As a government imposed June 1st bankruptcy deadline looms on the horizon, the UAW is reporting that it has reached a tentative agreement with General Motors and the U.S. Treasury.

The specifics of the agreement will not be made public until the contract is ratified, however, the UAW did say that changes have been made to the employees retiree health trust, referred to as the Voluntary Employee Beneficiary Association. It is not clear if the UAW has worked out a deal similar to the one with Chrysler that would see the union take control of a portion of the company.

Negotiations between the Canadian Auto Workers (CAW), GM and the Canadian Federal and Ontario Provincial governments have yet to result in an agreement.

As with Chrysler, a ratified contract would not necessarily mean that GM would avoid filing for Chapter 11 bankruptcy protection.

[Source: Automotive News]

Starting Monday, Chrysler will idle most of its plants as the company restructures under a Chapter 11 bankruptcy filing. This will include 8 U.S. assembly plants, as well as facilities in Canada and Mexico. Other pre-assembly facilities will also face temporary closure including five North American engine plants, six stamping plants and seven transmission plants.

The temporary shut-down will effect 26,000 UAW workers and 10,000 Canadian Auto Workers. 

Chrysler is using the bankruptcy proceedings to its advantage, as the production stoppage will allow it to deplete the ever-increasing stockpile of vehicles.

The temporary shut-down is expected to take from 30 to 60 days, however, there is potential for it to extend beyond that.

[Source: Automotive News]

Less than a day after the UAW, Chrysler and Fiat agreed upon the terms of a contract that would keep the struggling U.S. automaker afloat, details of the agreement have surfaced in which the union will take a controlling share in Chrysler.

At first it seemed almost too good to be true that all sides had reached an agreement without the need for decreased wages. Instead the agreement stipulated that Chrysler would significantly reduce its participation in the employee retirement program.

The agreement came just days after a similar agreement had been reach between Chrysler Canada and the Canadian Auto Workers union – an agreement that was ratified the same day Chrysler and the UAW put together the current proposal.

Now word has leaked that in exchange for Chrysler’s reduced payments to the company’s retirement plan, the company had to essentially hand itself over to the union. In total, the UAW will get a 55 percent stake in the planed Chrysler-Fiat partnership, with Fiat initially taking a 20 percent share, with up to 35 percent ownership possible if certain conditions are met. 

The agreement now has to go before Chrysler’s 26,000 workers, with voting on Wednesday in order to ratify the agreement ahead of the government’s end-of-month bankruptcy deadline. If the deal is reached and Fiat signs on, the Federal Treasury will provide Chrysler (or should we say the UAW) with $6 billion to keep the automaker afloat.

Meanwhile, one other major player (which has been incredibly quiet during this ordeal) has agreed to remove itself from the situation. Daimler will shed its 20 percent stake in Chrysler and rethink ever working with a U.S. automaker again.

[Source: Automotive News]

The Canadian Auto Workers union, after burning the letter written by Chrysler CEO Bob Nardelli and joint-president Tom Lasorda, has now responded with its own statement.

CAW president Ken Lewenza denies that a $19 labor gap exists between Canadian and U.S. workers and refuses to re-negotiate a contract that has already been re-neogotiated. 

Lewenza calls the $76 per hour wage “inflated and artificial” and says that it, “includes many non-relevant factors, such as expenses associated with retirees who have not worked at Chrysler for years, and payroll taxes which are paid to government not to workers.” He continues: “Perhaps most galling of all, Chrysler’s number even includes the proportional cost of downtime and lay-offs. In essence, we are being ‘charged’ for our own unemployment. The best way to reduce that artificial $76 number is to put Chrysler workers back to work: that alone would reduce hourly costs by several dollars per hour.”

Regardless of how you view the statistics, Lewenza makes two other strong points. First, he says that Toyota and Honda (both of which are non-unionized) have made it well-known that they match wages and other benefits with unionized automakers. In other words, the wage that Chrysler employees are making is fair because it’s what the other companies are paying their staff. Second, Lewenza says that the bond holders haven’t had to make any concessions at all.

Unfortunately for Lewenza and the CAW, it doesn’t matter what they say and it seems that if the $19 gap isn’t closed then Fiat won’t partner with Chrysler, the federal governments in both Canada and the United States won’t keep the cash flowing. As a result Chrysler will be forced into bankruptcy, something Lewenza calls, “an increasingly likely prospect.”

Read the full letter after the jump:

Statement by CAW President Ken Lewenza in Response to Nardelli/LaSorda Letter to Chrysler Workers

April 17, 2009, 4:06 PM EST

We heard earlier from Fiat CEO Sergio Marchionne, Federal Industry Minister Tony Clement, and Chrysler Canada CEO Reid Bigland.  The letter distributed in Chrysler plants today from Robert Nardelli and Tom LaSorda, a clear attempt to sidestep and undermine the CAW, is the most offensive yet.

