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News
         
         THE VIEWS & OPINIONS EXPRESSED HERE ARE
                NOT NECESSARLY THE VIEWS OF CAW LOCAL 584.
                THEY ARE POSTED FOR INFORMATION PURPOSES.

 

January 2, 2008 to December 31, 2008
      

 




2008 MONTHLY ARCHIVES

 

GMAC
`back in the game'
on lending

Auto financing firm modifies credit criteria following cash injection

Dec 31, 2008
Edmund L. Andrews
Bill Vlasic
THE New York Times

GMAC, the automobile financing company, said yesterday it would immediately resume financing to a wider range of car buyers, a day after the U.S. Treasury Department injected billions of dollars into the lender.

GMAC said it would modify its credit criteria to include financing for customers with a credit score of 621 or above, a significant expansion of credit compared with the 700 minimum score put in place two months ago. GMAC had significantly cut back on the number of loans it offered as it struggled to stay afloat.

And General Motors said yesterday it would begin to offer zero-per cent financing on some models as it tries to jump-start sales.

"That brings a lot more customers into play for us," said Mark LaNeve, GM's vice-president for North American sales and marketing.

"It's a strong signal that GMAC is back in the game, and that GM dealers are back in the game of financing vehicles."

On Monday, the Treasury Department injected $5 billion (U.S.) into GMAC as part of a deal that will let the lender convert itself into a bank holding company to reduce borrowing costs and thus borrow at low rates from the Federal Reserve.

"This is exactly what some of the government money was intended to do – stimulate credit, stimulate business," LaNeve said.

The deal came as the Treasury was preparing to provide General Motors and Chrysler with $4 billion each in the first part of a bailout plan for the car companies.

Under the financing deal, the Treasury will buy $5 billion worth of preferred equity shares in GMAC, which used to be the financing subsidiary of General Motors and is now owned jointly by GM and Cerberus Capital Management, the private equity firm that owns Chrysler.

A Treasury official said on Monday the deal had closed and that GMAC already had the money. In addition, the Treasury said it would lend General Motors $1 billion so it could purchase additional equity offered by GMAC.

"We will immediately put our renewed access to capital to use to facilitate the purchase of cars and trucks in the U.S.," GMAC president William Muir said yesterday.

GMAC said, however, that it would not finance higher risk transactions characterized by a credit bureau score of 620 or below.

The Treasury deal, using money from the $700 billion Troubled Asset Relief Fund set up for financial institutions, came after intense efforts to prevent a collapse of GMAC, a crucial source of automobile sales financing. It has been reeling from both the paralysis in credit markets and huge losses from its mortgage lending subsidiary, Residential Capital.

 

Kerkorian's Tracinda
sells last of Ford stake

Dec 30, 2008

Billionaire investor Kirk Kerkorian has sold off his remaining shares of Ford Motor Co., a spokesperson for his investment firm, Tracinda Corp, said yesterday.

Tracinda, which ranked as Ford's largest outside investor earlier this year, said in a regulatory filing in October that it had started working with bankers to sell the 133.5 million shares it held at the time.

It was not clear when Tracinda had completed selling the stock.

The pullout from Ford completed a costly retreat for Kerkorian, who has a mixed investment track record at the Big Three automakers in Detroit.

Kerkorian surprised analysts and investors in April when he began buying Ford shares.

He spent more than $1 billion (U.S.) to take a stake in Ford at an average per-share price of $7.10.

Since then, Ford's shares have traded between a low of $1.02 in November to a high of $3.54 earlier this month.

 

Ford announces new
self-parking technology

Dec 30, 2008 07:08 AM
ERIN CONROY
The Associated Press

NEW YORK – Sit back, relax and let your car parallel park itself – without a single scratch or ding to your bumper.

That's what Ford Motor Co. said Tuesday about its new self-parking technology, which it announced will debut as an option on the 2010 Lincoln MKS sedan and the new seven-passenger Lincoln MKT luxury crossover vehicle.

The technology uses ultrasonic sensors on the front and rear of the vehicle, combined with electric power steering to angle and guide it into a snug parking space – all with the push of a button.

Ford isn't the first to introduce cars that practically park themselves. Toyota Motor Corp.'s Lexus luxury line has a video camera-based parking system that can calculate whether the vehicle has enough clearance for a particular spot.

But Ford's technology is easier to use and works in downhill parking situations, unlike competing systems, according to Ford's president of the Americas, Mark Fields.

"This one-touch function will be much safer to use and less intimidating," Fields said. "It's all part of our strategy to introduce smart technology to a vehicle that will make our lives easier.''

The driver will still need to shift the transmission and operate the gas and brake pedals, as a visual or audible driver interface advises about the proximity of other cars, objects and people. Still, the driver never has to touch the steering wheel.

The sensor system also monitors blind spots, and can notify the driver with a warning indicator light in the side view mirror if something is detected or if traffic is approaching. Meanwhile, the electric power steering can improve fuel economy and reduce carbon emissions because it is powered by the vehicle's battery rather than hydraulic pump systems, Ford said.

The company plans to fit nearly 90 per cent of its Ford, Lincoln and Mercury vehicles with electric power steering by 2012.

The parking assistance technology will be featured at the North American International Auto Show in Detroit in January, and will be available in its new models in mid-2009.

Among Detroit's auto makers, Ford is considered the best positioned to weather the industry slump and has said it does not need federal loans to survive, but its sales have withered and its stock has plunged.

Fields said pricing on the new models wasn't available, but added he believes it's an affordable way to eliminate unease about parking.

"I don't know about you, but when I was taking my driving test, parallel parking was the most stressful part," he said.


Massive CAW clawbacks
likely: expert

Dodge Ram trucks sit parked outside a Chrysler manufacturing plant December 19, 2008 in Fenton, Missouri. Chrysler announced plans to idle North American manufacturing plants until January 19, 2009.

DesRosiers: 'They have no choice'

Jamie Sturgeon, Financial Post

Ken Lewenza, the chief of the Canadian Auto Workers, said yesterday the union felt no pressure to agree to wage concessions for its 27,800 workers at troubled automakers General Motors Corp., Chrysler LLC and Ford Motor Co.

"I don't imagine there will be anything happening until after the holiday season," said Mr. Lewenza, referring to when union officials meet with the Canadian arms of GM and Chrysler to begin hammering out restructuring plans required by Ottawa and Ontario in exchange for emergency loans.

Mr. Lewenza said the companies won't likely be in touch until Jan. 5, the date work usually resumes in the new year.

That leaves the automakers and union just six weeks to negotiate "acceptable" restructuring plans that are due on Feb. 20 and that "include specific actions sufficient to ensure long-term viability," according to the loan terms, "including agreement with all stakeholders of needed reductions in structural costs."

Six weeks to table plans designed to reinvent the companies, or the $4-billion loans could be called in.

But while there is no apparent pressure on union wage concessions, there will be pressure, when the time comes, on the union to accept massive clawbacks on at least non-wage benefits that have become an achilles heel for Canadian autoworkers, said Dennis DesRosiers, president of independent industry researcher DesRosiers Automotive Consultants Inc.

"You're going to have to see a very proactive approach in January," he said yesterday. "At one level, they have no choice. They'll have to give up a substantial amount of non-wage benefits."

Chiefly, "a very long list" of so-called penny funds that the companies pay a certain amount per hour per employee into to fund a litany of perks -- from workers' legal bills when buying a home to scholarship funds and charitable causes.

"All in, it amounts to millions and millions of dollars a year," said Mr. DesRosiers. "There's no negotiation ... gone."

The 10 or so Special Paid Absence -- or SPA -- days workers get on top of normal sick leave and paid vacation days will almost assuredly be cut, the analyst said.

Many of the targeted extras don't extend to United Auto Workers in the United States. Instead, they've been built up over years of bargain negotiations to offset health-care savings GM, Ford and Chrysler receive because of Canada's publicly funded systems.

Begun last year, the U. S. union started making arrangements to handle medical costs for workers and retirees with their Voluntary Employment Benefit Associations (VEBAs), Mr. DesRosiers said.

The result works out to be around a $15-per-hour cost advantage for U. S. assembly workers, he said, making Canada the "highest-cost location anywhere in the GM, Ford and Chrysler worlds for manufacturing vehicles."

"That's not a good position to be in."

Before the VEBAs were commissioned in Detroit, average compensation plus benefits -- the total cost -- for factory labour was about US$75 an hour, whereas in Canada it is US$67 at Big Three operations, the analyst said. With the implementation of the VEBAs, labour costs are heading toward US$55.

Canadian compensation fares worse against foreign-based suppliers such as Honda and Toyota, where costs stand at about US$45.

"This is why Canada is in so much trouble from a labour perspective," said Mr. DesRosiers.

"At the end of the day, the labour cost differential is very real and if they don't address it, they'll continue to lose market share."


Canada needs its own car czar

(STAR EDITORIAL)

Dec 27, 2008 04:30 AM

Restructuring the North American auto industry is a complicated challenge. There are three different assembly companies involved (General Motors, Chrysler and Ford) with plants on both sides of the border, hundreds of suppliers of auto parts, tens of thousands of dealers and hundreds of thousands of employees.

