Autoworkers confident after meeting with Chrysler October 17, 2009
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Canadian Auto Workers president Ken Lewenza has high praise for Chrysler CEO Sergio Marchionne after the two men met Thursday at Chrysler headquarters in Auburn Hill, Mich.(Chris Young/Canadian Press)
A meeting between representatives of the Canadian Auto Workers and the Chrysler Group LLC late Thursday has given union president Ken Lewenza new confidence about the future of the struggling automaker.
The meeting at Chrysler headquarters in Auburn Hills, Mich., was scheduled to last three hours. Instead, it lasted six hours and ended only after Chrysler CEO Sergio Marchionne took the autoworkers out for dinner at a local fish restaurant.
Marchionne spent much of the time “expressing his confidence in the corporation” and the future of its products, Lewenza told CBC News.
“I left there feeling a sense of confidence for the first time in a long time,” he said. “This is a guy that’s focused and determined to turn the corporation around, not just for the short term but for the long term.”
Turning Chrysler around won’t be easy.
Sales of Chrysler vehicles in the United States were down 42 per cent in September from the year before, and down 32 per cent internationally. The company laid off 12 percent of its United States workforce, or 360 employees, from its field offices and headquarters on Oct. 1. And it is scheduled to begin talks with U.S. congressional leaders who want the company to reverse its recent termination of 789 dealerships.
‘The existing products that we have in the pipeline at our Canadian plants are incredibly important to the company.’?Ken Lewenza, CAW president
Chrysler has fared slightly better in Canada. The company rehired 1,200 workers at its Dodge Grand Caravan assembly plant in Windsor in August due to increased demand, and sales of the minivan rose six per cent in September over the year before.
Still, the next nine or 10 months will be “a very difficult time for Chrysler workers and CAW members,” Lewenza predicted.
But Marchionne “clearly indicated that the existing products that we have in the pipeline at our Canadian plants are incredibly important to the company,” he added.
‘A worker’s CEO’
Thursday’s was the first formal meeting between Lewenza and Marchionne, who took over as CEO from Robert Nardelli on June 10.
The two men spent much of the day “getting to know each other,” Lewenza said, and he liked what he saw.
Marchionne has streamlined Chrysler management team, improved communication between departments in the area of product quality and improved plans to get vehicles to market quickly, Lewenza said.
“He’s a worker’s CEO,” Lewenza said. “He puts in the hours that are necessary, he empowers his leadership team, and he certainly made the CAW leadership yesterday feel very, very comfortable with the presentation he gave.”
A spokesperson for Chrysler refused to comment on the meeting, calling it private.
Marchionne and other senior executives will outline the company’s strategic plan to economists and the media at its annual meeting on Nov. 4.
Chrysler Canada offers boost to federal clunker program August 25, 2009
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Chrysler Canada said Friday it is launching a “cash for clunkers” program to supplement the current federal program to encourage drivers to scrap old vehicles for new, fuel-efficient cars and trucks.
The company said it will kick in $500 to $1,500 to supplement the federal “retire your ride” program.
Qualifying customers must be owners of a 1995 or older model year vehicle that is in running condition and has been registered and insured in Canada for the previous consecutive six or 12 months, depending on the province, Chrysler said.
Reid Bigland, the president of Chrysler Canada, said the program is the responsible thing to do. Facilitating the removal of older model vehicles from the road is the right move for the country, people’s health and the environment, he said.
To date, 13,000 Canadians have turned in their old vehicle under the retire your ride program, which also involves the provinces and offers varying incentives.
Chrysler Canada’s cash for clunkers is in addition to its current sales incentives.
Canadian Auto Workers president Ken Lewenza said the union supports such programs that Chrysler and the federal government are offering. But he added that in order to stimulate the economy, there should be a condition on the federal program that it apply to domestically built vehicles
Chrysler Canada’s program follows a move by South Korean automaker Hyundai earlier this week to top up incentives available under the federal retire your ride program.
Chrysler plants to reopen June 29 June 17, 2009
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Chrysler plants in the Ontario cities of Brampton and Windsor will resume production starting June 29.
The company announced Wednesday it will restart output at seven North American plants that day, including facilities in Sterling Heights and Warren, Mich.; St. Louis; Toledo, Ohio; and Toluca, Mexico.
The plants ceased operation on May 4 after Chrysler sought creditor protection in the United States.
Through the courts, the bulk of Chrysler’s assets have been transferred to a new company that is led by Italian automaker Fiat. Chrysler got out of creditor protection on June 10.
