As much as I love my Jeep, this story makes me want to vomit. I'm ready to say goodbye to Chrysler...

http://business.theglobeandmail.com/servlet/story/RTGAM.20090311.wchryslerCanada0311/BNStory/Business/home

Chrysler threatens to pull out of Canada
Article Comments (688) SHAWN MCCARTHY AND GREG KEENAN

From Thursday's Globe and Mail

March 11, 2009 at 11:01 PM EDT

OTTAWA AND TORONTO — Chrysler LLC threatened last night to pull the company's production out of Canada – a move that would throw 9,000 employees out of work – unless governments here provide $2.3-billion (U.S.) in loans and its Canadian union agrees to slash labour costs by 25 per cent.

At a parliamentary committee hearing last night, Chrysler president Thomas LaSorda said the company would commit to maintaining roughly a quarter of its North American production in Canada if its “needs” are met.

“The current success and long-term viability of Chrysler's manufacturing operations in Canada is very much dependent on three critical factors,” said the Detroit-based executive, who grew up four blocks from the firm's Windsor plant where his father, Frank, worked and was union president.

“Chrysler LLC cannot afford to manufacture products in a jurisdiction that is uncompetitive relative to other automotive jurisdictions.”


Mr. LaSorda said that in addition to the government loans and an agreement by the Canadian Auto Workers to dramatically reduce labour costs, the company requires a letter from the Canada Revenue Agency saying it will seek no more cash or collateral in its continuing tax fight with the company.

The federal government asserts Chrysler paid more than $1-billion in taxes in the U.S. that should have been paid in Canada and has placed a $500-million lien on its Brampton, Ont., plant and withheld $300-million in tax rebates pending an arbitrated settlement.

Asked by an MP whether the company has the ability to move production, Mr. LaSorda noted Chrysler recently closed a minivan plant in St. Louis, which could reopen to take production from Windsor, which makes the same model. He said models currently being made – or planned for – its Brampton plant could be moved to the U.S. or Mexico.

CAW president Ken Lewenza called Mr. LaSorda's threats “blackmail.”

“He's obviously blackmailing the Canadian government for Canadian jobs and he's obviously blackmailing the Canadian Auto Workers,” said Mr. Lewenza, who began working in the Chrysler minivan plant himself as a teenager and was once president of the same Windsor union local that Mr. LaSorda's father led.

However, Mr. LaSorda said he did not intend to issue threats but to provide a clear picture of the company's challenges.

“The bottom line is we needed to be very, very clear – ambiguity doesn't help the process,” the auto executive told reporters after the meeting. “These are things that Chrysler needs … we know they can be addressed. The sooner the better, and we'll be here for a long time once they are addressed.”

He noted Chrysler plans to invest $1-billion in Brampton and several hundred millions of dollars in Windsor if it gets the assistance from government and unions that it is seeking. He added, however, that the Windsor van plant is already “highly profitable.”

Chrysler last month surpassed General Motors to post the highest sales of any auto maker in Canada – the first time it has achieved that ranking.

The company, which is controlled by Connecticut-based private equity fund Cerberus Capital Partners, has asked the U.S. government for $9-billion (U.S.) in loans to keep it operating as North American car sales have cratered. The company said it has a plan to survive the downturn, including a proposed merger with Italy's Fiat SpA, but needs the assistance of government, its workers, suppliers and creditors.

Mr. LaSorda said Chrysler's Canadian labour costs are $75 (Canadian) an hour per worker – including wages and benefits for both active workers and retirees – and need to be cut by $20 an hour to be competitive with American and foreign car makers in the United States.

He said a cost-cutting agreement that the CAW struck with General Motors of Canada Ltd. – which GM's workers approved last night with 87 per cent in favour – is not sufficient for Chrysler.

The CAW typically negotiates a deal with one of the Detroit-based companies, and then reaches similar agreements with the others, a process known as pattern bargaining.

“The current agreement with GM is unacceptable to us, and we have to break the pattern.” Mr. LaSorda said.

The union does not agree with Mr. LaSorda's contention that costs need to come down to $55 an hour from $75, Mr. Lewenza said. He noted that GM has confirmed that its deal maintains the cost advantage CAW plants have over United Auto Workers plants in the United States.