That's why President-elect Barack Obama is considering the appointment of a "car czar" with powers not unlike those of a bankruptcy overseer to spread the pain of restructuring and make the sector viable again, with perhaps just two assembly companies instead of three emerging from the process.

Among those rumoured for the position is Paul Volcker, the redoubtable former chair of the U.S. Federal Reserve Board. He's someone who would command respect from all sides.

It's a good idea, one that should be picked up by the Canadian government. If Ottawa were to appoint someone of similar stature – say, David Dodge, former governor of the Bank of Canada – with similar powers, that person could work with the U.S. car czar to ensure that Canadian interests are given full consideration.

There is a real danger that restructuring – essentially a euphemism for closing plants and consolidating assembly in fewer locations – will be done at Canada's expense. Take, for example, Chrysler's minivans. Until two months ago, they were assembled at two different locations, St. Louis, Mo., and Windsor. With sales falling, Chrysler decided to idle the St. Louis plant and do all the assembly in Windsor. Under prodding from the U.S. car czar, that decision could be reversed.

A Canadian car czar could enter into tough negotiations with his or her U.S. counterpart to ensure that not all the trade-offs favour the Americans.

But Ottawa does not appear inclined toward such an appointment. Indeed, the governing Conservatives seem to be headed in the opposite direction. Last week, they severed connections with Jim Arnett, the corporate executive (former Molson CEO, current chair of Hydro One) whom they appointed just a few weeks ago to help them do "due diligence" on any auto bailout. "I'm not sure we need a new special adviser just yet," an unnamed "high-ranking" government official told the Star.

When asked directly this week whether consideration was being given to the appointment of a car czar, a spokesperson for federal Industry Minister Tony Clement replied that "there will be stringent oversight" of the auto bailout and added:

"As for a czar or any option to head up that oversight function on a long-term basis, we are looking at all options to determine what is best for the Canadian auto industry, as I understand Mr. Obama is in the United States. Given that, it is premature to say what will be best for either Canada or the U.S. in that respect."

This ambiguous response could be interpreted in one of two ways: either Ottawa is waiting for Obama to move first, or the appointment of a czar is not on Ottawa's agenda.

If the former, why not get ahead of the Americans by appointing our own czar before Obama does?

If the latter, will the auto bailout and restructuring be run out of the Prime Minister's Office? Now that is a frightening thought.

 

 

Bush's tough auto talk
puts CAW in crosshairs

GREG KEENAN
Tuesday, December 23, 2008

With just a few words, U.S. President George Bush has done what the Detroit Three were unable to achieve with decades of negotiating: eliminate the iron grip the mighty United Auto Workers union has held for decades on setting labour rates in the auto industry.

Chrysler LLC, Ford Motor Co. and General Motors Corp. have been effectively ordered to make their labour rates competitive with Japanese auto makers in the United States.

In the process, Mr. Bush has cast the future of those companies' operations in Canada into the hands of the Canadian Auto Workers union, which divorced from the UAW in 1986, but now will have to find ways to match what the UAW does or risk watching about 30,000 jobs in this country vanish.

Prime Minister Stephen Harper echoed Mr. Bush's thoughts in announcing a $4-billion rescue package for Chrysler Canada Inc. and General Motors of Canada Ltd. on Saturday when he said all stakeholders will have to make sacrifices.

The CAW "would have to sign on to the same deal" as the UAW, said Sean McAlinden, an expert on automotive labour issues and chief economist of the Center for Automotive Research, an industry think tank in Ann Arbor, Mich.

The problem for the unions, Mr. McAlinden noted yesterday, will come during the GM restructuring talks, when the largest Detroit company asks holders of its debt to trade that debt for equity.

"The bondholders are going to say: 'Why should we swap debt for equity, unless we see a really rich, big union concession in Canada and the United States?' " he said.
But the key question is which labour rate will set the benchmark: Will it be the approximately $49 (U.S.) hourly costs at the Georgetown, Ky., operations of Toyota Motor Corp., or will it be the new Honda Motor Co. Ltd. plant in Indiana, where wages are about $21?

The $49 Toyota figure creates a competitive gap of about $18 an hour at unionized Canadian plants, using the CAW figure of $67 (Canadian) an hour for labour costs in this country based on the two currencies trading at par and excluding payments to retired workers.

CAW economist Jim Stanford argues that labour costs here equate to $53.60 when the dollar is trading at 80 cents (U.S.). Given the volatility of currency markets, however, and wild fluctuations in the commodity prices that propel the Canadian dollar, that advantage can be wiped out virtually overnight.

The Detroit Three will find it impossible to invest in their Canadian operations if the UAW agrees to cut labour costs and the CAW does not, said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. in Richmond Hill, Ont.

Talks with GM Canada will likely begin in early January, Chris Buckley, president of CAW local 222 in Oshawa, Ont., said yesterday.

He said he's confident the CAW can reduce costs without touching base wage rates of $35 (Canadian) an hour.

Sticking deeply in the craw of Canadian managers are the so-called SPA days, or special paid absense: two weeks off the job that have been criticized in the vocal public debate about whether to offer financial assistance to Detroit.

Even if the CAW agrees to cut costs to match new UAW labour rates, some assembly plants operated by the companies in Canada are in danger as the three auto makers slash production over the next few years to make themselves more competitive.

Detroit Three production will drop by about two million vehicles between 2008 and 2010, Michael Robinet, vice-president of global vehicle forecasts for consulting firm CSM Worldwide Inc., said in a presentation in Detroit earlier this month.
That's the equivalent of about eight assembly plants. Some of those have already been announced, such as the GM truck plant in Oshawa as well as Chrysler and Ford factories in the U.S. Midwest.

The obvious decisions about plant shutdowns have already been made.
"The facilities that are going to have to close from here on out, it's going to hurt," Mr. Robinet said yesterday.

Ottawa and Ontario offered the loans in part to ensure Canada maintains its 20-per-cent share of North American production, but as that production shrinks, the Canadian plants become vulnerable.
One of the wild cards is whether Chrysler can survive even with the $4-billion (U.S.) in loans Washington earmarked for it on Friday and the $1-billion (Canadian) Ottawa outlined the next day.

There is a widespread belief in the industry that Chrysler will be forced into bankruptcy and its assets sold off. Its minivan plant in Windsor, Ont., is viewed as a valuable asset, but there is uncertainty about whether a buyer would be interested in its Brampton, Ont., large-car facility.


FORD (F)
Close: $2.59 (U.S.), down 36¢
GENERAL MOTORS (GM)
Close: $3.52, down 97¢

© The Globe and Mail

 

Ford Will Likely
Benefit From Bailout

GM, Chrysler Will Seek Concessions From
Suppliers, Unions, Dealers and Debt Holders

DETROIT -- As the lone Big Three auto maker passing on a federal bailout, Ford Motor Co. won't have to undergo an intrusive government review of its books and its business plans to become a viable company in order to qualify for --and keep -- the low-interest loans authorized by the Bush Administration Friday.

At the same time, the Dearborn, Mich. car company is likely to benefit from many of the concessions that General Motors Corp. and Chrysler LLC exact from the suppliers, unions, dealers and debt holders shared by all three companies.

"The clear winner in this game is Ford," Kimberly Rodriguez, a principal at Grant Thornton consulting firm and an adviser to Ford senior management, said in an interview Friday.

The Bush administration said it would provide a total of $17.4 billion in loans for GM and Chrysler. As part of the bailout, GM and Chrysler will have to open their books to the government and meet restructuring targets such as reducing their debt and hammering out deals with the United Auto Workers to cut labor costs.

Ford is still seeking a $9 billion line of credit from the government, though it adds it may not need to tap it. In addition, Ford wants $5 billion from the Energy Department program.

Most experts agree that Ford is in better shape than GM and Chrysler, in large part because it mortgaged almost all of its assets in 2006 to raise $24.5 billion.

"As we told Congress, Ford is in a different position. We do not face a near-term liquidity issue, and we are not seeking short-term financial assistance from the government," Ford Chief Executive Alan Mulally said in a statement Friday.

Still the company needed the Bush Administration to rescue GM and Chrysler because of fears that a failure of one or both of those companies could imperil their shared base of auto-part suppliers. "The U.S. auto industry is highly interdependent, and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs and further damage the already weakened U.S. economy," Mr. Mulally said.

In the third quarter, Ford burned through $7.7 billion in cash, which left it with $18.9 billion. At the current rate Ford is using up cash, however, the company would have enough money to last only until April. Ford also has $10.7 billion in available credit lines, which could give it another four months of breathing room. But the auto maker has said that the company does not expect to continue to burn cash at the same rate in the fourth quarter.

To conserve cash, Ford is laying off salaried employees and cutting between $500 million and $1 billion in capital expenditures in both 2009 and 2010. Company officials have said the cutbacks would only slightly delay -- and not irreparably harm -- the auto maker's ability to bring new products to showrooms.

