• Apr 25, 2009
The April 30th deadline to reorganize looms larger by the second, and Chrysler is scrambling to make deals that could theoretically help it stave off a bankruptcy filing next week. For that to happen. Chrysler needs to get concessions from labor unions and lenders that make the financial situation palatable enough for Fiat to step in and make the automaker "financially viable" in the eyes of the President's auto industry task force. To that end, it appears that the contentious situation north of the border between the automaker and the Canadian Auto Workers union has ended in an agreement -- not that the CAW brass sounds particularly happy about it. Follow the jump for the rundown of what the proposed deal entails.

After going through what CAW leader Ken Lewenza called "the most torturous and unfair process imaginable," the union and representatives from Chrysler and Fiat struck a deal that will:

  • Retain current CAW wages and pension benefits (for now, at least)
  • Have Chrysler/CAW set up a health care trust modeled after the UAW's VEBA fund. CAW's Lewenza says there's still "work to do" on this and thus no implementation timetable has been set.
  • End the third shift at Windsor assembly this August
  • Keep all of Chrysler's Canadian plants open
Concessions by the CAW on benefits include:

  • Elimination of semi-private hospital room coverage
  • Elimination of the employee discount on vehicle purchases
  • Elimination of a $3,500 employee vacation buyout option
  • Elimination of tuition reimbursement
  • Increased prescription costs
Finally, work rule changes agreed to by the CAW include:

  • Total time per shift for lunch, bathroom breaks to be set at 40 min
  • Chrysler Canada plants to adopt Fiat's "World Class Manufacturing" production process
  • Chrysler will be given flexibility to use part-time temp workers when necessary
  • Suppliers will be able to work (i.e. build, assemble parts) inside the vehicle assembly plants
The full official CAW statement can be read here. Chrysler's official statement is here. The union rank-and-file will vote on the deal today and tomorrow.

Despite all this, there are no guarantees whatsoever that Chrysler won't file next week anyway. Remember, The New York Times reported earlier this week that U.S. Treasury officials are already working with Chrysler on a bankruptcy filing, and that the administration effectively had a side deal in place with the UAW that would protect the union's benefits. (In response, the UAW came out and said this isn't the case, for what that's worth.) CAW's Lewenza says that Chrysler/Fiat negotiators explained to him that a Chrysler bankruptcy filing would split the automaker into "good" and "bad" companies, similar in concept to what media rumors say is in store for GM if/when it files.

And so, we wait for next Thursday, when all of this is scheduled to come to a head, one way or another. Will Chrysler score enough givebacks from its stakeholders to allow Fiat ride in on a white horse and save the day? Or will the Italian automaker simply wait for a Chrysler bankruptcy, after which it will swoop in like a vulture to pick and choose what parts of the carcass it wants to keep. Stay tuned. This is going to be a busy week in Auburn Hills.

[Sources: Detroit Free Press, CAW]


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  • 40 Comments
      • 5 Years Ago
      All the concessions seem very reasonable, minor actually, like in ones most other people don't have especially those working for companies facing bankruptcy.
        • 5 Years Ago
        Sorry wrong post to reply to. Hey Autoblog, delete feature? Please?
        • 5 Years Ago
        "Under full capitalism none of these things would exist; everyone is supposed to fend for themselves. "

        How so? Even in England during Victorian times, when the industrial revolution was getting under way there were places for the poor to turn to. And orphanages for children without parents. There has always been a social safety net. It's just recently that it has become fashionable for the government to do the work of private charities and religions. Problem is government is often more inefficient at it. The first help on the scene after Katrina wasn't the local, state, or federal government (which to this day says they cannot render help until 72 hours have passed). The first help on the scene were charities run by the Salvation Army, the Baptists and the Catholics.
      • 5 Years Ago
      Sorry, but $38 an hour is awefully high for an assembly job, assuming no benefits are included...I wonder what percentage of the workforce has that income rate...

