A quote in a news story yesterday appeared to reveal that the Canadian Auto Workers boss gets it and will agree to slash labor costs by 25% so Chrysler LLC can survive.
“We’re going to get it done,” Ken Lewenza, president of the holdout, the Canadian Auto Workers, told Bloomberg April 21 in an interview. “We are not worried about the time frame.”
But time is critical. Washington has given Chrysler another eight days to get its act together and merge with Fiat SpA. The Italian automaker, in turn, wants wages reduced from C$79 an hour by C$19 an hour – a condition that is also imposed by Canada’s federal government.
If conditions are unmet, Chrysler has made it clear that it will close down its Canadian operations, already on the downstroke for years.
Bye bye
More likely if conditions are not met, Chrysler will go into bankruptcy and liquidation in both the U.S. and Canada. That will mean the thousands of CAW Chrysler workers will be responsible for the bankruptcies of suppliers employing tens of thousands as well as pension disaster for retired workers.
The only good news from this scenario would be that Chrysler’s demise will enhance the survivability of the other two manufacturing giants.
CAW has balked at the C$19-an-hour demand because it is more than General Motors or Ford requested. Worries are that it will be whip-sawed into matching lower wages with those two if it agrees to Chrysler’s requirement.
But whip-sawing has been a part of the game and, on the way up, the unions profited mightily (too much so) from picking on one of the Big Three to extract the same benefits out of the other two. The victim was usually the weakest automaker.
New business model, new union model too
The crisis illustrates the flaw in the union mentality: some CAW officials have even demonized the wage-cut request as union-bashing and/or believe that their workers have been at the center of creating good cars for decades.
They are not at the center. Workers are cogs in the wheels of Detroit. Auto company success is the intersection of billions in capital investment with great managers, brilliant engineers, snappy designees, smart marketers and lady luck.
Lewenza thinks he is just doing his job by holding out for more money on behalf of those who pay his organization dues. But this is the paradigm in the parallel universe of auto unions. He and the CAW must shift gears immediately.
GM shutdown spares Macomb plants – The Macomb Daily News: Breaking … – GM normally shuts down its assembly plants for two weeks each summer to prepare for the new model year, but assembly plants that will see additional down weeks are in Arlington, Texas; Bowling Green, Ky.; Detroit-Hamtramck, Mich.; Flint, Mich.; …. And the Democrates say they are pro union. ” Report Abuse. TEABAGGD wrote on Apr 23, 2009 4:31 PM: ” PEOPLE ARENT BUYING NEW CARS BECAUSE THANKS TO NAFTA EVERYBODY OUTSIDE OF THE AUTO INDUSTRY MAKES $8.00 PER HOUR ” …
INTERNATIONAL AUTO WOES INCREASE « Culture of Life News 2 – Neither knew when the shutdowns would occur, but both said the closures would include the normal two-week closure in July to change from one model year to the next. The company has not yet notified workers. … 1995: Unions Must Study German Auto Lesson – The New York Times. “Luxuries They Can’t Afford” (Business Day, Sept. 13), on the globalization of the German auto industry, helps explain why even the strongest national unions are at a disadvantage in the struggle to …
Sympatico / MSN Autos (EN): Is Chrysler filing for bankruptcy? – I think any company in the auto industry should have to fold like any other business that files for bankruptcy, it forces the other companies still around to rethink old ideas and produce a product that will actually be wanted by those that need it. …. They need to bring down the price of a new car so middle class can afford them again! Get rid of the union they do more harm than good! Posted by: P.K. | 2009-04-24 8:14:31 AM. I think enough is enough. …
Meltdown 101: Why would it make sense for GM to temporarily close … – The United Auto Workers union contract requires the company to make up much of the difference between state unemployment benefits and their wages. A plant’s white collar work force, which has no UAW contract, can use vacation time to continue getting paid during part of the shutdown period. … GM normally shuts down its assembly plants for two weeks each summer to prepare for the new model year, but several assembly plants will see additional down weeks on top of that. …
James Laxer: Canada’s Vital Auto Industry: Past, Present and Future – The concern the government had with that choice was that General Motors, Ford and Chrysler were U.S. owned companies and so too were many of the major parts suppliers for the Canadian auto industry. The problem was that at some ….. We need a new model to plan a wide range of Canadian initiatives. Involved must be the federal government, the provinces, and the cities. The private sector, trade unions, and the best brains in a range of fields must be brought on board. …
Editorial: Between the Lines: MaryAnn Keller: Post C11 GM Needs A … – GM needs a turnaround, even if it is for the “New GM” which emerges from C11. There may be an example in automotive history of a significant turnaround without fresh leadership, but I can’t think of it. (Any ideas, Menno? …. The only thing that this division has going for it is the hope that GM can copy the Toyota/Lexus, Honda/Acura business model… But take a look at Acura sales are imploding and Lexus used to “make it” in North America by marketing Cars that everywhere …
GM to idle 13 plants as it slashes output again – Without the successful resolution of this dispute, it is General Motors’ view that Delphi or its lenders could force GM into an uncontrolled shutdown, with severe negative consequences for the U.S. automotive industry,” GM said in a release . ….. In 1996 a new financial service brand was born in Canada — ING Direct. Bruce Philp played an instrumental role building that brand, one that is detailed in The Orange Code, his new book co-authored with Arkadi Kuhlmann. …
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