As part of their plan submitted to Congress earlier this month, Ford pledged to accelerate their efforts to bring new gas-electric hybrids and plug-in electric vehicles to market.

Still the overall decline in sales for cars and trucks continues to weigh Ford down greatly. The company this week confirmed it would extend its two-week holiday shutdown by an extra week at 10 plants in order to meet a goal of lower production.

 

Concessions loom for auto workers
Prime Minister Stephen Harper and Premier Dalton McGuinty say all stakeholders will need to cut costs soon.

PM, McGuinty stress cuts in labour costs
will be needed in exchange for $4 billion in loans

Dec 21, 2008 04:30 AM
Tony Van Alphen
Robert Benzie
STAFF REPORTERS

The federal and Ontario governments increased the pressure on thousands of auto workers at General Motors, Chrysler, Ford and scores of suppliers yesterday to accept concessions in efforts to keep the reeling automakers alive.

In announcing $4 billion in loans to GM and Chrysler, Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty emphasized that in exchange for the money, all stakeholders – including unionized workers – would need to cut costs soon.

Pressure had been building for weeks as the automakers pleaded for public aid. On Friday, the Bush administration announced a $17.4 billion (U.S.) rescue package in exchange for major concessions from auto industry employees there.

Ottawa and the provincial government underlined the need for cuts in labour costs as a condition of the aid packages. They also noted that even with the reductions in those costs, there would be unidentified job losses.

In Canada, that would mean a reopening of contracts and concessions from the tens of thousands of unionized auto workers at GM, Chrysler and Ford.

Ford didn't seek any immediate aid but it has sought a $2 billion line of credit, if necessary.

Production technicians at the three automakers currently earn $33.90 an hour, including cost of living allowance.

Harper and McGuinty also said the automakers would need reductions in costs from their suppliers. That could affect the wages and benefits of more than 20,000 parts workers who are primarily represented by the Canadian Auto Workers and the United Steelworkers unions.

Many of those workers have already accepted concessions in recent years as the automakers tried to stay competitive against surging foreign-based companies.

CAW president Ken Lewenza said yesterday there would be "pain" but it was difficult to comment on the extent of concessions.

He noted the United Auto Workers union in the U.S. is hoping president-elect Barack Obama will soften conditions for concessions when he assumes power next month and that could affect the situation here.

"The automakers haven't specifically indicated what they want from us," he said. "But we will be part of any solution to retain our competitive edge in productivity."

Meanwhile, Ontario NDP Leader Howard Hampton, who attended the Harper-McGuinty press conference, told reporters that workers shouldn't have to bear the brunt of the restructuring.


Destroying What the UAW Built

By Harold Meyerson

December 2008

In 1949, a pamphlet was published that argued that the American auto industry should pursue a different direction. Titled "A Small Car Named Desire," the pamphlet suggested that Detroit not put all its bets on bigness, that a substantial share of American consumers would welcome smaller cars that cost less and burned fuel more efficiently.

The pamphlet's author was the research department of the United Auto Workers.

By the standards of the postwar UAW, there was nothing exceptional about "A Small Car Named Desire." In its glory days, under the leadership of Walter Reuther, the UAW was the most farsighted institution -- not just the most farsighted union -- in America. "We are the architects of America's future," Reuther told the delegates at the union's 1947 convention, where his supporters won control of what was already the nation's leading union.

Even before he became UAW president, Reuther and a team of brilliant lieutenants would drive the Big Three's top executives crazy by producing a steady stream of proposals for management. In the immediate aftermath of Pearl Harbor, Reuther, then head of the union's General Motors division, came up with a detailed plan for converting auto plants to defense factories more quickly than the industry's leaders did. At the end of the war, he led a strike at GM with a set of demands that included putting union and public representatives on GM's board.

That proved to be a bridge too far. Instead, by the early 1950s, the UAW had secured a number of contractual innovations -- annual cost-of-living adjustments, for instance -- that set a pattern for the rest of American industry and created the broadly shared prosperity enjoyed by the nation in the 30 years after World War II.

The architects did not stop there. During the Reuther years, the UAW also used its resources to incubate every up-and-coming liberal movement in America. It was the UAW that funded the great 1963 March on Washington and provided the first serious financial backing for César Chávez's fledgling farm workers union.

The union took a lively interest in the birth of a student movement in the early '60s, providing its conference center in Port Huron, Mich., to a group called Students for a Democratic Society when the group wanted to draft and debate its manifesto.

Later that decade, the union provided resources to help the National Organization for Women get off the ground and helped fund the first Earth Day. And for decades after Reuther's death in a 1970 plane crash, the UAW was among the foremost advocates of national health care -- a policy that, had it been enacted, would have saved the Big Three tens of billions of dollars in health insurance expenses, but which the Big Three themselves were until recently too ideologically hidebound to support.

Narrow? Parochial? The UAW not only built the American middle class but helped engender every movement at the center of American liberalism today -- which is one reason that conservatives have always held the union in particular disdain.

Over the past several weeks, it has become clear that the Republican right hates the UAW so much that it would prefer to plunge the nation into a depression rather than craft a bridge loan that doesn't single out the auto industry's unionized workers for punishment. (As manufacturing consultant Michael Wessel pointed out, no Republican demanded that Big Three executives have their pay permanently reduced to the relatively spartan levels of Japanese auto executives' pay.)

Today, setting the terms of that loan has become the final task of the Bush presidency, which puts the auto workers in the unenviable position of depending, if not on the kindness of strangers, then on the impartiality of the most partisan president of modern times.

Republicans complain that labor costs at the Big Three are out of line with those at the non-union transplant factories in the South, factories that Southern governors have subsidized with billions of taxpayer dollars. But the UAW has already agreed to concessions bringing its members' wages to near-Southern levels, and labor costs already comprise less than 10 percent of the cost of a new car. (On Wall Street, employee compensation at the seven largest financial firms in 2007 constituted 60 percent of the firms' expenses, yet reducing overall employee compensation wasn't an issue in the financial bailout.)

In a narrow sense, what the Republicans are proposing would gut the benefits of roughly a million retirees. In a broad sense, they want to destroy the institution that did more than any other to raise American living standards, and they want to do it by using the power of government to lower American living standards -- in the middle of the most severe recession since the 1930s. The auto workers deserve better, and so does the nation they did so much to build.


PM, McGuinty pledge
$4B in auto aid
Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty have pledged $4 billion in aid to GM and Chrysler.

Dec 20, 2008 11:05 AM

Robert Benzie
Queen's Park Bureau Chief
Tony Van Alphen
Business Reporter

Prime Minister Stephen Harper and Premier Dalton McGuinty have announced a $4 billion (Cdn.) bailout for General Motors Canada and Chrysler Canada.

Following the $17.4 billion (US) rescue package announced yesterday by President George W. Bush, the two leaders this morning announced the long-awaited deal.

"This is a regrettable but necessary step to protect the Canadian economy," the Prime Minister said.

"Today's announcement is not a blank cheque."

McGuinty, who has been fighting for such an aid plan for weeks, praised the agreement.

"Here in Ontario, we've got thousands of people and their families who rely on the auto industry to be on firm ground so they can put food on the table and keep a roof over their heads," the premier said.

The accord, which represents 20 per cent of the U.S. scheme, will loan GM $3 billion and Chrysler $1 billion. Ford, which has been seeking a standby line of credit if necessary, is not part of today's announcement.

It's not immediately known how many jobs are guaranteed under this deal.

 

Detroit faces change
imposed from the outside

Citing danger to the economy, President Bush approved an emergency bailout of the U.S. auto industry, offering $17.4 billion in rescue loans in exchange for tough concessions from the deeply troubled carmakers and their workers. (Dec. 19, 2008)

Listen

Dec 20, 2008 04:30 AM

David Olive

As stays of execution go, the Detroit Three bailout unveiled yesterday by U.S. President George W. Bush was done on the cheap.

Time was, the $17.4 billion (U.S.) with which Washington rescued General Motors Corp. and Chrysler LLC would have been considered a lot of money.

But that sum works out to a mere 1.1 per cent of the combined $700 billion effort by the U.S. to bail out its crippled banking system and the $850 billion stimulus package that U.S. President-elect Barack Obama is preparing to roll out soon after his inauguration Jan. 20, rumoured in yesterday's Washington Post.

Previous estimates have put Obama's planned stimulus only as high as $700 billion. But U.S. economic conditions are deteriorating rapidly. So this might not be the time, in a year when the American workforce already has shed 2 million jobs, to let GM and Chrysler go to the wall, jeopardizing Ford Motor Co. as well since it shares key suppliers with its rivals. The result would be to risk inflating the dole by another million or so auto assembly workers, parts-plants employees and dealership personnel.

The American taxpayer is spending a comparatively small sum to spare the U.S. the fate of Canada and Britain in being the only G8 nations without a substantial domestically owned auto sector. But Bush has been crafty enough to provide only just enough emergency loans to get GM and Chrysler through the year – a mere $13.4 billion upfront for GM and Chrysler combined, with another $4 billion to come in February.