U.S. Supreme Court clears sale of Chrysler assets to Fiat June 11, 2009
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A U.S. Supreme Court decision has cleared the way for Chrysler to proceed with the sale of most of its assets to Italian automaker Fiat.
The court rejected a plea from consumer groups and three Indiana pension plans to block the sale.
Fiat has the legal right to walk away from the deal if the sale is not completed by June 15.
In a brief filed with the Supreme Court Tuesday afternoon, Chrysler and Fiat warned that the deal will terminate if it doesn’t close by that date.
On Monday, Justice Ruth Ginsburg ordered a temporary suspension of the sale. She decided to review an appeal by a group of Indiana pension and construction funds that own a small part of Chrysler’s secured debt. They claimed the deal unfairly favours Chrysler’s unsecured stakeholders over secured debt-holders like them.
The court issued a brief, unsigned opinion explaining its action. To obtain a delay, or stay, someone must show that at least four of the nine justices find that the issue raised is serious enough to warrant hearing a full appeal and that a majority of the court will conclude the lower court decision was wrong.
“The applicants have not carried that burden,” the court said.
Obama administration issues warning
The Obama administration had said in a separate court filing that each day of delay consumes more of the financing provided by the government.
“If the closing is delayed by more than approximately 10 days, a sufficient amount of the current commitment of debtor-in-possession financing from the United States will have been consumed as to require the government either to increase its overall funding to the detriment of taxpayers, or abandon its role in the transaction,” the administration said.
Production at Chrysler’s manufacturing plants remains halted pending the closing of the sale. Chrysler says it is losing $100 million US every day its plants are closed.
Meanwhile, a U.S. bankruptcy court judge ruled that Chrysler can go ahead with its plan to terminate 789 dealer franchises as part of its restructuring plans.
Judge Arthur Gonzalez issued the order late Tuesday afternoon after hearing arguments against the plan by more than 25 lawyers representing hundreds of dealers from across the U.S.
The ruling said the franchises can no longer act as authorized Chrysler, Dodge and Jeep dealers, effective immediately.
Lawyers for the dealers argued that their existence doesn’t result in any substantial costs for Chrysler and that little would be gained by terminating their franchises.
Chrysler maintained that it needed to cut its dealer ranks by about 25 per cent as part of its plans to cut costs and quickly emerge from Chapter 11 bankruptcy protection.
As the two sides awaited the ruling, some dealers were selling the last cars on their lots and preparing to shut their doors for good at the end of the day, while others were making plans to sell used cars or other brands after severing ties with Chrysler.
With files from The Associated Press
Chrysler factories to reopen as Fiat takes control June 11, 2009
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Italian automaker Fiat on Wednesday acquired most of the assets of Chrysler, which has been in bankruptcy protection since April.
The move came a day after the U.S. Supreme Court cleared the way for the deal to proceed by ruling against the attempt by consumer groups and three Indiana pension funds to block the sale.
Fiat CEO Sergio Marchionne became the boss of the new company, which said it will get idled Chrysler manufacturing plants open again soon. The plants — including facilities in the Ontario cities of Brampton and Windsor — have been down since Chrysler sought creditor protection.
“We intend to build on Chrysler’s culture of innovation and Fiat’s complementary technology and expertise to expand Chrysler’s product portfolio both in North America and overseas,” said Marchionne in a release.
“Work is already underway on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler’s hallmark going forward,” he said.
The new company starts life with hundreds of fewer dealerships, a reduced debt load and lower labour costs.
Fiat will initially hold a 20 per cent stake in Chrysler, which could eventually grow to 35 per cent on certain conditions being met. Fiat cannot acquire majority control of Chrysler until all public funds are repaid.
Industry Minister Tony Clement applauded the news of the completion of the Fiat deal.
“The Government of Canada is confident that we will see a competitive Chrysler Canada Inc. that will produce and sell Canadian-made cars and will continue to play an important role in the company’s North American operations,” he said.
“A restructured Chrysler is good news for the Canadian auto parts supply chain and for Canadian consumers,” he added.
The Canadian government has been issued two per cent of the equity in the new Chrysler, and has one seat on the firm’s nine-member board of directors.
On Monday, U.S. Supreme Court Justice Ruth Ginsburg ordered a temporary suspension of the sale. She decided to review an appeal by a group of Indiana pension and construction funds that owns a small part of Chrysler’s secured debt. The group claimed the deal unfairly favours Chrysler’s unsecured stakeholders over secured debt-holders like them.
The court issued a brief, unsigned opinion explaining its action. To obtain a delay, or stay, someone must show that at least four of the nine justices find that the issue raised is serious enough to warrant hearing a full appeal and that a majority of the court will conclude the lower court decision was wrong.
