CAW President Lewenza issues address responding to Nardelli/Lasorda letter
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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Reader Comments (Page 1 of 4)
chineyz954 5:04PM (4/20/2009)
Writing your own pink slip is never smart in a bad economy, but i respect anyone who will stand to their principles. Even when it almost certainly will end your career.
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ckm 8:38PM (4/20/2009)
The CAW sounds like AIG execs who don't want to give back bonuses. Overpaid people who should loose their jobs all around.
Really, I don't see the difference. CAW == AIG
some1 10:55PM (4/20/2009)
the economy is in the tank, people are being laid off left and right...
1 - These people should be THANKFUL to have a job in the first place
2 - Most people in factories dont have DEGREE'S, so be happy with what you make.
my family friend retired from GM, no degree, so did his wife. They are banking some serious cash. they were line workers, go figure, oh and they retired (not forced) at age 50...
so i love how people think that while everything is going to hell, they can not give any, and expect everyone else to give.
the best part is, the average employee is prolly looking at this thinking "im going to be canned cuz of this"
Kevin 5:08PM (4/20/2009)
$19 an hour wage concessions! You gotta be kidding me! I wish I made $19 an hour to concede. Standing on principle is great, particularly when standing on principle in the unemployment line!
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J 5:26PM (4/20/2009)
They aren't wage concessions. They are benefit concessions, including things like tuition reimbursement, getting your own private room for hospital stays for free, having to actually pay what everyone else does for health care, etc.
The actual wages are staying the same.
MemphisNET 5:30PM (4/20/2009)
Most of that 19$ is for legacy costs, health care/meds and other perks.
They're not only jeopardizing their jobs, but those of future Canadian's and Americans.
WarHawk 5:10PM (4/20/2009)
But he does have a point; everyone who is part of the company needs to take their cut.
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BoxerFanatic 5:45PM (4/20/2009)
The unions are much less tied to market forces for pay compensation.
And even if the executives are a bit overpaid, there is nothing saying that they can't be, or that they can't be fired... Even if they were to give up their over-pay, it would be a drop in the bucket compared to union labor costs.
The un-supported union labor costs that are almost completely divorced from market forces that determine labor costs, apply to EVERY union worker.
Standing for your principles tells us where your principles lay. Evidently, theirs do not lay with supporting the hands that feed them, or with coming to a mutually beneficial outcome through compromise. Their principles lay with self-aggrandizement, self-interest at the cost of everything else, and greed in the face of impending dissolution.
So, I guess we are seeing true colors here...
BigWill 5:12PM (4/20/2009)
It's really bad when I believe the CAW is telling the truth, because Nardelli, LaSorda, and Press are even less credible.
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jdavis7188 5:14PM (4/20/2009)
Simply Amazing
Work or Walk... Looks like they wish to walk.
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Sam 5:59PM (4/20/2009)
Hey, if they want to be unemployed (the union workers), be my guest. Because right now, its like you said, work or walk, no exceptions. I think there being pretty stupid and should take accept what they can to still be employed.
ImSteevin 5:15PM (4/20/2009)
And this is exactly WHY Honda and Toyota wage match to avoid unionization, because eventually the purpose of the Union loses it's way, through all the good times better and better benefits are offered, and in bad times, they refuse to give them up. Ironically it seems like the Automakers need a union to protect themselves from the workers unions...
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Kumar 5:24PM (4/20/2009)
Sounds like a bankruptcy filing is more likely.
Makes you wonder if the CAW is going to be the whipping boy when it comes to blaming someone for all workers getting let go, then offered a new job at an entry-level wage after bankruptcy, under new Fiat management.
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rtofilovski 6:13PM (4/20/2009)
Even if Chrysler workers end up with LESS per hour (wages and benefits) than Honda or Toyota, they're still better off with the union (assuming they keep their jobs) because the union is what would have prevented, say, a $25/hr. haircut instaed of $19.
This sort of thing is normal in many types of difficult negotiations - mutual gnashing of teeth and recriminations, followed by a last-minute deal.
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Rboyett 5:24PM (4/20/2009)
He does have a point about the bond holders. They have thus far been unwilling to take any of the cuts the UAW or CAW have gone forward with.
I think that down the road we'll find that bond holders actually want a Chrysler and GM bankruptcy. I'm, betting that these bond holders have insured their holdings with AIG just like many of them did with real estate. If that is the case, then they stand to lose a lot less money if they let these companies go Chapter 11 or (as in Chrysler's case) Chapter 7. Once that happens, they just go to AIG and collect on their policies. Then we the US tax payer get to give AIG more money...
It is just a theory of mine but I believe it is highly probably given bond holder reluctance to accept the equity for debt swaps that GM has brought up..
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Bill Clough 6:47PM (4/20/2009)
The problem with the bond holders, if I understand it correctly, is that they hold as collateral nearly all the machinery and tooling for building the vehicles and real property where the factories are located. If ChryCo goes bankrupt, they take the property and sell it and it won't even go though the bankruptcy. Thus, the bondholders are in a position where their losses won't be any worse in bankruptcy than any other option - they have no real incentive to bargain.
Nick 5:31PM (4/20/2009)
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
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Aki 5:34PM (4/20/2009)
"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.
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BoxerFanatic 6:00PM (4/20/2009)
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?
BigWill 1:02AM (4/21/2009)
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.