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 | Image: Bill Pugliano/Getty]

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