Freelance Writing Jobs | Today's Articles | Sign In

Chrysler's Exit Moves Closer

Automaker, Union in Negotiations

Mar 18, 2009 Laura Steiner

Chrysler's exit from Canada is moving closer to reality. The automaker is evaluating how a possible exit will affect suppliers.

The threat to leave was made by CEO Tom Lasorda as he testified before a Parliamentary Committee. It’s been followed by what’s been termed by company officials in some media reports as a ‘paper exercise.’

Ongoing Negotiations With Union

The Canadian Autoworkers Union (CAW) is in negotiations with Chrysler to cut costs in order to ensure the company’s survival in Canada. It negotiated a deal with General Motors (GM) that sees wages frozen at $34 reducing costs by approximately $7/hr. The union hopes to get Chrysler, and Ford to sign on through the process of pattern bargaining.

Chrysler has so far refused, saying it estimates labour costs need to be reduced by $20/hr in order to match operating costs at competitors Toyota. In comments featured in a Toronto Star article, CAW leader Ken Lewenza voiced his disbelief in the estimate: “Chrysler’s claim that CAW labour costs are about $20 too high is utterly false and not justified even by their own internal numbers.” The company argues it deserves a different deal because GM has a different makeup of employees (more retirees) and therefore less operating costs.

Media reports indicate the two sides have reached a stalemate, and can’t agree on a starting point for negotiations.

Threatened Pullout From Canada

Chrysler Canada’s CEO Tom Lasorda first mentioned the threat of a pullout in his testimony before a Parliamentary Committee. He told the committee his company couldn’t afford to manufacture goods in uncompetitive jurisdictions.

The exit is only a ‘paper exercise.' The company released a statement saying it is only evaluating ‘alternative solutions,’ if negotiations with the CAW fail. If they do fail, and Chrysler pulls out, they would still have to respect laws governing severance, and notice.

Any departure could take time. Current speculation is the company will move operations from Windsor to St. Louis because those two plants made the same car. Removing operations from Brampton would be more difficult because it’s the only plant making full-sized sedans and equipping another plant to do the same thing would cost money.

Union officials at the Brampton location have heard nothing of a possible pullout. In comments published in the Globe & Mail, Local 1285 President estimated it would cost the company a “couple billion to move somewhere else.” He added the process would cost Chrysler market share, because the whole process could take up to 6 months.

Chrysler is looking for a $2.3 billion US bailout from the Canadian government. It’s been in Canada for 84 years, and currently employs 94,000 workers.

The copyright of the article Chrysler's Exit Moves Closer in Business Management is owned by Laura Steiner. Permission to republish Chrysler's Exit Moves Closer in print or online must be granted by the author in writing.