cost gap of up to $19 per hour between our facilities and non-union auto assembly plants in Canada. The Canadian executives of Toyota and Honda have described many times their strategy of essentially matching wages, pensions, and core benefits to those paid in CAW-represented facilities (as a key part of their long-term effort to avoid unionization).

- Remember, the restructuring of Chrysler and the other companies is a complex, high-stakes process. Chrysler's future will ultimately be decided by bond-holders (who have yet to accept any concessions) and governments. The more we give up, the less bondholders and other vested interests will have to sacrifice.

- The CAW has a proven track record of ensuring that Canadian plants are competitive within North America. It is no accident that Canada has attracted more than its share of new investment, and why our share of total continental production has actually grown in recent years (despite the industry's overall challenges). We will work to defend the interests of Canadian autoworkers - both union and non-union (since remember, any reductions in CAW wages and benefits will quickly be reflected in matching rollbacks in wages and benefits at Toyota and Honda). We will ensure that Canadian plants retain their investment advantage. If Chrysler or any other company goes into bankruptcy protection (an increasingly likely prospect, given the stalemate with bondholders in the U.S.), it will not be because of us.


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    • 1 Second Ago
  • 53 Comments
      • 5 Years Ago
      Glancing at past comments....well, CAW does have self-preservation skills (they took concessions--historically a first since the CAW was originally founded on the 'no concessions' platform)

      FYI: most 'line jobs' today are VERY physical in nature--the popular misconception that one only drives in a screw or pushes a button is somewhere out in LA-LA land.
      A majority of those working on the line on a daily basis have an RSI ( repetative strain injury) for which they wear a brace daily in order to be able to do their job and often also supplement the brace with physiotherapy in order to avoid surgery.
      That particular aspect of ANY type of factory job--assembly line worker or part supplier in any industry , not just automotive related,that utilizes this type of working module is often overlooked and downplayed by the media.

      Sensationalism sells....sadly, truth often does not.

      Concessions by any workforce do not, I repeat, do not sell product.
      While they might entice a new investor, (ie Fiat in the Chrysler scenario) the only other benefit that appears to be consistent is the 'excuse' provided to decrease wages and benefits all around--think bandwagon effect rather than relevancy to economic conditions which may differ according to different economic sectors or geographic location..
      Literally a race to the bottom.....one that NO ONE working at an hourly wage really wants to win!
      Between concessions and pension at this point autoworkers are the litmus test for all other workers.
      Hopefully our elected reps in government realize that 'by the people, for the people' is their true mandate and thus protect the pensions of every worker irregardless of workplace !

      At some point it is important to support and protect ALL Canadians and not just revert to old stereotypes.
      The days of the 'uneducated autoworker/McDonald's employee/WalMart greeter are truly long gone.
      Any 'new hires ' in automotive since 1990's ALL have either a college or university degree---the same is often true of so-called lesser jobs/lesser workplaces---strangely, all now seem to 'require' proof of post-secondary education, even for jobs which are deemed 'menial' ( or manual) in nature.

      Rather than fighting amongst ourselves, we should be questioning why ALL Canadian workers do not have their pensions guaranteed (maybe not quite as royal as those of our elected reps, but they should at the very least be just as secure!)
      • 5 Years Ago
      It's obvious that the current CAW model no longer works and needs to be replaced with something more realistic in today's economy.
      Regardless if they accept the $19/hour cut, the real problem still remains...who will buy a Chrysler product? No one. Until they have a viable product that consumers are willing to buy, things won't change.
      Why is KIA having such a good year? They have products comsumers want to buy. It is as simple as that.
      They need to go down, resturcture, and figure out how to make their product desirable.
        • 5 Years Ago
        Arguably, they're already doing this with the 200C & Grand Cherokee. Both will be very late to the game, but it's a start. If that is the direction Chrysler is headed, I still have faith in them.
      • 5 Years Ago
      They should accept the concessions while Chrysler is in bad shape. Once business roars again, they could demand pay increases.

      Now they re just making the situation worse
      • 5 Years Ago
      How stupid are people ? I know for a fact what labor costs are at all
      of the " big 3 " .
      I spent to many years on the wrong side of the problem, I am tired of
      watching management fail up-word and unions protect lazy
      mother#%@&*%#.
      There is no reason to cut wages, you can cut alot of the other
      fat out of these contracts. CAW is not more efficiant than the plants
      in the states, these companys just like the " FREE " health care.
      (witch really sucks, the worst health care on the planet)
        • 5 Years Ago
        By any objective measure, Canadian health care is some of the best on the planet.

