Chrysler, CAW spar over costs

Senior executives at Chrysler fired a warning shot at the Canadian Auto Workers on Friday, just days before the two sides are to resume negotiations on a labour deal.

In a letter to employees signed by company chairman Robert Nardelli and president Tom LaSorda, Chrysler said the "clock is running."

"Without labour concessions, Chrysler Canada's manufacturing operations will not survive long-term," read the letter. "Thousands of good-paying jobs are in jeopardy, as well as the economic health of communities such as Windsor and Brampton."

"Let me be clear, our negotiations are about saving Chrysler Canada," said Nardelli and LaSorda's letter.

The company said it needs more progress on closing what it says is a $19-per-hour wage gap between itself and Toyota Canada.

To reduce that gap, Chrysler said it has proposed increasing health-care premiums, eliminating life insurance and eliminating a cap on prescription drug dispensing fees, among others.

Chrysler said the CAW has rejected those proposals.

CAW disputes Chrysler's numbers

CAW president Ken Lewenza rejected the $19-an-hour wage gap with Toyota. "We do not remotely accept the claim that there is a cost gap of up to $19 per hour," he said in a news release. Toyota's Canadian executives have said they essentially match CAW wages, pensions and benefits to keep the union out, he said.

Lewenza also rejected the $76 an hour figure that Chrysler said a worker costs. "This is an inflated and artificial figure that includes many non-relevant factors," such as costs paid to retirees who haven't worked for years, payroll taxes paid to government, not workers, and the proportional cost of downtime and layoffs.

He denounced the "unprecedented and outrageous series of attacks on Canadian autoworkers and their union" by business and political leaders, including Fiat CEO Sergio Marchionne, federal Industry Minister Tony Clement and Chrysler Canada CEO Reid Bigland.

Marchionne said the union must make concessions or else Fiat, a potential saviour of the company, could walk away. Clement has made similar comments.

In earlier statements, the union maintained it will follow the pattern it set with an earlier contract it reached with GM, which saw that automaker's labour costs reduced by about $7 an hour.

Union members demonstrated outside of a Chrysler assembly plant in Windsor, Ont., burning the letters they received from the company.

CAW Local 444 president Rick Laporte said unionized workers have now gone from scared and nervous to being very angry.

Bankruptcy 'probable': GM chief

The chief executive officer of General Motors said Friday that a filing under bankruptcy is "probable" under the conditions laid out by the U.S. government for the automaker to secure public money.

But a bankruptcy filing is not GM's preferred option, Fritz Henderson added.

"Contingency planning is underway," Henderson said during a conference call with reporters. "We are on several tracks."

GM has until June 1 to come up with a plan to reduce its costs and cut its debt. The company's earlier restructuring plan was rejected by the Obama administration, which gave the automaker 60 days to draw up another plan.

Henderson said any decision to file for bankruptcy would be made by the company with U.S. Treasury Department officials.

If GM does file for bankruptcy, Henderson said speed is important. GM would seek agreements with creditors and unions before filing, or go through a fast in-court process.   

"It's all about speed," he said. "This environment is not helpful for us."