“The applicants have not carried that burden,” the court said.
U.S. appeals court backs Chrysler sale, but leaves time for another appeal June 7, 2009
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A U.S. appeals court Friday upheld a bankruptcy court judge’s ruling allowing Italian automaker Fiat, Canadian and U.S. governments and a trust for Chrysler pensioners to buy Chrysler’s best assets.
But the three-judge panel delayed the sale until Monday afternoon to give opponents of the deal time to appeal the ruling to the U.S. Supreme Court.
Three Indiana state pension and construction funds oppose the sale, arguing they are entitled to more money for the Chrysler debt they hold.
On June 1, U.S. bankruptcy court judge Arthur Gonzalez approved the sale to Fiat because the only alternative was the immediate liquidation of Chrysler.
“The terms of the Fiat transaction present an opportunity that the marketplace alone could not offer, and that certainly exceeds the liquidation value,” his ruling said. It said that 92 per cent of the holders of Chrysler debt had approved a deal which would see them get 29 cents for each dollar of debt.
The Indiana funds appealed that ruling. They were turned down Friday, but are expected to appeal to the top court, reports said.
If approved, Chrysler will sell its assets, including factories and dealerships, to a new company which will be held 55 per cent by a union-run trust for retirees, 20 per cent by Fiat (that can ultimately grow to 35 per cent) and smaller stakes by the U.S. and Canadian governments.
With files from The Associated Press
Fiat would ‘fully utilize’ Chrysler Canada’s plants, CEO says June 3, 2009
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Italian automaker Fiat SpA plans to make full use of Chrysler Canada’s plants when it buys a major stake in the ailing North American automaker, CEO Sergio Marchionne said Friday.
Fiat officials have toured Chrysler’s assembly lines in southern Ontario and concluded that they’re efficient operations that churn out high-quality products, Marchionne said .
“We have a large commitment to fully utilize these assets, and the opportunity is going to be visible relatively quickly about what can be done here,” he told reporters after giving a speech in Montreal.
A bankruptcy court in New York is considering a request from Chrysler to approve the sale of the bulk of its assets to Fiat. The deal is scheduled to close June 15.
Chrysler Canada, with more than 10,000 employees, operates vehicle assembly plants in Windsor and Brampton, as well as a parts factory in Toronto.
“I think that if we start working together with the Canadian Auto Workers, I think these plants have got a great future,” Marchionne said.
The dual Canadian-Italian citizen said Fiat can offer Chrysler technical expertise on how to produce smaller, more efficient cars.
“We showed up at the right time with the right technology, the right engines and the right transmissions to help Chrysler complete its product range,” he said.
“And we’re going to benefit from what they do at the upper end of the spectrum,” he said.
But as Marchionne was speaking in Montreal, it appeared that a fatal blow was struck to Fiat’s bid to acquire GM Europe’s operations, which include automakers Opel and Vauxhall.
The acquisition was part of Marchionne’s strategy to combine Fiat, Chrysler, Opel and Vauxhall into a car company with the capacity to produce six million cars a year, the threshold he says is necessary for an automaker to survive.
German government Ok’s Magna deal
But late Friday, it was announced the German government had approved a plan for a consortium bid led by Canadian-based auto parts company Magna International to acquire GM’s Opel unit.
According to the New York Times, under the terms of the deal, GM would retain a 35 per cent stake in the new company, with Russia’s Sberbank taking 35 per cent, Magna holding 20 per cent and Opel’s employees controlling the remaining 10 per cent.
The government has been seeking an agreement that will shield Opel from a looming bankruptcy filing by General Motors in the U.S. and extensive restructuring. Opel employs 25,000 people in Germany, nearly half of GM Europe’s workforce.
Shares of Fiat, which had been in the running to acquire the operations, fell in the wake of the news.
Fiat said earlier in the day that it would not attend meetings with the government of Germany, citing “unreasonable” funding demands.
GM is widely expected to file for bankruptcy protection in the U.S. on Monday.
Shares of Magna International closed up four cents to $36.20 on the TSX, while falling 11 cents to $32.43 US on the New York Stock Exchange.
With files from The Canadian Press and The Associated Press
Parts shortage prompts shutdown at Chrysler minivan plant April 2, 2009
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Workers at Chrysler’s Windsor, Ont., minivan assembly plant were sent home Tuesday night and Wednesday morning because of a parts shortage.
The shortage is due to an interruption in supplies from manufacturer H.E. Vannatter in Wallaceburg, Ont., where about 100 workers were laid off on Monday.
