Fiat tells union ... $19 per hour pay cut or we walk away from Chrysler.

CAW to Chrysler: No more concessions in bankruptcy
Union wants shield if company seeks to use Companies Creditors Arrangements Act

GREG KEENAN AND KAREN HOWLETT AND SHAWN MCCARTHY

TORONTO and OTTAWA -- Forced to make concessions twice in less than a year to Chrysler Canada Inc., the Canadian Auto Workers union is seeking a guarantee that its members won't be targeted again if the company seeks bankruptcy protection.

The union is insisting the auto maker not seek more cuts in labour costs if it files for protection under the Companies' Creditors Arrangement Act, union sources said yesterday.

What's more, the union could use the Chrysler contract to extract a similar promise from General Motors of Canada Ltd., which did not include such a clause in the contract it signed with the CAW in March.

The agreement with GM calls for about $7 an hour in cuts, but Chrysler has been seeking concessions worth about $19 an hour. Chrysler wants to slash benefits by that amount to reduce its overall labour costs to $57 an hour from $76 and match what Toyota Motor Manufacturing Canada Inc. pays its workers.

The union and Chrysler moved closer to an agreement yesterday but by late evening still did not have a deal.

"We are wrestling with a number of issues," CAW president Ken Lewenza told reporters at a Toronto hotel. Although he said none of the issues was a showstopper, bargaining could break down at any time.

Officials from both Ottawa and Ontario urged the two sides to conclude a deal quickly, he said, and it was clear that the union was wrestling with demands from Italian auto maker Fiat SpA, which is seeking a strategic alliance with Chrysler LLC to save it from liquidation.

Both the governments and Chrysler executives said a bankruptcy filing by the company is possible, Mr. Lewenza said.

The union originally stood fast against giving Chrysler concessions beyond what it had provided GM in what is known as pattern bargaining, where an agreement with one company provides a template for deals with the other two.

But that sacred tenet of the auto workers movement is now in tatters.

"There is no pattern any more," Mr. Lewenza said.

If GM insists that any cuts given to Chrysler must be extended to it as well, the CAW will counter that GM also sign a clause not seeking any additional concessions if it goes into CCAA protection, union sources said.

Such a clause could make it difficult to use the CCAA process to dramatically reshape contracts, but not impossible, labour experts said.

"As the CCAA unfolds, the union always has a knife at its throat," said one labour lawyer, who added that Air Canada came back to its unions for cuts several times during its CCAA restructuring.

The New York Times reported that Chrysler and the United Auto Workers struck a deal that will protect health care and pensions for U.S. workers in a U.S. bankruptcy protection.

Sources have said Chrysler Canada and Chrysler LLC are close to a filing for bankruptcy protection in Canada and the United States, with the governments providing the financial backstop - known as debtor-in-possession financing - necessary to keep operating.

Such financing would be in the range of $40-billion (U.S.) to $50-billion, sources and industry analysts have said, with Canadian governments providing about 15 per cent of the money, or about $6-billion.

Industry Minister Tony Clement confirmed that Ottawa is looking at DIP financing, although he called $6-billion "very speculative."

The government has contingency plans, Mr. Clement said, that rank, in order: restructuring outside protection, a restructuring under CCAA, and liquidation.

He said the stress of the negotiations is affecting him. "My mood changes so fast, we'd almost need a therapist. There are ups and downs and good days and bad days and good hours and bad hours," he said.

While the CAW and Chrysler negotiated, hundreds of GM Canada retirees joined a protest at the Ontario legislature in a bid to get the province to backstop their pensions.

Premier Dalton McGuinty triggered concern about the future of GM Canada's pensions two weeks ago when he said Ontario's Pension Benefits Guarantee Fund does not have enough money to bail out the company's plans.

Givebacks by Canadian Auto Workers mark key element of auto maker's survival, but questions remain

Toronto — Chrysler LLC nailed down a key piece of its survival plan in Canada Friday, but the critical issue of a tax dispute with the federal government still hangs over the troubled auto maker.

Sources said Friday night the Canadian Auto Workers union agreed to
make ground-breaking concessions to Chrysler Canada Inc. after a week of tense, multi-party negotiations that involved the federal and Ontario governments and Italian auto maker Fiat SpA, the would-be saviour of Chrysler LLC.

The agreement, which slices Chrysler's hourly Canadian labour costs
through major union givebacks, won't on its own keep the Canadian unit out of bankruptcy protection.

Read story here.

Deank wrote:at least it sounds like the union is willing to take some sort of cut.. just a negotiated one.. not something forced down their throats..... you know so it looks to their members like they are doing their jobs.. heh... I have no doubt that there is a little bit of back room dealing going on here... Union says yeah we can take a pay cut.. but you know what.. how about you demand something outrageous in public... and then we will say no way and negotiate 75% of that with you...it will sell to our members like milk at a free pancake breakfast

oh wait thats right only big business is evil and underhanded.. a union would enver do something like that.

Miraculously, the CAW managed to preserve union awareness training at Chrysler. Known as NTC training, for CAW National Training Committee, it's been cut back to 24 hours per employee per contract, down from 32 hours.

It's amazing the NTC program, which cost the company $18,609,091 in Windsor alone during the 2002-04 agreement, remains in the new contract at all. If Chrysler's survival is hanging in the balance, why is the union forcing the company -- with the backing of taxpayers -- to spend millions on what many members of Local 444 tell me is a political "brainwashing" program?

Read story here.

Dear Mr. grumpy old man:

I am very pleased to announce that Chrysler LLC has signed an agreement in principle to establish a global strategic alliance with Fiat to create a vibrant new car company.

For the past several months, we have worked tirelessly to reach agreement with key stakeholders on concessions that would allow Chrysler to complete this alliance with Fiat and proceed with its plans without the need for a bankruptcy proceeding. Despite substantial progress on many fronts, the support of the U.S. and Canadian governments, and agreements with most parties, including our unions, dealers and suppliers, it was not possible to obtain the necessary concessions from all of our lenders. As a result, to facilitate this alliance with Fiat and to create a new company, Chrysler filed voluntary petitions for a structured bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the Southern District of New York.

Here's what is meant by a "structured" bankruptcy: With this filing, we will also submit a motion under Section 363 of the Bankruptcy Code, requesting the swift approval by the Court of the agreement with Fiat and the sale of Chrysler's principal assets to a new company. With the approval of the Court, a new stronger Chrysler will be out of bankruptcy in 30 to 60 days.

To clarify our position here in Canada, Chrysler Canada has not filed for bankruptcy protection and is not part of any bankruptcy filing. Rest assured that there will not be a moment's interruption in our work to meet the needs of all our customers. The company will seamlessly honor all warranty claims and service contracts. Chrysler will continue to produce and support quality vehicles over the long term, under the Chrysler Jeep and Dodge brands and parts under the Mopar brand.

Some may be wondering if purchasing a Chrysler vehicle now is a wise investment. Beginning today, Chrysler can look forward to its future with great optimism. In most cases your local Chrysler, Jeep and Dodge dealer has vehicles to sell that are well priced and with attractive customer incentives. Your local dealer would welcome the opportunity to speak with you about today's products, which have the highest quality rankings of any in our history.

We are profoundly grateful for the support of the millions of owners of Chrysler vehicles. We take enormous pride in the contributions we have made to our industry, are honored by the trust you have placed with us for over 80 years, and look forward to continuing to serve you for many years to come.

Again, I thank you for your support and look forward to serving you with outstanding products and service from a strong new Chrysler.

Sincerely,


Bob Nardelli
Chairman and CEO
Chrysler LLC