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Auto makers, CAW ‘still shadow boxing’ in contract talks

Canadian Auto Workers union president Ken Lewenza.

Moe Doiron/The Globe and Mail

The Canadian Auto Workers union and the Detroit Three auto makers are still "miles apart" in negotiations for a new contract with less than two weeks remaining before the Sept. 17 deadline to reach a deal.

"We're still shadow boxing," CAW president Ken Lewenza said Monday as negotiators took a break so he and his members could observe Labour Day. "We are still miles apart. All of the companies have significant demands on the table."

Mr. Lewenza's comments came after officials from the Canadian units of Chrysler Group LLC , Ford Motor Co. and General Motors Co. spent more than a week in face-to-face talks.

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When the negotiations opened last month, the CAW leader warned the companies that if they were "overzealous" in their demands to hold the line or reduce wages and benefits or insist on concessions in other parts of the contracts, it would be tough to get a deal.

He noted that it's still early in the process, but described the demands from the Detroit Three so far as overzealous. Their proposals are the kind that would be put on the table during a restructuring, he said, such as the crisis the companies endured in 2008-09, which sent Chrysler LLC and General Motors Corp. into Chapter 11 bankruptcy protection.

Since then, the auto makers have returned to profits, notably in North America, where they shed tens of thousands of employees, closed scores of plants, and Chrysler and GM eliminated tens of billions of dollars of debt.

All three companies posted profits in the second quarter, but they have insisted that hourly labour costs at their Canadian operations are too high and need to be made more competitive with such costs at their U.S. plants, where workers are represented by the United Auto Workers.

Company negotiators have zeroed in on any aspects of the contracts that would increase fixed labour costs, Mr. Lewenza said, such as the cost-of-living adjustment that was restored for workers earlier this year after being frozen for three years in the deals that were signed in 2009.

In addition, they're seeking increased employee contributions for health care benefits, known as co-payments, and they want to eliminate a provision in the contracts that allows employees with 30 years service to retire with full pensions.

The companies also want to cut hourly wages and benefits for newly hired employees.

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They are demanding that the CAW match the UAW agreement on new hires, Mr. Lewenza said.

The UAW agreed to let the companies hire new employees for wages ranging from $14.78 (U.S.) an hour to $19.28, versus the $28 an hour they pay longer-term workers.

The CAW contracts have a provision that new employees receive lower base wages when they start work, but their pay increases gradually to the full rate of about $32 an hour over six years.

Mr. Lewenza has indicated that he is flexible on the terms for newly hired employees, but has said the union will not permit the companies to put in place a permanent two-tier system of wages and benefits.

GM Canada's communications director Faye Roberts said in an e-mail that the company is "optimistic that we can work with our CAW partners to overcome challenges together, find creative solutions, ensure we are competitive and come to an agreement that is a win-win for everyone."

Al Iacobelli, vice-president of employee relations for Chrysler, said the negotiations represent an "opportunity to establish a foundation for Chrysler Group's future competitiveness here in Canada." Improvements in competitiveness by both the company and the industry as a whole have been modest, Mr. Iacobelli said

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