The Canadian Auto Workers Union announced today that it has agreed to accept a four-year labor contract with Chrysler Group LLC.
In a statement, the CAW said that approximately 90 percent of its workers voted to approve the new contract which covers some 8,000 Canadian employees. Only 82 percent of workers supported their current contract with Ford Motor Company and 73 percent voted for the current GM contract.
Chrysler was the last of Detroit’s Big 3 automakers to reach an agreement with Canadian auto workers.
In a press release, Chrysler’s vice president of employee relations Al Iacobelli said, “The new agreement rewards employees for their commitment during our ongoing recovery and narrows the gap on our future competitiveness here in Canada.”
Ford Motor Company, General Motors Company and Chrysler all contended that Canadian labor costs must be reduced, but Chrysler and its CEO, Sergio Marchionne, took a harder line than their fellow automakers. Arguing that labor costs must be reduced in order to remain competitive, Chrysler threatened to move their Canadian operations out of the country if it was unable to reach an acceptable arrangement with the CAW union.
The final agreement between Chrysler and the CAW union closely mirrors the deals made by Ford and GM. Under the new contract, wages for existing union workers will be frozen for the first three years. Laborers will receive lump-sum bonuses periodically, and cost-of-living adjustments will be given to workers during the fourth and final year of the contract.
The new contract also establishes a lower hourly rate for new hires and it will take longer for these new workers to reach the highest pay level.
Another sticking point in the Chrysler contract was the union’s insistence that the automaker agree to build new models in its Canadian plants. The union also pushed Ford and GM to make the same commitment. In the end, however, none of the automakers agreed to this demand.
Ford and GM did commit to creating new jobs at their Canadian plants – a promise that Chrysler refused to make. Approximately 800 of Chrysler’s CAW workers are currently receiving long-term lay-off benefits.