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Fiat: No Chrysler Deal Without Unions Cuts

From Toronto’s Globe And Mail:

A manager, who was held by workers at a Fiat sales office in a labour dispute, leaves the building in Brussels April 9, 2009. Three managers, whom workers earlier held in a room for negotiations over 24 planned job cuts at the office, left the premises in a car without making any comment to waiting media.

Fiat to Chrysler: Cut costs or we walk

CEO says auto maker prepared to scrap last-chance merger unless unions agree to match competitors’ low labour costs

ERIC REGULY AND GREG KEENAN

April 15, 2009

ROME and TORONTO — Fiat SpA will abandon Chrysler LLC, leaving it to fend for itself in bankruptcy court, unless Chrysler’s Canadian and American unions agree to substantial labour-cost reductions by the end of the month, Fiat CEO Sergio Marchionne says.

For Chrysler, which is subsisting on cash borrowed from the U.S. and Canadian governments, the deal with Fiat is the last chance to avoid a bankruptcy filing and possible liquidation.

But Fiat is prepared to scrap the deal and look elsewhere for an international partner if the unions do not agree to match the lower labour costs of Japanese and German plants in the United States and Canada, Mr. Marchionne said in an exclusive interview with The Globe and Mail at the Italian auto maker’s headquarters in Turin.

“Absolutely we are prepared to walk. There is no doubt in my mind,” he said. “We cannot commit to this organization unless we see light at the end of the tunnel.”

Mr. Marchionne, 56, said Chrysler workers on both sides of the border have to end their sense of entitlement if the wrecked auto maker is to have any chance of repairing itself.

“The minute you talk to me about historical entitlement in an organization that is technically bankrupt, it’s a nonsensical discussion,” he said.

“There is no wealth to be distributed.”

Because of the lack of progress on labour negotiations, especially on the Canadian side, there is only a 50-50 chance the partnership will be formed, Mr. Marchionne said.

“From what I can tell from a distance, the CAW may have taken more rigid positions,” he said.

“The dialogue is out of sync. I think they need to see what state the industry is in. Canada and the U.S. are coming in as the lender of last resort.

“No one else would put a dollar in. This is the worst condemnation of the viability of this business.

“We are not anti organized labour. No one wants to remove the UAW or the CAW from the table. But it will happen if a bankruptcy process drags on. …The UAW and the CAW have a unique opportunity here to change the framework of the discussion.”

Hourly labour costs vary among the plants operated by Japanese and German auto makers in the United States – mainly in such southern states as Kentucky, Alabama, Georgia and Tennessee.

At a mature plant such as the Toyota Motor Corp. assembly operation in Georgetown, Ky., hourly labour costs are in the high $40 (U.S.) range, Toyota spokesman Mike Goss said yesterday.

Costs at Honda Motor Co. Ltd. and Nissan Motor Co. Ltd. plants in the United States are estimated to be about $40 an hour.

Chrysler has already demanded that the CAW trim hourly labour costs by $19 (Canadian) to $55 to match what it pays UAW workers at its U.S. plants.

The CAW has refused to go that far, offering Chrysler the same $7 to $7.25 an hour it has already given General Motors of Canada Ltd. in overall cost cuts, plus agreeing to reduce break times at Chrysler plants in Brampton, Ont., and Windsor, Ont., which would reduce hourly costs by what the union says is several more dollars an hour

As the April 30 Fiat-Chrysler partnership deadline approaches, the chances of Chrysler’s failure appear as high as ever.

Earlier this month, Moody’s Corporate Finance said Chrysler’s risk of a bankruptcy filing was greater than 70 per cent

Did you ever think you would see the day when Italians would be demanding that US (and Canadian)companies get control of their unions?

That is how far out of control the UAW, the CAW and the rest have gotten.

This article was posted by Steve on Wednesday, April 15th, 2009. Comments are currently closed.

3 Responses to “Fiat: No Chrysler Deal Without Unions Cuts”

  1. proreason says:

    “Fiat is prepared to scrap the deal and look elsewhere for an international partner if the unions do not agree to match the lower labour costs of Japanese and German plants in the United States and Canada”

    Like I tell the kids, I don’t mind saying no because at some point you will hear it from somebody and I’d prefer it to come from me rather than you hearing it from a judge.

    But The Moron suspended all that didn’t he?

    Maybe Fiat hasn’t read the polls yet.

  2. BillK says:

    Mr. Marchionne, 56, said Chrysler workers on both sides of the border have to end their sense of entitlement if the wrecked auto maker is to have any chance of repairing itself.

    The minute you talk to me about historical entitlement in an organization that is technically bankrupt, it’s a nonsensical discussion,” he said.

    Wow, now even the Italians understand principles of business better than the US does.

  3. LewWaters says:

    Didn’t Fiat get the memo that B HO has given Chrysler less than 30 days to finish this merger?

    In reality, I hope Fiat doesn’t merge with Chrysler. Being a Dealership Technician, we had too many headaches with Daimler at the helm and Mitsubushi before that.

    If Chrysler can get the Union concessions, what do they need Fiat for?


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