Bush won't be president then, of course, and The Economist was quick to observe that the automakers' plight is now "Barack Obama's problem." The Detroit automakers will be back for more – tens of billions of dollars more – to finance their urgently required restructuring. With Obama as president, Detroit is likely to get its money. But the individuals asking for it might not be around to collect it.

Every year for the past two decades, Detroit has vowed to reconnect with American motorists and offer them the vehicles they want to buy. And every year it has reneged. America's domestic auto industry has few rivals for insularity. Can a century-old industry long protected from foreign competition learn new tricks? Is it willing even to try? Evidence suggests no.

Last year, Candidate Obama, in a Motown speech, blasted the Detroit Three for "failing to make changes they should have made 30 years ago," and offered that federal assistance should he become president would be tied to meaningful progress on fuel efficiency and a focus on the small cars the U.S. market now demands. More recently, President-elect Obama has vowed to save Detroit, but neither with a "blank cheque" nor the same Detroit management that so stubbornly resists change.

To save Detroit – the city and its mainstay industry – will require a radical transformation that could see its three players merged into one. Or just the opposite, the breaking up of GM, Ford and Chrysler into nimbler competitors.

What appears certain is that the change will have to be imposed from outside Detroit, where countless layers of middle management know things that are no longer true. With a "car czar" waiting in the wings – often rumoured to be Paul Volcker, the most successful chairman in the history of the U.S. Federal Reserve Board – Detroit either will propose its own radical restructuring next spring or have one forced on it by a president elected by lunch-bucket votes in the auto-producing heartland of the U.S. Midwest.

David Olive writes on politics and economics.

 

PM, McGuinty to announce Canadian bailout

 

Dec 19, 2008

Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty will announce an aid package for the Canadian auto industry tomorrow after the U.S. government announced a $17.4-billion (U.S.) bailout package for its own auto industry today.

No details of the Canadian aid package have been issued but it is expected to be worth several billion dollars, since both the federal and Ontario governments have said they would provide a package proportional to the size of the industry in Canada.

That would be about 20 per cent of production capacity in North America.

Kory Teneycke, communications director for Prime Minister Stephen Harper, said that McGuinty and Harper "will address the Canadian response tomorrow."

Asked if the Canadian bailout will include the kinds of concessions and controls the United States is insisting on, he said: "You'll see similar things in a Canadian package," that will give governments a larger say in how the companies restructure.

"We're a partner, but a minority partner in this, and we'll be a partner to the extent to which we are a part of this industry. Canada will work to maintain its market share in the North American auto industry."

Harper will make the announcement alongside McGuinty in Toronto.

McGuinty's aides at Queen's Park were scrambling today to organize the event. There were concerns about whether the prime minister could make it from Winnipeg to Toronto in the fierce winter storm.

U.S. President George W. Bush said earlier today that his government will provide the beleaguered automakers with emergency loans while they implement plans to restructure. The aim is to prevent an industry collapse that could send the economy into a deeper and longer recession.

The Detroit Three - General Motors Corp, Ford Motor Co and Chrysler - have been hit hard by the sharp slowdown in U.S. demand.

GM and Chrysler have asked for bridge loans and credit guarantees to keep them alive while restructuring. Ford has asked for a line of credit to tap into in case their finances worsen more than expected.

The companies have until the end of March to present viable restructuring plans.

"We don't know what GM or Chrysler has put on the table in terms of Canadian operations," said Richard Cooper, executive director of Canadian operations at J.D. Power & Associates.

"For GM to remain viable, they are going to have to make a lot of changes. For Chrysler to remain viable, they are going to have to make a lot of changes and we don't know what those changes are going to look like and how they will impact the Canadian operations."

The sudden announcement of the U.S. government package appeared to send aides to Harper and McGuinty scrambling to put together a joint announcement of the Canadian package. Harper, in Winnipeg today, was scheduled to travel to Calgary to begin Christmas holidays with his family but will instead head to Toronto for the announcement.

Details were still not available about where they would unveil the package.

As late as last night, while taping an interview to air tomorrow, Harper told CTV that no deal had been reached.

"The truth is we haven't settled on a dollar figure nor have we have we settled on a package. We're working with the United States Administration with them on what they are putting together."

Harper said the Canadian and American auto industries are so entwined that "we cannot have a solution unless we have an integrated approach and an integrated action with the United States administration."

But Harper suggested the Canadian package will mirror much of the controls that the U.S. is prescribing.

"I think it's safe to say if you look at what's on the table in the United States right now, there will be some significant say of governments in the future of those companies."

Harper said the Canadian government and the government of Ontario "have concluded we either do our share of the restructuring or we will have no share of that industry in Canada."

"If the United States does all the restructuring themselves, the industry will move to the United States. That's not acceptable to the government of Canada. So we will work with the Americans, make sure that we get our share of a restructured industry.

"Obviously as public money goes into that, there will be more public say about how that money is used, but we should be under no illusions: there is going to be significant restructuring. And the aim at the end of this is to make sure that, while those companies will be smaller, they will be viable and they will make money."

Harper admitted he finds himself "uneasy" as a small-c conservative at all the government intervention in the economy that he finds himself forced to adopt.

"As a conservative, not ideal circumstances, but this is — my training as an economist tells me — that these are the policies we must adopt under these circumstances."

He said his main goal is to help ordinary people and communities in transition. He also said he wants the country to emerge from the recession without a "permanent deficit."

 

Bush offers Detroit $17.4B

2009 Ford F-150 trucks are ready to leave the assembly line at the Dearborn Truck Assembly in Michigan in this October 2008 file photo

Tim Harper

Washington Bureau Chief

Dec 19, 2008

WASHINGTON–President George W. Bush threw the staggering U.S. auto industry a short-term $17.4 billion (U.S.) lifeline today.

With General Motors and Chrysler on the verge of collapse, the U.S. president stepped in after Republicans in the Senate last week blocked congressional approval of a similar bailout plan.

The White House plan gives automakers three months to restructure themselves and make themselves "viable,'' Bush said, but if that cannot be done, these loans would allow them to make the necessary preparations to declare bankruptcy.

If new, acceptable business plans are not completed by March 31, Bush said, the money must be repaid.

The $13.4 billion in short-term financing will be drawn from the $700 billion Wall Street rescue program, White House officials said, with another $4 billion to be made available in February.

"The American people want the auto company to succeed and so do I,'' Bush said.

He said he grappled with a thorny question involving the proper role of government in grim economic times.

"If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy,'' Bush said.

Under ordinary circumstances, Bush said, he would allow the collapse, but in the current economic crisis, he cannot allow that, the president said.

"These are not ordinary circumstances,'' he said.

"In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action.

Bankruptcy at this point would not be an option, Bush said, because consumers would shun the companies.

Ford will receive none of the money and, in submissions to the U.S. Congress, the company said it would seek taxpayers help only if one or both of its competitors declared bankruptcy, creating a ripple effect throughout the industry.

General Motors is expected to receive $9.4 billion of the money immediately available, with Chrysler receiving $4 billion.

Bush also stressed that a responsible business plan will include concessions from management, unionized workers and industries which depend on the automakers.

"The convergence of (economic) factors means there is too great a risk that bankruptcy now would lead to a disorderly liquidation of American auto companies,'' Bush said.

"My economic advisers believe that such a collapse would deal an unacceptably painful blow to hardworking Americans far beyond the auto industry.

"It would worsen a weak job market and exacerbate the financial crisis.

"It could send our suffering economy into a deeper and longer recession.''

Chrysler announced an extended shutdown earlier this week, idling their plants beginning today and keeping them dark until the third week of January.

Canadian government reaction is expected later this morning.

 

Ford vehicles finalists
for U.S. top car

Dec 19, 2008 07:41 AM

The Associated Press

DETROIT–Two Ford Motor Co. large vehicles are finalists for the 2009 North American Car and North American Truck of the Year awards.

The Ford Flex, a seven-passenger crossover vehicle will be considered for top car of the year. Ford's F-150 truck is a finalist for best truck of the year.

Winners will be announced on Jan. 11, the first press day of the North American International Auto Show in Detroit.

Both the 2009 Flex and the F-150 made the Insurance Institute for Highway Safety's list of the safest new cars last month.

Other finalists include the Hyundai Genesis luxury sedan and Volkswagen Jetta TDI in the car category. The Mercedes-Benz ML 320 Bluetec and Dodge Ram pickup were the other finalists in the truck category.

Ford's Lincoln MKS, a luxury crossover vehicle, was a candidate in the car category, but did not make the finalist list.

Shares of Ford dropped 30 cents or 9.6 per cent Thursday to $2.84.

 

$3.4 billion bailout
just 'bit of a lifeline'

McGuinty admits cash will keep industry alive only in the short term

Dec 18, 2008 04:30 AM
Robert Benzie
Robert Ferguson
Queen's Park Bureau

The proposed $3.4 billion auto industry bailout from Ontario and Ottawa is just the beginning of help for the troubled Detroit Three, Premier Dalton McGuinty acknowledged yesterday.

