Chrysler Reaches CAW Deal - Analyst Blog


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The Canadian Auto Workers (CAW) union has wrapped up its labor negotiation with the remaining major U.S. automaker, Chrysler Group LLC, majority-owned by Fiat SpA ( FIATY ). The union reached a 4-year tentative labor agreement with Chrysler, dropping the idea of a strike.

Among the Detroit Big Three, Chrysler operates the largest facility in Canada. The company employs about 8,000 workers in Ontario including vehicle-assembly plants in Brampton, near Toronto, and Windsor, located in Southwestern Ontario.

These plants produce some of the company's top-selling lineups. The Windsor plant manufactures Dodge Grand Caravan and Chrysler Town & Country minivans. They were the fourth and fifth best selling models of the company last year.

The CAW union already reached agreements with Ford Motor Co. ( F ) and General Motors Company ( GM ) last week. The union has ratified the Ford agreement last week while the ratification meeting for GM agreement has begun this week.

Under the Ford and GM agreements, workers will be paid 60% (instead of 70% previously) of the highest hourly wage rate of C$33.89 (US$34.74), which means $20.33. The starting wages would take 10 years to reach the highest hourly rate instead of 6 years.

The deal also included lump-sum payments of C$2,000 ($2,050) in lieu of raises and a C$3,000 ($3,076) ratification bonus. GM agreed to make the lump-sum payments same as Ford. Under the deal, Ford would create 600 jobs in Canada while GM would add 1,000 jobs and pump in C$675 million ($692 million) in its Canadian plants.

The agreement with Chrysler will follow the same pattern as the GM and Ford. However, Chrysler would not make any investment in its Canadian operations under the deal.

According to the Detroit automakers, Canada is considered the most expensive country in the world for manufacturing cars. The CAW union represents about 21,000 workers in Canada and contributes 16% of vehicle production in North America.

FORD MOTOR CO (F): Free Stock Analysis Report
FIAT SPA (FIATY): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
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