The Canadian Auto Workers Union and Chrysler — along with its potential merger partner Fiat — have struck a significant labor agreement that will save the automaker $240 million per year in operating costs. The U.S. government has said it will only offer further loans to Chrysler if it partners with Fiat and reduces costs. Fiat has said it will only partner — and eventually merge — with Chrysler if unions and debtholders agree to concessions, so this is certainly a positive step.
“We are extremely grateful to the CAW leadership and to its hardworking members for their openness in this challenging environment to create a new strategy that will lead this company on a path to success,” said Al Iacobelli, Chrysler ’s lead bargainer. “The tentative agreement also helps move the Company one step closer to a partnership with Fiat SpA.”
“We deeply appreciate the CAW leadership’s dedication and commitment to the process by reaching this tentative agreement. The negotiation process is never easy, especially in these historically challenging times,” Iacobelli added.
The agreement includes: the elimination of semi-private hospital coverage; the elimination of a one-time $3,500 vacation buyout negotiated in 2008; the elimination of clawback reimbursement through the SUB program; the elimination of employee car purchase and tuition rebate programs; an increase in the waiting period for sickness & accident benefits; and a reduction in the maximum dispensing fee for prescriptions.
“CAW members supported their union right through this process, rather than allowing themselves to be intimidated by crude threats,” said CAW President Ken Lewenza. “That has allowed us to bargain the very best agreement possible, imposing the minimum possible sacrifice on our members and their families, despite the incredibly tough times.”
In comments made to the Detroit Free Press, however, Lewenza was considerably less upbeat about the outcome. He characterized the negotiations as “the most torturous and unfair process imaginable.”
The CAW is expected to ratify the agreement over the weekend.