"This is a bit of a lifeline at this point in time to sustain the industry," the premier said as the White House in Washington continued to mull the size of an aid package for General Motors, Ford and Chrysler.

The Canadian money – designed to help the automakers stay afloat while they restructure – is contingent on the U.S. providing assistance first.

When asked how big the Canadian bailout could be, McGuinty said: "We don't know right now because we haven't completed our due diligence, and neither has Washington, to get a good sense of what's going to be involved ultimately."

The Canadian Taxpayers Federation continues to oppose a bailout, saying the automakers have been loaned or granted $782 million from taxpayers in the last five years.

"Throwing good money after bad won't fix big auto but it will drive Canada and Ontario further into deficit," warned spokesperson Kevin Gaudet, calling GM, Ford and Chrysler a "bottomless pit."

"Each announcement of government cash support was followed by downsizing, layoffs of Canadian workers, and the demand for even more cash by the Big Three. Be assured, these companies will be back for more before spring."

The $3.4 billion in aid from Canada was based on last week's failed U.S. plan for $14 billion (U.S.) in emergency cash for the automakers – a 20 per cent share when the exchange rate is taken into account. That plan was rejected in the Senate, leaving the White House scrambling for alternatives.

McGuinty said he wants to ensure that the Detroit Three's operations in Ontario come out with a 20 per cent share of their parent companies' North American production following the restructuring.

Meanwhile, NDP Leader Howard Hampton urged McGuinty to do an immediate $2 billion made-in-Ontario stimulus package without waiting for Ottawa or the U.S. to rescue the Detroit Three.

"Ontario simply can't afford to wait for Washington to act," Hampton told a news conference yesterday at Queen's Park.

He implored McGuinty to expedite auto aid, accelerate spending on infrastructure, expand a "buy Ontario" policy for transit and other expenditures, implement an industrial hydro rate to provide cheaper power to manufacturers and mills, and raise the minimum wage to $10.25 right away to inject cash into the economy.

In a sign not every segment of the economy is suffering, the premier attended an unpublicized $5,000-a-plate Ontario Liberal fundraiser at a Forest Hill mansion with about 20 guests last night. Liberal sources told the Star the event was a chance to give lobbyists private face time with the premier. The dinner was left off McGuinty's official itinerary because it was deemed "private."

 

Ford builds image as
strongest of Big 3

But a GM bankruptcy could sink Blue Oval; suppliers grow jittery.

Bryce G. Hoffman / The Detroit News

DEARBORN -- Ford Motor Co. is trying to pull itself up by its own bootstraps, and it hopes America notices.

As crosstown rivals General Motors Corp. and Chrysler LLC ask the White House for $14 billion in emergency loans just to tide them over until March, the Dearborn automaker maintains it has enough cash to weather the current economic crisis. It is still asking the federal government for a $9 billion line of credit, but it is not asking the Bush administration for immediate cash assistance.

Ford executives think this fact has not been lost on the American people, and it is hoping to use its comparative financial strength to position itself as the most viable of Detroit's Big Three. That might not be saying much -- particularly given that Ford does not expect to post a profit until at least 2011 -- but experts agree that the situation represents an opportunity for Ford to begin rebuilding its brand image.

But this strategy is not without its risks. The biggest danger facing Ford today is a GM bankruptcy, which could pull Ford into bankruptcy court, too. It also knows that suppliers are becoming increasingly jittery about the state of the entire domestic automobile industry and could begin demanding quicker payments than Ford could make. The last thing Ford wants is to be too heavy-handed with its message and risk exacerbating these problems.

"We are trying to tell our story, but we also think it's very important that we don't appear to be turning our back on our industry," Executive Chairman Bill Ford Jr. said Tuesday. "The good news for us is we're starting to get some separation in the customers' minds and people see that we're trying to make it on our own. We're hearing comments in the showroom to that effect."

December is "starting off relatively well," Bill Ford said, noting that his company has already gained a point of market share over the past couple of months -- a significant accomplishment for a business that has seen its share steadily erode for more than a decade.
Analyst Erich Merkle of Crowe Horwath says Ford stands to gain even more market share.

Like most analysts, he thinks Ford has enough cash to make it through until next year when the full benefits of its landmark labor agreement with the United Auto Workers kicks in. As GM and Chrysler struggle just to stay out of bankruptcy court, consumers are less inclined to consider their cars and trucks. And Merkle says Ford has a slew of new products coming out over the next year that should demonstrate just how much progress it has made in its turnaround campaign.

"They're very well positioned for when we come out of this and people start buying cars again," he said, though he added the company needs to be careful not to be too assertive. "Ford can separate itself, but to do that now with everything the industry is going through -- particularly GM and Chrysler -- could hurt everyone."

Ford Americas President Mark Fields says it is all about striking the right balance. "Our job going forward is to be confident, but not arrogant," he told The Detroit News Tuesday.

The recent Congressional hearings have focused the national spotlight on the domestic automobile industry like never before. For the first time in a long time, the American people want to hear what Detroit's Big Three have to say. Ford sees that as an opportunity to speak to millions of potential customers.

"They clearly understand that Ford is in a different place," said Ford CEO Alan Mulally. "The most important thing is that we help everybody understand where Ford is and where it's going. We're looking at every medium we have to tell that story."

Over the past couple of weeks, the Dearborn automaker has been making its executives available -- not only to major media outlets, but also to newspapers and television stations around the country. Bill Ford himself was the scheduled guest on Larry King Live last night. The company is also being more aggressive in trying to get its message out through online social media Web sites like Facebook.

But analyst Jim Hall of 2953 Analytics LLP says the company could do more. He says Ford needs to make consumers feel like they are part of its solution.

"What you do is say, 'We're working through this with " he said. "You make the your help. Vote for Ford with your dollars,' customer one of the winners. And you can do that without taking the mallet to anyone else."

Even with the right marketing message, Ford still needs to contend with the economy. Its market share may be up, but like every other automaker its sales are down sharply, and there is no sign of a recovery anytime soon.

"At a certain point, if customers are just completely stressed out and tapped out, all the messaging in the world isn't going to get them in," Bill Ford said.

Moreover, while Ford may not need government help today, its finances are still a disaster. The company has lost $24 billion since 2005, its stock is trading for just over $3 a share and its bonds are worth pennies on the dollar.

But Ford continues to aggressively restructure its business to match the actual demand for its cars and trucks, to consolidate its global operations and shed what it calls "non-core operations" like Jaguar and Land Rover to concentrate its resources on saving the Blue Oval itself.

It is finally getting credit for the strides it has made in quality, safety and reliability. And Ford is about to begin one of the most aggressive product launch cycles in recent automotive history.

Jim Farley, Ford's global sales and marketing chief, says that's the story Ford needs to share with the American people.

"They're all ready to listen and they're all paying attention," he said. "It may not be the best starting point, but Americans love a good underdog."


 

Detroit's Problem:
It's Health Care,
not the Union

by Christopher R. Martin

The Senate's failure to pass the bailout of the U.S. auto industry strikes a big blow at one of labor's last stands in manufacturing in the U.S.

What's at stake? According to the bill: 355,000 workers in the U.S. directly employed by the automobile industry; 4,500,000 employed in related industries (the auto industry has the highest job creation multiplier effect of any industry); 1,000,000 retirees (with pensions and health care benefits).

Vice President Dick Cheney, mindful of his administration's economic legacy, reportedly pleaded to fellow Republicans in the Senate, "If we don't do this, we will be known as the party of Herbert Hoover forever."

Welcome to forever, Dick.

It's too late for Cheney, as his party and their think tank associates celebrated the opportunity of Detroit's woes to pin blame on their perennial target, labor unions. In September, the conservative Heritage Foundation, with a barely concealed smirk, was already spreading disinformation:

"There are plenty of auto industry jobs being created every day right here in America - and with no government help. Toyota recently opened a new plant in Texas, and is building another factory in Mississippi. Toyota already produces more than 1.5 million cars in America, and that number is set to soar as more factories like those in Texas and Mississippi come on line. Unlike the Detroit automakers, Toyota has a union-free workforce, which gives the company a huge competitive advantage. Toyota still pays good wages but its workforce is younger, not burdened by seniority rules, and the company has smarter and lower benefit costs."

Two contentions - that foreign automakers in the U.S. have received no government help, and that union workers are grossly overpaid - are either misleading or completely untrue.

First, let's start with government assistance. It's easy to forget that there are government subsidies other than the ones asked for in Congressional hearings. For foreign automakers such as Toyota, Nissan, Honda, Hyundai, Mercedes, and BMW, the better way of wringing out public subsidies is to get Southern states to battle for your plants by offering a bevy of tax abatements, infrastructure projects, and even employee recruitment, screening and training. According to the Center for Automotive Research at the University of Michigan, between 1998 and 2003, the Southern states paid out an average of $87,700 in "government help" per nonunion auto job created - an average of $143 million per facility - compared to $50,180 per job created in the haplessly unionized North.