Let me remind these business and political leaders, and the public at large, of some key facts in this debate:

. Canada has been an incredibly successful and profitable place for Chrysler to do business in.  In addition to several billions of dollars in profits generated here over past decades, the company’s current activities in Canada are truly enviable.  Chrysler enjoys significantly lower hourly labour costs, and higher labour productivity, in its Canadian plants than in its U.S. plants.  It enjoys a very high market share among Canadian consumers (in fact, in February it sold more vehicles than any other automaker for the first time in history).  Canada’s health care system, infrastructure, education system, and research facilities have been and continue to be immensely valuable to this company. Canadians deserve better than to be threatened by a company which has enjoyed billions of dollars in profits here.

. Far from being “inflexible” and “intransigent,” the CAW has been pro-active, creative, and constructive in our response to the financial crisis which has enveloped our industry.  In May 2008 we negotiated a forward-looking contract, months ahead of the contract deadline, which saved the industry $300 million per year.  Then this March, following government instructions that we had to be “part of the solution,” we negotiated (for the second time in ten months) the contract all over again. We settled with GM on provisions which will reduce active labour costs by several dollars per hour, and will eliminate a billion dollars of so-called “legacy costs.”  GM itself confirmed that this contract meets the goal of preserving Canada’s investment advantage. Our labour costs will continue to be lower than average of all the suppliers selling into the North American market.  On top of that, our productivity is consistently superior.

. Every time we negotiate a new agreement, however, the goalposts are shifted by companies who sense an opportunity to inflict long-term damage on the credibility and influence of the union.  We could have reached a valuable new contract with Chrysler, prior to the original March 31 deadline that would have provided substantial savings to the company (including Chrysler-specific productivity and operational changes worth several dollars per hour). But the company, after accepting our offers, always wanted more; with President Obama’s announcement on March 30, our talks were put on the back burner.

. Now we face the prospect of our own federal government interfering in our negotiations, which were already complex and difficult to begin with. The federal government has linked arms with the employers to demand exactly the same concessions.  Seeing our own government echoing perfectly the painful demands made on hard-working, tax-paying Canadians by the executives of multinational corporations is deeply troubling.  Worse yet, by clearly taking sides in private negotiations between an employer and the union, and hence emboldening the company to keep asking for more, the federal government is making it harder to reach a deal.

. We do not accept Chrysler’s claim that the work of CAW members costs $76 per hour.  This is an inflated and artificial figure that includes many non-relevant factors, such as expenses associated with retirees who have not worked at Chrysler for years, and payroll taxes which are paid to government not to workers.  Perhaps most galling of all, Chrysler’s number even includes the proportional cost of downtime and lay-offs.  In essence, we are being “charged” for our own unemployment.  The best way to reduce that artificial $76 number is to put Chrysler workers back to work: that alone would reduce hourly costs by several dollars per hour.

. And we do not remotely accept the claim that there is cost gap of up to $19 per hour between our facilities and non-union auto assembly plants in Canada.  The Canadian executives of Toyota and Honda have described many times their strategy of essentially matching wages, pensions, and core benefits to those paid in CAW-represented facilities (as a key part of their long-term effort to avoid unionization).

. Remember, the restructuring of Chrysler and the other companies is a complex, high-stakes process.  Chrysler’s future will ultimately be decided by bond-holders (who have yet to accept any concessions) and governments.  The more we give up, the less bondholders and other vested interests will have to sacrifice.

. The CAW has a proven track record of ensuring that Canadian plants are competitive within North America.  It is no accident that Canada has attracted more than its share of new investment, and why our share of total continental production has actually grown in recent years (despite the industry’s overall challenges).  We will work to defend the interests of Canadian autoworkers – both union and non-union (since remember, any reductions in CAW wages and benefits will quickly be reflected in matching rollbacks in wages and benefits at Toyota and Honda).  We will ensure that Canadian plants retain their investment advantage.  If Chrysler or any other company goes into bankruptcy protection (an increasingly likely prospect, given the stalemate with bondholders in the U.S.), it will not be because of us.

Fiat is about ready to walk away from a potential partnership with Chrysler says CEO Sergio Marchionne unless the U.S. automaker can significantly cut labor costs. While the United Auto Workers union has made it known that it is willing to work with Fiat and Chrysler management, the Canadian Auto Workers union isn’t.

“From what I can tell from a distance, the CAW may have taken more rigid positions,” said Marchionne in an interview with Canada’s Globe and Mail newspaper.

Currently Chrysler and the CAW do not see eye-to-eye. The automaker has asked the union to cut labor costs by $19 CDN to $55 to match hourly wages in U.S. plants but the CAW will only go as far as reducing hourly wages by $7.25 (an amount GM workers agreed to recently).

Marchionne did not mince words in his interview with the Globe saying that a sense of entitlement in an organization that is technically bankrupt was nonsense and that the involvement of the U.S. and Canadian governments in a bailout plan was a sign of last resort for Chrysler.

Marchionne said that there is currently only a 50 percent chance the deal could go through. Meanwhile Moody’s Corporate Finance recently said that Chrysler has a greater than 70 percent chance of going into bankruptcy.

Meanwhile the Obama administration’s April 30th deadline is fast approaching.

[Source: Globe and Mail]