September 21, 2012 / 6:18 PM / 6 years ago

Chrysler pressured to accept same CAW deal as GM, Ford

(Reuters) - Chrysler LLC was under pressure on Friday to reach a contract deal with the Canadian Auto Workers similar to those reached at rival Detroit automakers Ford Motor Co and General Motors Co, or face a damaging strike.

A Chrysler badge is pictured on a new car at a dealership in Vienna, Virginia April 26, 2012. REUTERS/Kevin Lamarque

Both Fiat SpA’s Chrysler and the CAW said talks were continuing after the union reached a four-year deal with GM late on Thursday after hours of grueling negotiations. It signed a deal with Ford Motor Co on Monday that will be put up for a membership ratification vote this weekend.

A CAW official said the union met with senior Chrysler officials on Friday morning at the downtown Toronto hotel where talks have been held for more than a month, and asked for a written proposal in response to the Ford pattern-setting deal.

Pattern bargaining, under which the first deal reached becomes the template for deals with the other two automakers, is a longstanding strategy of the CAW meant to ensure that no company has a labor cost advantage over the others.

CAW secretary-treasurer Peter Kennedy said it was unclear when the union would get Chrysler’s response but in the meanwhile discussions would continue. Talks would, however, slow down over the weekend as the CAW’s leadership traveled to Ford plants in southern Ontario, where union members will vote on the CAW’s agreement with the company.

“We will get at it today, and work through today and tonight and be back at it first thing Monday morning... I will be very happy if we can wrap this thing up on Monday,” Kennedy said.


Of the three automakers, Chrysler and its chief executive, Sergio Marchionne, have taken the hardest line on labor costs in Canada, insisting that they must come down to match those of the United Auto Workers in the United States.

The Detroit Three say Canada is the most expensive place in the world to assemble vehicles. Marchionne has threatened to move production out of Canada if labor costs don’t come down.

Even so, Chrysler will ultimately have to accept the pattern agreement or face a costly strike that would halt the production of some of the automaker’s key products, said Tony Faria, a University of Windsor professor and auto industry expert.

Chrysler’s Windsor, Ontario, plant, is the sole source of its minivans in North America, and its Brampton, Ontario, plant, assembles the company’s popular Chrysler 300 Series, Dodge Charger and Dodge Challenger sedans. These products make up 15-20 percent of Chrysler’s sales, Faria said.

“They can’t afford a shutdown of those products. If Sergio Marchionne were to push Chrysler into a strike in Canada all that would happen is that he would lose whatever number of days of production and ultimately end up agreeing to the same deal anyhow,” Faria said.

“It is up to him from there what he is going to do, if he is going to follow through on looking at possibly moving some activities out of Canada into the U.S. or Mexico. But he is going to have to make the decision as he is definitely going to have this contract,” he said.

Although the Detroit Three’s previous contracts expired last Monday night, the CAW, which represents about 20,000 workers at the companies in Canada, said it would continue talks as long as progress was being made. If negotiations falter, it said it would serve 24 hours’ notice of a strike.

On Thursday night, the CAW and GM agreed on a deal that adds a third shift and 900 jobs to the “flex” line at its Oshawa, Ontario, assembly plant and creates 100 positions at its St. Catharines, Ontario, engine and transmission plant.

As at Ford, the agreement includes a wage freeze for existing workers for the first three years of the contract. Workers will get a cost-of-living adjustment in the fourth year, and a series of lump-sum bonuses. New hires will start at a lower hourly rate than under the previous contract and take longer to reach the top level of the pay scale.

Results of the Ford ratification vote should be known by late Sunday afternoon, the CAW said.

Reporting By Nicole Mordant in Vancouver; Editing by Peter Galloway

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