      I'm all for people making more money, but there needs to be parity. It's hard to sell any car to the public when the buyers make less than the people putting them together.
      • 5 Years Ago
      After going through what CAW leader Ken Lewenza called "the most torturous and unfair process imaginable," the union and representatives from Chrysler and Fiat struck a deal that will:

      * Retain current CAW wages and pension benefits (for now, at least)
      * Have Chrysler/CAW set up a health care trust modeled after the UAW's VEBA fund. CAW's Lewenza says there's still "work to do" on this and thus no implementation timetable has been set. I THOUGHT CANADA HAD UNIVERSAL HEALTH CARE?
      * End the third shift at Windsor assembly this August
      * Keep all of Chrysler's Canadian plants open

      In addition, concessions by the CAW on benefits include:

      * Elimination of semi-private hospital room coverage - NOT A BIG DEAL
      * Elimination of the employee discount on vehicle purchases - NOW CHRYSLER EMPLOYEES CAN BUY A FORD GUILT FREE.
      * Elimination of a $3,500 employee vacation buyout option - NOT A BIG DEAL
      * Elimination of tuition reimbursement - NOT A BIG DEAL
      * Increased prescription costs - WITH UNIVERSAL HEALTH CARE THIS ISN'T THAT BIG A DEAL.

      Finally, work rule changes agreed to by the CAW include:

      * Total time per shift for lunch, bathroom breaks to be set at 40 min - THIS IS CALLED A REALITY CHECK FOR CHRYSLER EMPLOYEES.
      * Chrysler Canada plants to adopt Fiat's "World Class Manufacturing" production process - YES. FIAT HAS A GREAT REPUTATION FOR ERROR FREE VEHICLES. (snark)
      * Chrysler will be given flexibility to use part-time temp workers when necessary
      * Suppliers will be able to work (i.e. build, assemble parts) inside the vehicle assembly plants


      Overall it seems like a reasonable deal. I don't know who Ken Lewenza thinks he's fooling with his "most torturous and unfair process imaginable" comment, but if your in a union I guess your required to think everything is unfair.
        • 5 Years Ago
        Obviously you have a closed minded attitude and you get all you news from the Liberal media and you give Faux news and the Repubicans credit for something they had absolutely nothing to do with Ultimo. You should open your eyes and see what's going on around you. I'd be glad to help.
        • 5 Years Ago
        "* Increased prescription costs - WITH UNIVERSAL HEALTH CARE THIS ISN'T THAT BIG A DEAL."

        Their universal healthcare doesn't cover prescription drugs.

        Many of your other conclusions are similarly sound.
        • 5 Years Ago
        It's quite obvious that you have never worked in a lean vechicle manufacturing
        Plant. The workers in these plants are subjected to some of the most mind numbing, physically exhusting, monotious work. Day in and day out. The comments able work conditions from anyone who has not worked one day in the type of work environment are unwarrented.

        When was the last time you ASKED to go to the washroom to releive yourself
        And were told to wait 10-12 minutes till they could find someone to stand in your place?? I doubt anyone that works behind a desk has this problem.
        • 5 Years Ago
        "Suppliers will be able to work in vehicle assembly plants".
        Who owns the plants?Shows You who's in charge.
        The thugs and goons
        • 5 Years Ago
        "Universal health care" in Ontario(canada) doesn't cover everything.. prescriptions aren't covered, hospital stays are Ward (4 per large room), doesn't cover dental, doesn't cover glasses/contacts, and has poor coverage for hearing aids(limited to 500 per hearing aid, when a good hearing aid will run around 2000-2500 apiece)

        The Green Shield plan covers semi-private hospital stays(2 per room), covers dental, including braces, covers glasses/contacts to some degree, largely pays for hearing aids, etc.

        I don't remember what the current drug coverage is, but when I was growing up we had to pay 35 cents for a prescription, no matter what the true cost was.
      • 5 Years Ago
      Just curious.
      Why does a dealership mechanic or bodyman make $20 - $25 an hour and
      the people that build these cars make $50-$60- $70 an hour???