“If not resolved, this parts interruption could affect production at our Brampton [Ontario] assembly plant and other Chrysler facilities in North America,” Chrysler said in a statement.
The automaker said it is currently seeking to relocate production of the parts, which include die-cast aluminum engine and transmission brackets, to its casting plant in Etobicoke, Ont.
CAW Local 444 president Rick Laporte said Chrysler is hopeful it will have enough parts for the afternoon shift.
With files from Canadian Press (more…)
Chrysler warns of Canadian plant closures March 12, 2009
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Chrysler LLC has warned that it could close its plants in Canada unless it gets enough concessions from its workers, along with government aid and resolution of a tax dispute.
Chrysler president Tom LaSorda told the House of Commons Finance Committee on Wednesday that the concessions deal between the Canadian Auto Workers union and General Motors is not acceptable to Chrysler.
The union has said that it hopes to use the agreement with GM as a model for pacts with Chrysler Canada and Ford of Canada. CAW officials announced Wednesday that members have voted 87 per cent in favour of the deal, which was reached last weekend.
The agreement would extend the contract with GM until 2012, while freezing wages and suspending cost-of-living adjustments for both wages and pensions.
It also reduces paid time off by 40 hours a year, scraps an annual $1,700 bonus and cuts company contributions to union-sponsored programs by one-third.
LaSorda said if the CAW-GM deal were applied to Chrysler, it wouldn’t eliminate even half the labour cost gap with Japanese auto plants in Canada.
“As a corporation with operations in multiple jurisdictions, we cannot afford to manufacture products in jurisdictions that are not competitive,” he said.
“The labour cost, government assistance, and of course the transfer tax will place our Canadian manufacturing operations at a significant disadvantage relative to our manufacturing operations in North America and may very well impair our ability to continue to produce in Canada.”
Chrysler Canada is involved in a dispute with the federal government over up to $1 billion in back taxes due to a reassessment by the Canada Revenue Agency.
Chrysler has asked for about $2.8 billion in aid from the Ontario and federal governments.
With files from the Canadian Press (more…)
GM, Chrysler to cut 50,000 jobs February 19, 2009
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General Motors CEO Rick Wagoner talks about the company’s restructuring plans during a news conference in Detroit on Tuesday.(Carlos Osorio/Associated Press)
U.S. automakers are calling on the government to provide even more funding to ensure the survival of General Motors Corp. and Chrysler LLC.
General Motors on Tuesday said it could need up to $30 billion from the U.S. Treasury Department to continue operating.
Included in that amount is $13.4 billion the company has already received. Previously, GM had said it could need as much as $18 billion.
GM said it could run out of money by March without the new funds from the government.
General Motors is:
Seeking $30 billion US in government funding.Cutting 47,000 jobs.Downsizing to 33 factories.Possibly eliminating Hummer, Pontiac, Saab brands.Phasing out Saturn.Focusing on Chevrolet, Cadillac, GMC and Buick.Promising to repay loans by 2017.
The automaker said it considered the option of bankruptcy but the only credit available to finance a reorganization would be from the government and could cost as much as $100 billion.
Both GM and Chrysler said they will also have to further cut jobs and curtail auto production, reducing the number of models they offer to car buyers.
GM said it will cut 47,000 jobs ? including 37,000 hourly workers and 10,000 salaried employees. The company will also shut down five more factories by 2012, reducing its operations to a total of 33 plants.
Workers to see cuts in 2009
Assembly line workers join the cab to the chassis of a Chrysler 2009 Dodge Ram pickup.(Carlos Osorio/Associated Press)
A total 26,000 of the cuts will come from outside the U.S. as GM downsizes its global operations. It is not yet clear what the impact will be in Canada. The cuts are expected to be made by the end of 2009.
The company may be eliminating its Hummer brand and said it will make a final decision by March 31.
GM is also considering selling its Pontiac and Saab brands and the Saturn brand is being phased out, officials said. The Saturn plant will remain in operation until the end of its current life cycle in 2011, officials said.
The changes will see GM focusing its efforts on Chevrolet, Cadillac, GMC and Buick.
GM also said it will make all of its new vehicles from 2009-2014 fuel-efficient or crossovers.
“All these actions will reduce our labour costs and improve our competitiveness,” said Rick Wagoner, CEO of General Motors.
GM’s plan said it plans to start repaying the government in 2012 and to pay off its loans by 2017.
Chrysler requests $5 billion top-up
Meanwhile, Chrysler is asking for another $2 billion US on top of the $4 billion it has already received and the $3 billion it’s expecting from Washington.
