By clearly signalling it is going to help, the U.S. government has actually made it more difficult for Chrysler to obtain concessions needed for viability.
While the U.S. industry and associated pundits were transfixed by the apparent decision of the Obama administration to force out Rich Wagoner, CEO of General Motors, to give it political cover for an extension in loans, Chrysler and the Canadian Auto Workers remained locked in an intense battle over the company’s future. A Chrysler negotiator reiterated over the weekend that it needed more concessions from the CAW, which has said talks have broken down.
“We all recognize that we are in unprecedented times as it relates to the global economy and current financial crisis, which has a direct impact on the automotive industry. After several days of bargaining in good faith, Chrysler and the CAW have not reached an agreement that closes the competitive gap with other automobile manufacturers in Canada to ensure Chrysler’s immediate viability,” said Al Iacobelli, Chrysler’s top labor negotiator.
“The Company has been very clear in its Canadian Government testimony and position with the CAW: We must close the competitive gap of $19 an hour immediately. Although we made progress toward closing the gap, significant issues related to the existing ‘pattern’ remain on the table. These are not normal business circumstances and all Chrysler constituents have been asked to break the pattern – employees, retirees, dealers, suppliers and others. These requests have been made to all of our constituents, including the CAW, to ensure Chrysler’s viability,” he said.
CAW President Ken Lewenza had no immediate comment on the Iacobelli’s comments. The talks have been particularly tense because the CAW has made an issue than $30 million in bonuses Chrysler Vice Chairman Tom LaSorda has collected in the past two years both from Daimler AG and from Cerberus. Other Chrysler executives also have collected substantial “retention” bonuses while the company has suffered financially and thousands of employees both in the U.S. and Canada have been laid off.
If negotiators fail to reach an agreement, Chrysler has vowed to permanently close its Canadian operations, putting some 8,000 Canadians out of work.
Talks began last Monday on trimming labor costs before the March 31 deadline to qualify for a bailout of more than $2 billion from the governments of Canada and Ontario Province. General Motors reached a deal with its approximately 10,000 Canadian workers on March 8 to freeze wages and pensions, and reduce holiday pay. Chrysler, however, said the cuts, which were to be used as a template in negotiations, were not deep enough.
The Canadian and provincial Ontario governments scheduled a news conference for noon Monday to discuss the restructuring efforts in the auto industry. This will follow President Obama’s announcement on his plan for GM and Chrysler, which is due about 11 am.