The second contention - that the unionized autoworkers of the north are grossly overpaid - is misleading. In fact, Sen. Bob Corker (R-Tennessee), one of the opponents of the bailout, encouraged the deception. The Chattanooga Times Free Press reported the Senator "said the automakers pay their rank-and-file employees an average of $70 to $74 an hour, including benefits, while foreign automakers pay an average of $42 to $44 an hour." The quote, repeated nearly everywhere in the news media over the past few weeks, obscures the situation.

Only a very few news organizations - Jonathan Cohn at the New Republic and David Leonhardt at the New York Times, among the few - bothered to break it down. As it turns out, the base wages are fairly close - about $29 an hour for Detroit's three automakers, and about $26 for the foreign automakers in the U.S. What nearly every Republican politician and news report fails to mention, though, is that wages in Detroit are already dropping. The UAW gave major concessions to GM, Ford, and Chrysler in 2005 and 2007, setting a new second tier starting wage at $14. This lower wage will continue to decrease the base wage cost going into the future.

Another difference in North vs. South autoworker wages is benefits. Adding in things like healthcare, training, vacation, and overtime, Big Three autoworkers make about $55 compared to about $46 for nonunion workers. True enough, unionized workers do better here. But a big part of this expense is healthcare.

Healthcare also is part of the largest difference between North and South: what the industry calls "legacy costs" - the pensions and health care of retirees. The foreign auto companies currently don't have these costs, since they've been operating in the U.S. for only about 25 years or less, and have few retirees. But, the Big Three have more than a million retirees and their families to cover. Corker and others unfairly lump this into average wage costs and arrive at something over $70 an hour.

So, when the Senate Republicans are talking about equalizing wages, what they are really talking about is taking pensions and healthcare away from retirees. That doesn't sound as nice as "equalizing" the wage of current workers, so they never say it that way.

The UAW has made a number of concessions over the years, but that's where they said no. They wouldn't sell out the dignity and well being of their retirees.

Back in 2006, GM vice president Bob Lutz famously said, "Sometimes it feels like we're a health-care company that tries to sell enough cars to pay the bills."

Exactly. Hello Washington? This is a primarily a health care problem, not an auto problem.

Corker and his colleagues might begin with a better comparison for the Big Three's unionized autoworkers -- their union colleagues in Canada. Their work and wages are similar, except that Canada has a public healthcare system that evens the playing field for all companies. According to the Canadian Labour Congress in 2006, health benefits for unionized autoworkers in Canada cost $120 per car. In the same year, health benefits for Big Three autoworkers cost $1,500, and they're still rising.

If Corker and his colleagues are truly serious about changing the structure of the auto industry, they should start by working to give people health care, not take it away. And if the news media wants to get to the bottom of Detroit's problems, health care is what they should be writing about.

Christopher R. Martin is an associate professor in journalism at the University of Northern Iowa in Cedar Falls, Iowa. His research has been published in Journalism Studies, Journal of Communication Inquiry, Communication Research, Labor Research Journal, Popular Music and Society, Journal of Communication, Z magazine and the Web journal Images. With Richard Campbell and Bettina Fabos, he is co-author of Media and Culture: An Introduction to Mass Communication (Bedford/St. Martin's, 2008), now in its 6th edition update, and author of an award-winning book on how labor unions are covered in the news media, Framed! Labor and the Corporate Media (Cornell University Press, 2004). Martin previously taught at Miami University (Ohio), and holds a Ph.D. from the University of Michigan.


517,000 Ontario jobs at risk

If Big Three automakers go out of business,
the entire economy will be devastated, report says

Dec 16, 2008 04:30 AM
Robert Benzie
Rob Ferguson
QUEEN'S PARK BUREAU

Ontario would lose 517,000 jobs within five years if the Big Three automakers went out of business, according to a new provincial report obtained by the Star.

The review, prepared for the Ministry of Economic Development and to be released today, warns the collapse of General Motors, Ford and Chrysler would send lasting shock waves through the economy.

If auto output by U.S.-based manufacturers in Canada were cut in half, at least 157,000 jobs would be lost right away, 141,000 of them in Ontario. By 2014, job losses would rise to 296,000 nationally, including 269,000 here.

If production were to cease completely, 323,000 jobs would be lost immediately in Canada, including 281,800 in this province, rising to 582,000 nationally and 517,000 in Ontario by 2014.

The Ontario Manufacturing Council, an arm's-length provincial government panel, commissioned the 11-page report, which was prepared by the Centre for Spatial Economics. The report paints a gloomy picture if governments at Queen's Park, in Ottawa, and in Washington do not bail out the automakers.

"The depreciation of the dollar, lower interest rates, and lower production costs eventually help the economy to partially recover (over the following five years, 2015 to 2019) but the loss of the Detroit Three leaves a permanent dent in Canada's economy in terms of jobs and output," the report says.

"For any Canadians who feel that the auto industry is expendable to our economy, this report is a wake-up call," Economic Development Minister Michael Bryant said in an interview yesterday.

"This report suggests that even under a scenario where half the auto sector is lost, our economy (in Ontario) basically craters and brings the whole rest of the (Canadian) economy with it," Bryant said.

The damage would extend well beyond the auto and related parts industries to housing and a broad range of consumer spending, said Jayson Myers, an economist who is president of Canadian Manufacturers and Exporters.

Myers is a co-chair of the manufacturing council with Jim Stanford, economist for the Canadian Auto Workers union.

"We were surprised how big the impact is. ... It shows the importance of ensuring we maintain production here."

The impact on citizens would be huge, Bryant predicted.

"If the auto industry is somehow allowed to part (from) our economy, it's the equivalent of a nuclear winter with lasting effects ... and would require enormous cuts to public services plus massive deficits every year."

North American automobile demand is already down to 11 million vehicles from a previous 19 million.

"Let's hope that doesn't last long," said Myers. "I'm pretty certain we will see demand rebound, but certainly it won't rebound to 19 million units."

Because automakers have been offering plenty of sales incentives and rebates in the past few years, which eat into future sales, "it's not going to be easy" to get demand up given the economic crunch facing consumers, Myers said.

Nor could Japanese-based automakers like Toyota and Honda, which already build cars and trucks in Ontario, be expected to fill the void left by GM, Ford and Chrysler.

"The economic impacts estimated by this analysis are likely to understate the true economic impact for several reasons, despite the possibility that foreign vehicle producers could expand production in Canada," the report states.

First, "a permanent contraction of the motor vehicle industry would negatively impact the U.S. and, indeed, the global economy, reducing the demand for Canadian exports from all industries."

That would depress prices of commodities such as oil and minerals, hurting resource-rich provinces like Alberta and Saskatchewan.

Second, the bankruptcy of any of the Big Three automakers might have serious implications for their pension funds and retirees' incomes.

Third, the study suggests "more than 80 per cent of the parts industry would vanish in the event of the failure of all three Detroit companies," which would temporarily disrupt foreign automakers' production in North America.

A subsequent housing slump would cast a pall over construction jobs as well as hurt the retail, insurance, real estate and financial services sectors, the report said.

Bryant said it underscores the necessity of keeping the Big Three in business.

"We have to mitigate the impact as much as possible."

The study comes as Ottawa and Queen's Park are preparing a $3.4 billion (Cdn.) emergency aid package if Washington comes through with a $14 billion (U.S.) rescue.

The U.S. Senate last week rejected a $14 billion bailout, but President George W. Bush is expected to resurrect it as early as this week.

In Canada, both levels of government are still determining how much money Ottawa and Queen's Park would each contribute.

Both Prime Minister Stephen Harper and Premier Dalton McGuinty have been in constant contact and Ottawa is talking with the White House to track the status of the U.S. bailout, Bryant said.

In the wake of Harper's offer of help for automakers, Alberta Premier Ed Stelmach yesterday urged assistance for his province as well.

Stelmach asked Ottawa to match the $2 billion Alberta is spending on carbon capture and storage technology to fight climate change, saying it would generate tax revenue and create manufacturing jobs across the country.

 

CAW warns plants could go south

Union chief says government bailout package must
be contingent on auto jobs staying in Canada

Dec 14, 2008 04:30 AM
Kenyon Wallace
Staff Reporter

Canadian governments must intervene to prevent the loss of whole auto assembly plants to the United States, says the president of the Canadian Auto Workers.

Despite $3.4 billion in conditional emergency aid promised to Canada's ailing auto makers Friday by the Ontario and federal governments, Ken Lewenza says excess capacity at Canadian auto plants must be protected or General Motors, Ford and Chrysler could move plants and equipment south of the border.

"If the Canadian government doesn't do anything ... you've got to believe that over time, our products would be moved," Lewenza said yesterday in an interview. "We don't want GM to pick up and say, it's been nice doing business in Oshawa but sorry we've got a better deal in the United States. We want to ensure that when the Americans put their legislation together, it isn't on the backs of Canadian jobs."

Lewenza also said that thousands of jobs could still be lost even with additional aid unless the money is contingent on manufacturers keeping workers in jobs and plants open.