It plans to cut 3,000 jobs and three models ? the PT Cruiser, Dodge Durango and Chrysler Aspen ? as part of its restructuring plan. None of Chrysler’s job cuts are expected to impact its Canadian operations.
Chrysler is:
Requesting $5 billion US in new government funds.Cutting 3,000 jobs.Cutting fixed costs by $700 million.Removing 100,000 units from production.Eliminating PT Cruiser, Dodge Durango and Chrysler Aspen models.Launching 24 vehicles in the next 48 months.
The company said it has reached fundamental agreements on concessions with unions, dealers, suppliers and lenders to achieve the savings required by its government loan terms.
Chrysler also said it will reduce a manufacturing shift, remove 100,000 units from production capacity and cut costs by $700 million.
The plans were submitted to the Treasury Department on Tuesday and explain how the Detroit automakers plan to become viable and repay loans.
The plans will now be vetted by Treasury and a high-level task force that was created by the Obama administration on Sunday night to oversee the restructuring of the automakers, which are struggling with a 26-year low in auto sales amid the world economic recession.
White House reviewing plans
The White House released a statement saying it will be reviewing the automakers’ plans but that it is clear that more will be required of the companies and their stakeholders.
“It is clear that going forward, more will be required from everyone involved ? creditors, suppliers, dealers, labor and auto executives themselves ? to ensure the viability of these companies going forward,” White House Press Secretary Robert Gibbs told reporters on Air Force One Tuesday night.
Gibbs added that bankruptcy for the Detroit automakers has not yet been ruled out.
The rush to submit the plans came on the same day GM was to get the second installment in U.S. government loans ? $4 billion US ? on top of the $9.4 billion it got earlier. Chrysler was to get $3 billion on top of its earlier $4 billion, according to a report from Associated Press.
Prime Minister Stephen Harper said Tuesday he is not concerned about the possibility of General Motors Corp. moving out of Canada as the Detroit-based company restructures its operations.
“We’ve had good discussions with the company,” Harper said. “Obviously, there is a range of options and the restructuring itself will be quite complex. But I’m confident that with Canada, with the partnership with Ontario, coming to the table with our share of funding that we’ll maintain a strong industry in this country.”
Canadian unions ready to compromise
Ken Lewenza, president of the Canadian Auto Workers union, said Canada’s auto industry is at the mercy of the American parent companies. CAW is working to dissect plan to see what it means for Canada, Lewenza said.
“We know that Chrysler, Ford and General Motors is going to be a smaller company and we know that based on the global financial crisis and based on what the government is going to put on their terms and conditions, the CAW is going to have to make some compromises,” Lewenza said.
Lewenza said union leaders have agreed to restructuring talks with the Canadian units of the Detroit Three automakers ? GM, Ford and Chrysler ? and the talks will begin in the next few weeks.
“Those negotiations would be aimed at ensuring that active labour costs at Canadian facilities of the three companies remain fully cost competitive with the companies’ counterpart facilities in the United States, even as those operations are restructured in coming months,” Lewenza told a news conference late Tuesday.
Chrysler Canada, Ford Canada and GM Canada have been cutting plants and jobs for the last two years or so across southern Ontario where they operate as they cope with the recession and credit crunch that have eroded car sales across North America.
The Canadian auto industry lost approximately 13,000 jobs in 2008, and analysts predict it could lose between 15,000 and 20,000 additional jobs in 2009 as auto sales in the U.S. continue to slump and the major companies work to cut costs.
The Canadian Auto Workers union agreed to a three-year wage freeze in 2008, saving the industry about $900 million in wage costs.
“At the end of the day we’re going to take our responsibility as a union seriously and do what we need to do to protect investment in Canada, protect our jobs in Canada and protect our retirees in Canada,” Lewenza said.
Tentative agreement for U.S. union
In the U.S., the United Auto Workers union said it has reached a tentative agreement with Chrysler, GM and Ford Motor Co. on modifications to existing labour contracts.
Terms of the deal were not announced, but they were expected to eliminate the jobs bank through which furloughed autoworkers get most of their pay while laid off. Laid-off workers would now have to file for unemployment benefits.
The deal was also expected to include work rule and other changes that the government loan terms set out so the companies’ labour costs are competitive with those of their Japanese counterparts that have U.S. factories.
UAW President Ron Gettelfinger said in a statement that discussions are continuing with all three companies about billions of dollars in cash payments into the trust funds, called voluntary employees beneficiary associations.
Tony Faria, an auto analyst at the University of Windsor, said any American concessions will likely be copied in Canada.
“Whatever givebacks the UAW agree to, the companies in Canada will be looking for about the same things,” he said.
With files from the Associated Press and the Canadian Press (more…)
