Possible Chrysler Pull Out?
Automaker Sets Conditions for Staying in Canada
The declaration is another twist in the drama as the company struggles to remain viable amidst job cuts, and fight with Revenue Canada over unpaid taxes.
Chrysler's Tax Fight, Bailout Request
The automaker finds itself fighting with Revenue Canada over unpaid taxes. The tax agency holds a $500 million dollar lien over Chrysler’s Brampton plant, and is withholding over $300 million in GST (Goods & Services Tax) refunds. According to Lasorda, the dispute could take up to six years to settle and serves as a major roadblock to further investment in Canada.
The bailout money being sought by Chrysler totals $2.3 billion, 25% of the American bailout. Lasorda wants his in American funds, and in remarks published on ctv.ca told the committee if his company didn’t get the money they would leave: “Chrysler cannot afford to manufacture products in a jurisdiction that is uncompetitive relative to other automotive jurisdictions.” The remarks follow the announcement of 1200 job cuts in Windsor. When asked where operations would be moved, Lasorda hinted they could be moved to St. Louis.
In remarks published in the same article, Committee member NDP (New Democratic Party) MP Joe Coartin replied: “The bottom line is Chrysler does not function in the US without Canada.”
Canadian Autoworkers Union (CAW) President Ken Lewenza commented to Canadian Press that because the plants were both productive and state-of the art, it would cost a lot of money to move operations out of Canada.
Chrysler wants any bailout package to include a settlement of the tax dispute.
C.A.W, GM Agree To Cut Costs
Meanwhile the CAW came to an agreement with General Motors (GM) that could potentially save up to $400 million over 3 years. The deal would see workers lose a $1700/year bonus, one week of special holidays, pay an increased health premium, and see their wages frozen at $34/hr. The union hopes that agreement would serve as a pattern for similar settlements with Ford, and Chrysler.
Chrysler’s CEO Lasorda calls the deal unacceptable, saying it wouldn’t eliminate even half the labour cost gap. He estimates wages and benefits need to be cut by $20, and will seek further concessions.
CAW President Ken Lewenza firmly denied that request. In comments published by the Canadian Press he said there would be no breaking the pattern established with GM: “There is going to be absolutely no walking away from the pattern bargained.”
CAW workers at General Motors voted in favour of the new agreement.
Government Reaction To Pull-Out Threat
In remarks published by the Toronto Star, Federal Industry Minister Tony Clement commented his government didn’t have the necessary facts to make a decision: “I don’t think we’re at the point that we have all the information that we require to make a good judgment.” He proceeded to defend the automaker saying both sides were still feeling their way through. Clement also acknowledged the need of management, labour and government to work together in order to restructure the industry.
Opposition Leader Michael Ignatieff commented on Lasorda’s threat in remarks published by Canadian Press describing his own reaction: “I react very badly to threats.”
In comments published in the Canadian Press, Provincial Industry Minister Michael Bryant called the threat harsh: “It was a ham-fisted way of expressing the reality that in the absence of an agreement, Chrysler’s going to face critical challenges.”
The Big Three Automakers have until the end of March to submit their restructuring plans.
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