Lewenza's warning comes on the heels of Federal Industry Minister Tony Clement's announcement late Friday of the conditional $3.4 billion for Canadian operations of General Motors, Ford and Chrysler based on the $14 billion (U.S.) the White House is contemplating in rescue money for the Detroit Big Three.

The Bush administration spent yesterday weighing its options, but details were scarce as to how much interim financial aid the U.S. government would provide to stave off a collapse of the troubled industry. On Thursday, Republicans in the U.S. Senate refused to pass a $14 billion (U.S.) rescue bill, throwing the future of the Big Three into doubt. GM and Chrysler have already warned they could run out of cash in a matter of weeks without immediate government aid.

But Ontario's assembly plants are already on the brink. Chrysler's Windsor minivan plant will be shut down for the month of January, while GM's car plant in Oshawa is scheduled for a six-week closure starting at the same time. Lewenza said Ford's Oakville plant is also anticipating shutting down operations for two weeks early in the New Year. The three companies employ more than 30,000 people in Ontario.

 

  Gettelfinger blasts GOP's tactics

Gettelfinger

He says union was 'set up'; Corker says
he couldn't get a date for union to take pay cuts.

Louis Aguilar / The Detroit News
December 13, 2008

Union Auto Workers President Ron Gettelfinger and Senate Republicans from the South spent Friday blaming each other for killing the congressional bailout that would have provided emergency loans to keep the domestic auto industry going until January.

Hours after the Washington deal fell apart, Gettelfinger was at Detroit's Solidarity House charging that a minority of southern Republicans was trying to "set up" the union by demanding concessions no other party -- the automakers and bondholders, for example -- were being asked to accept.
The breaking point of the negotiations was the UAW's refusal to agree to lower wage and benefit rates as soon as next year, Gettelfinger said.

"The GOP caucus was insisting the restructuring had to be done on the backs of workers and retirees rather than have all stakeholders come to the table," Gettelfinger said. "They were trying to pierce the heart of organized labor while representing foreign brands," that have plants in the southern United States and use non-union workers.

Shortly after the UAW press conference in Detroit, Republican Sen. Bob Corker of Tennessee roared back at the union from Washington. Corker suggested the union bore the burden for the measure's failure.

"I offered them a solution," Corker said of the Thursday talks. "Our caucus was 100 percent behind it. Do we own it, or does the UAW own it?" Corker chided Gettelfinger for not participating in the discussions. "I asked him to come to the table, not assign somebody to come back and forth. It didn't work out."

Corker said he proposed that wages and benefits of UAW members be lowered next year to match rates at American plants run by foreign automakers, and gave the UAW the chance to pick the date when the pay cuts would be made. He could not sell a compromise to other Republicans without that agreement. "We just could not get a date," Corker said of his Thursday discussions with the UAW. "It was an amazing thing to me."

Gettelfinger countered there is no way to tell what Republicans mean by competitive wage and benefit rates. In the 2007 labor agreement, the UAW agreed to slash starting wages and benefits for newly hired autoworkers at the Detroit automakers to as low as $14 an hour. Those cuts don't affect current workers, whose hourly pay and compensation is about $55 an hour. The figure climbs to more than $70 an hour when automakers' costs for health care for retired workers and retirement benefits are factored in.

The hourly pay and compensation at foreign automakers is about $45 an hour, labor analysts say. Gettelfinger said that excluding benefits, UAW workers earn just over $28.12 an hour in wages, on average. That compares with $30.45 an hour, which includes profit-sharing bonuses, for non-union workers at Toyota's Georgetown, Ky., plant.

The UAW's back is up against the wall, said Gary Chaison, labor professor at Clark University in Massachusetts.

"This whole bailout, at least today, has become a debate that is very ideological and geographical, and the UAW is in a very difficult position now," Chaison said. "It's become about the American labor movement, about North versus South, about labor and anti-labor, about free trade versus regulation. Gettelfinger must be frustrated because he's a practical guy, but, with this ideological fight now, it limits his options and how much he can bargain."

Gettelfinger indicated Friday "we were prepared to make further concessions" but didn't provide details.

The debate over UAW wages and benefits is something that's often argued, even in Detroit. UAW members such as Local 22 President George McGregor say they occasionally have to defend themselves to other working-class residents.

"I get it sometimes from the cashier where I buy my groceries over on the east side," of Detroit, McGregor said, who represents workers at GM's Hamtramck Cadillac plant. "I'm wearing my shirt with the UAW logo, and I'm paying cash, when the cashier asks, 'How come you all make so much money? " McGregor said. It's unfair,'

In the student center at Wayne State University on Friday, a group of classmates also were discussing the pros and cons of UAW wages and benefits.

"If you put in the seniority, I don't see why you should lay blame towards them," said Courtney Griffith Jr., 18, of Detroit, whose father is a GM hourly worker.

But Mikaela Manley, 18, of Oak Park, says the wages of UAW workers should be cut. "A lot of them don't even have college degrees, and here we are, working hard and sacrificing to get an education, and yet they will get paid more than us," Manley said.

 

Every assembly plant
in Ontario facing cuts
Listen

Lengthy downtime bound to trigger layoffs at auto-parts suppliers

Dec 13, 2008
Tony Van Alphen
Isabel Teotonio
Staff Reporters

Tens of thousands of anxious workers in Ontario's auto industry will be off the job during the next few months as plunging sales in the U.S. hammer production here.

Company and union officials confirmed yesterday a new round of production cuts for December and the first few months of next year that will hit every assembly plant in Ontario for some time.

The lengthy downtime at some assembly plants in Oshawa, Oakville and Windsor will also trigger significant layoffs at scores of parts makers who supply them.

"All of our (auto) workplaces in Canada are experiencing reductions and temporary layoffs," said Ken Lewenza, national president of the Canadian Auto Workers. "Every company is being very stringent on overbuilding now."

Industry leader General Motors of Canada Ltd. said it will idle its Oshawa car plant for three more weeks in January and February, in addition to the two weeks announced earlier. The plant, which primarily builds Chevrolet Impalas, is also reducing output from three to two shifts.

The company, whose U.S. sales have crashed more than 40 per cent in recent months, has already scheduled four weeks of downtime at its adjacent Oshawa truck plant in the first few months of next year. That plant will close later in the year.

The growing cuts are increasing anxiety among workers. At My Sister's Place, a popular bar around the corner from the Oshawa complex, much of the talk centred on the pending shutdowns.

"I mean, it's only people's lives that they're playing with, but who cares about that?" said Gregg Barton, 49, taking a swig of beer. "The company is not telling us anything."

It's not only the uncertainty that has left him shaken. Barton, who is eligible for retirement next year, fears GM may declare bankruptcy and his pension will be in jeopardy.

"A lot of people don't realize just how serious this," said Barton, whose comments were greeted with nods from fellow workers.

"This is going to impact everyone," added Mike Moher. "The whole economy is going to be hurt."

Debbie Comartin, a 21-year GM veteran, always thought she would have a "stable job" with the company, but the shutdowns have shaken her confidence.

"I just assumed I'd be here for 30 years, but will I be here for nine more years?" said Comartin, 46.

CAMI, a joint venture between GM and Suzuki Corp. in Ingersoll, disclosed that it will extend downtime from three weeks to six in January and February.

In another huge production cut, Ford Motor Co. of Canada Ltd. will stop building crossover utility vehicles, including the Edge, at its Oakville complex for 10 of 19 weeks between Monday and the end of April.

Ford is also idling its sputtering car assembly plant in St. Thomas next week and the week of Jan. 5. It was down this week, too.

Chrysler Canada Inc. is halting production at its minivan plant in Windsor during January. It will also close some engine operations for two weeks this month and next.

The company is slashing output at its Brampton plant, which builds the Chrysler 300 and two sports cars, for two weeks in January.

Laid-off workers at GM, Ford and Chrysler will get about 65 per cent of their gross pay through a combination of company benefits and federal employment insurance.

Honda Canada said it's slowing output in Alliston by about 9 per cent during the next three months – despite producing the Civic, one of the most popular vehicles in North America. Workers will have the option of taking vacation time or extra training.

Toyota is also curbing January production at its Cambridge operation and a new plant in Woodstock.


Ottawa pledges billions
to avert auto meltdown

Listen

Queen's Park joins $3.4B plan to bail out struggling GM, Chrysler
and Ford, provided U.S. aid approved and Canadian firms'
restructuring plans are sound

Dec 13, 2008
Tony Van Alphen
Business Reporter
Rob Ferguson
Queen's Park Bureau

Canada's struggling automakers will get roughly $3.4 billion in emergency aid to "keep the doors open" – but only if the Americans put money on the table first, says federal Industry Minister Tony Clement.

The aid is also conditional on restructuring plans by the Canadian arms of General Motors, Ford and Chrysler meeting government approval, Clement told a news conference last night.

"The federal and the Ontario governments are prepared to move quickly if and when the Americans approve a support package," Clement said following weeks of talks between Ottawa and Queen's Park.

"It's absolutely not a blank cheque ... we have to protect the interests of the taxpayer. This is about conditional support based on their long-term plans, based on them working with the parts suppliers, based on the unions being at the table, based on the United States continuing to be part of the solution."