The CAW's position from the beginning of the negotiations between the governments and the companies has been that it will remain competitive with UAW plants in the United States, but would not compare itself against U.S. plants run by Japanese-based auto makers in Alabama, Kentucky, Tennessee and elsewhere.

As for breaking the pattern, the union leader said, “We have a pattern agreement with General Motors and that pattern agreement is going to apply.”

GM has asked the federal and Ontario governments for roughly $7-billion in loans, and has submitted a plan that it says will keep the company competitive in Canada.

The CAW-GM deal eliminates one week of time off, diverts a $1,700 annual bonus from workers' pockets to retiree health care, freezes cost-of-living adjustment increases for retirees and extends a wage freeze that began last year to 2012.

Industry consultant Dennis DesRosiers, of DesRosiers Automotive Consultants Inc., gave a rosy outlook to MPs last night.

Mr. DesRosiers said that he believes demand will rebound for the auto industry, and that Canada will be a big winner so long as all the parties can work together to keep jobs here through the downturn.

Asked whether he believes the federal and Ontario governments should lend General Motors and Chrysler $10-billion, Mr. DesRosiers said he would.

“Your government and the U.S. government are forcing them to go through a very rigorous [questioning] process, and if they can answer those questions and prove the answers to those questions, I would say yes, I would do it.”

With a report from Josh Wingrove in Toronto

As much time as I spend dwelling on "buy American" I have no problems buying cars made in Canada. It seems like Chrysler is playing dirty.

If (and that's a big IF) what Chrysler is saying is true, then they should close down those plants. If they cost that much more to operate.

I would say the same thing if it was a plant in Michigan too.

Is private corporation Chrysler that much worse off than GM that they feel they need to ignore the pattern bargaining, and reject wage and benefit cuts that GM says will allow Canadian autoworkers to be competitive with American? It's also interesting to note that the particular plant they are threatening to shut down in the article is later described by Chrysler as being "highly profitable." Though playing Devil's Advocate, perhaps that particular plant is an exception to the rule in Canada.

I've been a supporter of propping up such troubled companies during recessions in the past, believing that it would be economically cheaper for governments to keep people employed than it would be to spend that same money to create new jobs. But with the attitude of Chrysler (assuming it is an accurate representation by the media), now I'm not so sure.

Wow, 75$ or 55$ an hour! Over here the average wage is about 5$ an hour but most people don`t even have that. Everyone would be willing to work for 20$/hr to the death :o
But then again, we`re still a 100 years behind the apes here since the communist regime isolated and slowed us down for 40 years, even though it`s gone for 20 years already :Na_Na_Na_Na:

Wow, 75$ or 55$ an hour! Over here the average wage is about 5$ an hour but most people don`t even have that.

First of all, that is what Management is saying, so take it with a grain of salt. Second, those numbers are including benefits, future pension costs, and from what I hear, even factoring in the cost of pensions of retired employees in the costs of the current employees. So you can't just compare that number to what you are getting paid in cash (though that is exactly what Chrysler wants you to do).

Are they getting paid too much? Yes. Though the discrepancy isn't as high as some would have you believe. The union does need to make concessions. It seems though, based on the hatred I'm reading on the Globe and Mail and CBC websites, that many critics won't be happy until everyone is getting paid minimum wage. Or rather, below that even.

GM has no collateral at all to offer Canadians for the $10 Billion dollars they want, everything they own was used as collateral for the US bailout.
Now Chrysler is pulling this stunt. Everyone knows that GM or Chrysler will take the money and still close shop here.
The Ford CEO is the only one that has offered up some common sense, and they are the only ones not looking for money. They said what's the point of loans to keep people employed making cars that nobody can afford to buy? They suggested if the GOV wants to do something, offer up a large tax credit when recycling your old beaters to buy new cars. The focus should be on getting people to buy cars, not keeping people employed making cars, especially when they aren't selling any.

Like to see the CDN gov't tell them to take a hike, but don't think they will. We shouldn't be bailing out anyone, let alone an inefficient, unproductive foreign owned company. If we're going to support a foreign company, it should at least be the winners and not the losers.