        That aside, the CAW makes some valid points, but the fact remains that if Fiat doesn't do a deal, no money will be forthcoming from the Canadian government. There's a thing called the reality on the ground, and it doesn't matter if you're right if you're out of work.

        I don't disagree that Chrysler can probably cut costs somewhere other than directly off the compensation of the workers, but they're going to have to do a deal somewhere in the middle here or it just doesn't make any difference.
      • 5 Years Ago
      I would like to know when it became the governments roll to make sure " ANY " company didn't fail. We all see how government runns it's own house.
        • 5 Years Ago
        @Len_A: Shhhhh, don't feed the troll.
        • 5 Years Ago
        It's "runs" not "runns".
      • 5 Years Ago
      This recession is the best thing that happened to the US Auto Industry, assuming it results on "market-based" compensation for the Detroit-3 auto workers.

      Honda and Toyota must be having nightmares about the UAW/CAW stranglehold being broken and the Detroit-3 or surviving Detroit-2 competing with them with equal costs.

      Lets see if the Obama-heads and Detroit-3 executives do in fact have the balls to do the right thing and INSIST on absolute market parity on wages and legacy costs.
      • 5 Years Ago
      "We do not accept Chrysler's claim that the work of CAW members costs $76 per hour. This is an inflated and artificial figure that includes many non-relevant factors, such as expenses associated with retirees who have not worked at Chrysler for years, and payroll taxes which are paid to government not to workers. "

      The spinning by the CAW is amazing. Retiree expenses are still a cost, and contribute to the $76/hr figure. How is that a "non-relevant" factor? If it contributes to the overall cost per employee, it IS relevant. I guess they'd rather lose their jobs altogether instead of getting a pay cut.
        • 5 Years Ago
        Hell must be freezing over because I cannot believe I'm here defending a union's position ...

        The reason I'm suspicious about this whole $19/hr issue is that it came virtually out of nowhere. I'd posted a link in another blog entry to an MSNBC story that the Michigan congressional delegation was taken totally off-guard by this union issue because they had been just been told by Chrysler that the issue was bondholders not the union. So after looking at Chrysler's books for 2 months, how is it that only 15 days before the next deadline that Marchionne suddenly finds a $19/hr discrepancy that the union has to swallow immediately - or else? That's not exactly peanuts and it makes this whole thing smell like a pressure tactic.

        The union is pretty much screwed any way they turn. If they don't cave they'll take the blame for destroying Chrysler. If they do cave, there's nothing whatsoever that says Marchionne won't close the plants or significantly cut production anyways.
        • 5 Years Ago
        I've always wondered that...

        if the Unions say that secondary costs are inflated and fictional, and don't count....

        Does that mean that the companies don't need to actually pay those costs?

        Either it is a COST, or it is NOT. There ain't no third direction.

        if ('x' number of contracted current and former employees * $y contractual-retirement benefits dollars for those workers) + (z number of current workers * 'w' average wage rate per hour for those workers) = 'L'estimate of labor costs.

        (there are probably other incidentals in there, but let's keep this somewhat simple...)

        'L' labor costs / 'z' number of current workers = 't' total labor cost per worker

        The company says T = ~$76 per hour, per employee, on average. Working backwards, that means that 'L' is a pretty damn big number.

        But no, the unions won't budge... why would they let the company not pay some of those artificially inflated, and inconsequential benefit costs, that shouldn't be incorporated into the figures?
      • 5 Years Ago
      Shut up, Len_A. No one cares about your grammar and spelling "improvements" to other peoples' posts
      • 5 Years Ago
      It is a big company that just needs to go away. The pieces need to be given or sold to people (management and workers) who want to make cars and make a profit. If the workers see their value as a higher value item that could be used in another industry...good luck and hope that that industry will come to your small centric pissed-off socialist world. When your town implodes and your left unemployed and your home is foreclosed and you are left living in a ghost town with nothing but a VFW serving stale beer, a Wal-mart, a McDs...once again...good luck, and here is hoping all your belongings fit in your car when you are forced to leave to move to another town, state or country for work. Starting off at the bottom of the work chain will surely suck.
      • 5 Years Ago
      If the money was flowing from consumers buying, there would be no crisis! Chrysler needs to build cars that people would like to buy! Daimler forced alot of crap out there! The big wigs need to take a reduction also but does not look good. The only difference between the big 3 and toyota/honda, is the pensioners. Wages and benefits are pretty much identical!
      • 5 Years Ago
      Sounds good until you realize taxpayers are paying Chrysler's payroll, $750-million so far.
      • 5 Years Ago
      This is the first time in my life that I am not proud to be a Canadian.
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