Chrysler Group LLC is reluctant to match the agreement the Canadian Auto Workers union reached with Ford Motor Co. last week, CAW president Ken Lewenza says.
The third-largest Detroit-based auto maker is concerned about rising fixed costs in the deal the union signed with Ford that was later agreed to by General Motors Co. in what is known as pattern bargaining, where a deal with one company serves as a framework for a contract with all three.
“The pattern is not negotiable,” Mr. Lewenza said Tuesday. “The reality is, until the pattern is met, we’re miles apart.”
He said he is confident Chrysler will eventually agree to the deal the union reached with the other auto makers last week.
Chrysler is concerned about the $3,000 bonus scheduled to be paid to workers upon ratification of any deal, he said, noting that the company also has a problem with the restoration of a cost-of-living adjustment in the final quarter of the final year of the four-year deal.
GM also had problems with the restoration of the cost-of-living adjustment, he said after meeting leaders of the union’s GM units, who approved a tentative deal the CAW reached with that auto maker last Thursday.
“General Motors was reluctant at first; now they’re not reluctant,” he said. “Chrysler is reluctant. We’ll get them there.”
In addition to the $3,000 signing bonus – which would cost Chrysler about $24-million, based on its unionized Canadian work force of about 8,000 people – the other companies agreed to pay bonuses of $2,000 to their unionized employees in each of the last three years of the deal.
One of the key cost-cutting clauses of the new contract is a reduction in hourly wages for new employees to about $20 from $24 now. It would take new employees 10 years to reach the highest wage level of $34 an hour, compared with the current six-year progression. But the union resisted demands that the wage for new employees remain at a lower tier permanently.
Reduced benefits for newly hired employees will also reduce costs for the auto makers, including a change in the way pensions are financed.
Employees at the three auto makers hired before 2009 receive pensions that are funded entirely by the companies. The deal Chrysler officials are assessing now would require employees to contribute between 5 per cent and 6 per cent of their wages to their pension plans.
Sources involved in the negotiations described Chrysler as the most rigid in insisting that the CAW adopt the agreement it signed in 2011 with the United Auto Workers in the United States, which called for a permanent tier of lower-paid workers.
Chrysler chief executive officer Sergio Marchionne told The Globe and Mail in Calgary earlier this month that he opposes so-called pattern bargaining.
“It’s much easier to try and bargain when you’ve got all three lined up,” Mr. Marchionne said. “It looks like a duck shooting; you pick a spot and then you go knock them down. That’s nonsense.”
Rank-and-file workers at GM’s assembly plants in Oshawa, Ont., and an engine and transmission factory in St. Catharines, Ont., will vote on the deal Wednesday and Thursday.