Tuesday, May 6, 2008

CAW faces GM, Chrysler hurdles

Negotiations for labor deal likely will be tougher than with Ford

Sharon Terlep / The Detroit News

GM and CAW negotiators will start official bargaining Thursday. GM spokesman Stew Low says the company wants to ensure it receives the same level of savings achieved at Ford. (J.P. Moczulski / Associated Press)

The Canadian Auto Workers this week begins a push to convince General Motors Corp. and Chrysler LLC to agree on a labor pact that mirrors the deal adopted with ease by Ford Motor Co., four months before it was set to expire.

But talks may prove tougher for the Dearborn automaker's crosstown rivals.

Even as Ford touted the CAW deal reached last week as a big money saver, industry analysts said the pact will prove too costly for GM and Chrysler, companies that have a larger portion of their North American production in Canada than Ford. The union says its pact with Ford will keep labor costs essentially the same as they are now.

"This puts GM and Chrysler into a difficult spot," Dennis DesRosiers of DesRosiers Automotive Consultants in Richmond Hill, Ontario, wrote in a research note on the Ford-CAW deal. "Both these companies were looking for the CAW to give back a lot more than this contract ended up giving up so they are going to be very disappointed."

The Canadian auto industry is under pressure to slash costs after years of boasting cheaper labor relative to the United States. A weak U.S. dollar and last year's cost-cutting labor deals between Detroit's Big Three and the United Auto Workers have cut the cost of building cars and trucks in the United States.

Negotiators from GM and the CAW already are in disagreement over some of the financial data that sets the groundwork for negotiations, CAW President Buzz Hargrove said. Despite the differences, he said, the two sides agreed to start official bargaining Thursday.

GM spokesman Stew Low said GM is analyzing Ford's deal. The automaker, he said, wants to ensure it receives the same level of savings achieved at Ford, which may call for variances in the agreements because the companies have significant differences in their operations.

"We want to ensure that the economics translate at least as well as they did for Ford," Low said.

Chrysler, CAW set up talks

Chrysler and the CAW meet today to discuss a framework for negotiations.

"We will continue our ongoing dialogue with the CAW behind closed doors, rather than provide guidance on the potential status of negotiations prematurely," Chrysler spokeswoman Mary Beth Halprin said Monday.

Hargrove said he expects GM and Chrysler to agree to deals similar to the one at Ford. The CAW said its membership voted 78 percent in favor of the pact on Sunday. About 9,000 CAW workers work for Ford in Canada.

GM has about 15,000 hourly Canadian employees and six factories; Chrysler has 7,900 hourly workers in three factories.

"Most of us just want to hold on to something close to what we have now," said Pete Papineau, a 27-year-veteran machinist working at GM's Windsor transmission plant.

Hargrove said the Ford deal puts the cost of hourly labor and benefits at $67 (in U.S. dollars) an hour in Canada, compared with $60 an hour for the U.S. hourly work force represented by the UAW. Canadian plants are 10 percent more productive on average than U.S. factories, he said, which makes up for the $7 difference.

"A big deal is being made of us of having this cost disadvantage," Hargrove said Monday. "We've lost more jobs than the UAW even though we've had a cost advantage for years."

But the Ann Arbor-based Center for Automotive Research said the Ford labor deal essentially created more than a $20-an-hour labor cost advantage to the UAW over the CAW. The UAW last year agreed to take over Detroit's automakers' massive retiree obligations in the form of a union-run trust. The companies will provide the cash for the funds, but at a fraction of the cost of their obligations to retirees. The UAW also agreed to a two-tier wage system.

"The Canadian advantage has dissipated and become a disadvantage," said David Cole, chairman for the Center for Automotive Research. "You can't sustain that kind of cost differential and maintain long-term investments."

CAW deal praised by Ford

Ford touted the CAW deal as one that secures long-term savings while requiring almost no new spending.

Joe Hinrichs, Ford's global manufacturing chief, said the deal effectively freezes CAW wages and benefits. Some minor increases were largely offset by modest benefit cuts, such as the addition of a 10 percent drug co-pay, he said.

The automaker negotiated to "buy out" a week's worth of vacation, which Hinrichs said is significant because Canadian Ford workers get a lot more time off than their U.S. counterparts. Ford also can pay new hires 70 percent of base wages for three years, which the automaker will be able to benefit from immediately when it brings on 500 new workers for a third shift at the Oakville, Ontario, plant that builds the popular Ford Edge and Lincoln MKX crossovers and will soon start production of the Ford Flex, a key new vehicle.In exchange for reductions, Ford agreed to keep its St. Thomas Assembly Plant open for the life of the contract. However, the automaker did not make any new product commitments to that facility. Production of Ford's full-size sedans -- the Ford Crown Victoria, Mercury Grand Marquis and Lincoln Town Car -- is expected to end there in 2010.

Even with the new contract, Hinrichs said producing cars in Canada is still more costly than doing it in the United States.

GM, Chrysler see quick deal

GM and Chrysler rank-and-file workers in Windsor were cautiously optimistic Monday that Ford's deal with the CAW means a quick settlement for them.

But many are still nervous whether they can get product commitments and pension protections.

"There isn't much there not to like" in the Ford/CAW contract, said Lino Lomedico, a 17-year veteran and CAW representative at Chrysler Windsor Assembly, said of the deal. "I know there's no wage gains, but there's also no two-tier wages and (Ford) made some commitment to future products."

Getting commitments to Canadian plants is what autoworkers want to see in their contracts, many said.

"We keep getting work outsourced, so just to hear that we can keep working would be what we most want," said Janet Longmoor, who has worked eight years at Chrysler Windsor.

"I don't even think we expect the status quo. But something close to that status quo would be nice," Longmoor said.

At GM's Windsor plant, the sentiment was much the same.

"More money for co-payments on prescription medicines, OK, we can handle," said Wayne Durham, a 27-year plant veteran. "These days, it's all about job security and holding on to the pension, eh."

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