        • 5 Years Ago
        They don't.

        Union wages start at about $14 an hour and run up to about $38 an hour.
        What you are referring to in your $50, $60, $70 an hour is the total labor costs of production, health care, vacation and benefits...not just wages.
        • 5 Years Ago
        Thanks for the reply Jamie.
      • 5 Years Ago
      A lot of you seem to confuse "quality" with design. They are not the same thing. You may have a poor design, that has good quality. And you can have good quality, of a poor design. I think overall quality is vastly improved, but there is much room for design improvement. Just my 2 cents.
      • 5 Years Ago
      Lead time to rebody and engineer US safety compliance for the Fiat products is two years. Does anybody think Chrysler will last that long? Really. Say g'night, now.
        • 5 Years Ago
        These cars will not be FIATs. They'll be Chryslers. That means new bodies and trim, especially for the 500. US standards are still different, some easy to do, such as glass and headlight wattage. You can't just wave a magic wand and change badges. Anybody in engineering will tell you that few things are as simple as they appear. There will probably be no exemption for emissions testing, which was a 50k mi. deal last time I heard. That can't be done in a weekend.
        Before most standards, Chrysler imported several English and French smaller cars which were universally crap. I trust they learned from that.
        • 5 Years Ago
        There was supposed to be a rebodied 500 sold as a Chrysler. A FIAT FIAT would benefit only the dealers who would carry it. A tiny car with minimal markup doesn't need an additional layer of high overhead distributorship such as Chrysler if it's to be competitively priced. And those who remember FIAT of the olden days would never buy another.
        • 5 Years Ago
        I keep hearing this but nobody says why. Do you have a reference? Since Euro cars have pretty good crash standards themselves and emissions standards, exactly what is supposed to take two whole years to change?
        • 5 Years Ago
        mr Ed:

        "These cars will not be FIATs. They'll be Chryslers. "

        Sergio Marchionne has already stated that the FIAT 500 sold in the US would not be a Chrysler, but most definitely a FIAT.
      • 5 Years Ago
      After going through what CAW leader Ken Lewenza called "the most torturous and unfair process imaginable,"

      I think that being unemployed if Chrysler goes bankrupt would be even more torturous and feel more unfair.
        • 5 Years Ago
        Talk about being stuck between a rock and a hard place. Would you rather have A job or NO job? It pretty much comes right down to it. Not to mention that all these workers probably drive Chryslers. Depreciation of a car made by a bankrupt company must be killer...
        • 5 Years Ago
        Funny how "Retain current CAW wages and pension benefits (for now, at least)" translates to " "the most torturous and unfair process imaginable".
      • 5 Years Ago
      Chrysler and Fiat? Someone blogged about Chrysler's quality being at an "all time high"? Their all time high is third in line to American competitors and decades behind most European manufacturers. Now Fiat (Fix it again Tony) is the answer? Let's not forget, the only reason Chrysler started to see a swing in a positive direction was due to Mercedes Benz technology in the 300. The interior of the vehicle is mainly Chrysler - cheap and inferior as ever! I gave up reading most Union blogs, when is the Union ever happy? Eventually people will realize that slump in sales is primarily union and not economically related. Stickers prices jacked to $45,000.00 plus while financing options didn't stretch for the accomodation. The average American can't afford $700.00 auto payments and the average American can't purchase for cash these days. Someone has to pay for Union demands - oh wait, that's us, it's built in to every sticker price - thousands upon thousands of dollars. Then we wonder why we're where we are? Try looking beyond Wall Street, maybe toward Detroit.
      • 5 Years Ago
      - Chrysler will be given flexibility to use part-time temp workers when necessary
      This is the most important part of the deal. Chrysler will save a lot of money this way after the bankruptcy.
      Btw there is nothing wrong with socialism. If you think that the most important part of society is the middle class you choose socialism, if you think is the upper class you choose capitalism.
        • 5 Years Ago
        @Parkerman
        The funny thing is the communists (China) are doing a lot better than we are right now financially.

        I don't see what's wrong with mild socialism, everyone says the term as if it's evil or something. But in many ways some of the social interventionism under socialism is necessary, ie unemployment, disability benefits, education, social security, etc. Under full capitalism none of these things would exist; everyone is supposed to fend for themselves. I don't think America would be as good a place to live without these things; certainly a lot less people would see this country as an ideal place to immigrate to. For one, you would have people in the lower classes suffering and probably much more unrest. Without public education, we probably wouldn't have gotten anywhere near our current level in the scientific community.
        • 5 Years Ago
        "Under full capitalism none of these things would exist; everyone is supposed to fend for themselves. "

        How so? Even in England during Victorian times, when the industrial revolution was getting under way there were places for the poor to turn to. And orphanages for children without parents. There has always been a social safety net. It's just recently that it has become fashionable for the government to do the work of private charities and religions. Problem is government is often more inefficient at it. The first help on the scene after Katrina wasn't the local, state, or federal government (which to this day says they cannot render help until 72 hours have passed). The first help on the scene were charities run by the Salvation Army, the Baptists and the Catholics.
        • 5 Years Ago
        Socialism = fail
      • 5 Years Ago
      The quality of commentary is terrible. The auto the quality as measured by JD power in its Three Year Reliability Report is illuminating. The Chrysler brand is above average, while Dodge is slightly below average as is Jeep. But they are miles ahead of some of your European Junk.

      The real significance is that quality is becoming a statistically insignificant measure. The bad are closing in on the best. That is really a big change from the days when the quality was two to one in problems measured per vehicle between the best and worst. But not anymore, except for some truly execrable vehicles from the Abominable Five. I should note that the really poor vehicles form some third world countries and internal Chinese companies are NOT included.

      The "Abominable Five" or the Five worst, world-traded, brands in most of the world markets, as measured by JD Power which includes ail the common imported/exported brands and domestic American brands. show that The "Abominable Five" are (SURPRISE!) three Japanese brands, and two European brands. The absolute worst is Suzuki. Others were Daewoo, and Mitsu, but the biggest brand as an "Abominable Five " is Volkswagen, the German mass producer, and finally BMW's Land Rover.

      VW ranked some 60 positions worse than Chrysler, in reliability.

      But the real significance of this announcement is not immaterial, erroneous baloney from posters. It is that Chrysler is pulling off the requirements to do a bankruptcy without invoking a formal Bankruptcy.

      The bond holders oversubscribed the tender for equity offering, and the Government/Chrysler hoped for $6 billion of their $7+ billion or so of unsecured debt to be tendered.

      They got $7 billion tendered, but at a higher conversion price than planned; negotiations are continuing.

      Two of the three legs almost solved. The UAW is next, but they have less distance to go to match transplants costs than the CAW, who agreed now. Furthermore their current contract calls for an economic match with the transplants in 2010, only 6 months from now. So a 6 month speedup is relatively easy.

      If the UAW will agree, as the Italian Union leader for Fiat said in a press conference after conferring with the UAW's counterpart Mr. Gettelfinger, before retracting his comments as premature,then the UAW leg is secured.

      Chrysler will have pulled off the miracle of miracles, without a Chapter 11/ Chap 7 formal Bankruptcy filing.

      Good positive news. GM has a shorter distance to go, so if Chrysler succeeds, its is likely GM can also avoid bankruptcy. Both will have obtained the concessions for Viability, without formal bankruptcy and without the perils. Wonderful. Then Ford will have to try to match, I'm sure.
      • 5 Years Ago
      Will the union be dismantled I wonder.
      • 5 Years Ago
      Oh, and this is going to hurt the dealerships the worst.. Right now Chrysler is the #1 seller in Canada.. i wouldn't be surprised if a large chunk of that is because of the employee purchases, combined with their employee control numbers used all over... If you're going to be stuck driving a Chrysler, at least it's cheap.. now the cheap incentive is gone.
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