The U.S. government pulled the auto industry from the brink of collapse earlier yesterday with a pledge for interim financial aid, although an amount is still being worked out.

In an escalating crisis, the Bush administration said it would step in to provide billions of dollars in loans and lines of credit for the next few months to reeling GM, Ford and Chrysler in the United States.

The move came after Republicans in the U.S. Senate stunned the industry by refusing to pass an interim $14 billion (U.S.) rescue bill late Thursday.

The Canadian aid package will be proportional to any U.S. assistance, based on the Canadian share of North American auto production, putting the price tag to taxpayers at about $3.4 billion (Canadian) based on the $14 billion American proposal.

The final amount "depends on what the U.S. administration comes up with," Clement said.

In total, the Canadian automakers are seeking up to $6.8 billion in emergency and long-term aid to cope with plunging sales and the need to restructure operations.

Hopes for a bailout didn't stop the automakers from announcing yesterday a slew of production cuts and temporary layoffs later this month and into the new year.

The governments still need to work on details of conditions that the automakers will face, said Clement, who walked away from reporters when asked how soon the companies could expect to receive money. A source close to the federal-provincial negotiations said the auto companies should not expect cheques immediately, because they will have to prove they have met the conditions first and that will take time.

"There will be some back and forth with the auto companies after the announcement's made," the source said.

The Canadian announcement detailing the amount of aid and how it will be shared among the automakers will come "a short time" after a U.S. package is finalized, the source added.

Both GM and Chrysler have said they need emergency cash before year's end to stay afloat. Ford does not have an immediate cash flow crunch and is seeking a government-backed line of credit for future needs.

Clement made the announcement in Toronto shortly after Premier Dalton McGuinty and Prime Minister Stephen Harper met secretly in Ottawa for an hour late yesterday afternoon.

McGuinty said the two governments had to intervene given the huge number of auto assembly, parts and related jobs at stake.

"If 400,000 folks were to go on employment insurance that would cost us billions and billions," the premier told CTV.

While Ontario had been arguing that emergency aid should be solely a federal responsibility, with the province providing money later to help the automakers retool their plants, it appears Ontario taxpayers will be on the hook after all.

"We are in this together," said a provincial source.

That means Ontario's forecast $500 million deficit for this fiscal year could balloon because of the auto aid deal.

Earlier in the day, the New Democrats were critical of any plans to wait for American aid.

"That's a very dangerous game for Ontario workers and Ontario communities because you can end up with a pattern that works against Ontario," warned party leader Howard Hampton.

GM and Chrysler have indicated they will run out of cash to operate their U.S. and Canadian plants within weeks, which would also cripple hundreds of parts companies and stall production at other automakers who rely on them.

That would push the U.S. and Canadian economies into a deeper recession and trigger heavier job losses. Lack of aid could also force one or more automakers and many suppliers into temporary court protection from creditors, creating a crisis in consumer confidence that would eventually lead to their demise.

Even as the U.S. and Canadian governments work on details of interim and long-term aid packages, the downturn in the two economies prompted more major production cuts.

Chrysler will close its giant Windsor minivan plant for more than a month; GM is extending a stoppage at its Oshawa car factory and Honda said it would slow Civic production in Alliston. Ford is curbing production at its Oakville plant by a total of 10 weeks. In the U.S., the Detroit Three were seeking $14 billion immediately and more than $35 billion in total aid from the U.S. government. None of the automakers and their Canadian subsidiaries have revealed publicly how they would spend government aid nor provided any details of plant closures, shrinkage of operations or job losses. That has led to opposition demands for more transparency in talks for aid.

The Canadian Auto Workers union, which represents more than 30,000 production workers and skilled tradespeople at the three companies, had urged the federal and Ontario governments to move quickly in confirming aid.

"It has been a roller-coaster for our members ... and for our communities who rely so heavily on the auto industry," said union president Ken Lewenza.

Outside the sprawling GM operations in Oshawa, auto worker Debbie Comartin's voice began to choke and her eyes welled up in tears because of some public opposition to government aid.

"They're not looking at what we've put back into the community," Comartin said, adding she feels the public has turned its back on auto workers.

Comartin, a 21-year GM veteran, said she is willing to take a pay cut but now worries about losing her benefits and pension.

"The worst fear is that if they go bankrupt, we will lose everything."

In Washington, administration officials offered no information on what funds it would tap for interim aid, or the amount, terms and conditions for the automakers, workers and other stakeholders.

The U.S. Senate rejected the $14 billion aid plan after the United Auto Workers union refused demands from primarily southern Republicans for wage cuts at the three companies. The UAW charged that Republican senators who oppose the aid hail from states where governments have used billions of dollars in incentives to attract plant investments from non-unionized foreign-based automakers.

Lewenza, whose union is also under pressure to accept some concessions, said U.S. politicians are using workers as "scapegoats" in the battle for public aid.

"We could work for free for the next month and it wouldn't sell one more car," he said.

The downturn in the North American economy, tighter credit and soaring fuel prices have hammered auto sales this year in the U.S. and created a liquidity crisis for the Detroit-based companies.

However, other automakers are now also feeling the pain and slashing output.

With files from Isabel Teotonio and Robert Benzie

 

U.S. auto bailout deal collapses

Auto executives listen as United Autoworkers Union President Ron Gettelfinger, right, testifies on Capitol Hill in Washington on Nov.19, 2008, before the House Financial Services Committee. From left are, GM chief executive Richard Wagoner; Chrysler CEO Robert Nardelli and Ford chief executive Alan Mulally.

Dec 12, 2008

WASHINGTON–A $14 billion emergency bailout for U.S. automakers collapsed in the Senate last night after the United Auto Workers refused to accede to Republican demands for swift wage cuts.

The collapse came after bipartisan talks on the auto rescue broke down over Republican demands that the UAW union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers.

The Senate rejected the bailout 52-35 on a procedural vote – well short of the 60 required – after the talks fell apart.

The White House said it was evaluating its options in light of the breakdown.

"It's disappointing that Congress failed to act tonight," a White House statement said. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable.''

Majority Leader Harry Reid said he hoped President George W. Bush would tap the $700 billion Wall Street bailout fund for emergency aid to the automakers. General Motors Corp. and Chrysler LLC have said they could be weeks from collapse. Ford Motor Co. says it does not need federal help now, but its survival is far from certain.

The collapse followed unprecedented marathon negotiations at the Capitol among labour, the auto industry and lawmakers who bargained into the night in efforts to salvage the auto bailout.

The group came close to agreement, but it stalled over the UAW's refusal to agree to wage cuts before their current contract expires in 2011. Republicans balked at giving the automakers federal aid.

Reid called the bill's collapse "a loss for the country,'' adding: "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight.''

Last night's bailout collapse left Canada's situation in limbo.

The Detroit Three are seeking at least $6 billion (Cdn.) in public money, but have released few details about restructuring plans, including the future of plants, jobs or how they would spend the money.

Any financial help from the federal and Ontario governments was likely to have been piggybacked with the U.S. legislation, which would have given automakers until the end of March to submit restructuring plans, Ontario Economic Development Minister Michael Bryant said earlier yesterday.

The lack of disclosure about the impact on operations and employment has sparked criticism from the Ontario government and opposition politicians who remain in the dark about the future of some plants and thousands of jobs.

Last night's collapse was reminiscent of the defeat of the $700 billion Wall Street bailout in the House, which sent lawmakers back to the drawing board to draft a new agreement to rescue financial institutions and halt a broader economic meltdown. That measure ultimately passed.

It wasn't immediately clear, however, how the auto aid measure might be resurrected in a bailout-fatigued post-election Congress.

In Ottawa earlier yesterday, a senior official for the Conservative government said it was expecting to offer a "stimulus" package to the automakers before the Jan. 27 budget to be "in sync" with U.S. aid.

Supporters of aid in both countries say failure by governments to approve the rescue would trigger the collapse of the North American auto industry and push the economies in the U.S. and Canada into deep recession.

The parents of GM and Chrysler have told Congress they will soon run out of money to operate their plants. If one automaker fails, it would cripple parts makers who also supply other vehicle companies.

The U.S. legislation had set a March 31 deadline for GM Corp., Ford Motor Co. and Chrysler LLC to agree with a new U.S. "car czar" or presidential designate on restructuring plans that would make the automakers viable.

A summary of the U.S. legislation revealed the auto loans were for seven years or longer at interest rates of 5 per cent in the first five years and 9 per cent after that.

Bryant said governments on both sides of the border will have to set "tough terms" for aid "to make sure this is not throwing good money after bad."

Bryant said the North American auto industry is integrated between the two countries so it makes sense to manage the restructuring in the same way, with Canadian action mirroring the U.S.

With files from Rob Ferguson, Tonda MacCharles and Tony Van Alphen

Toronto Star

 

Automakers told to 'come clean'

Ontarians have right to know plans, McGuinty says
as U.S. House passes $14 billion American bailout


Dec 11, 2008 04:30 AM
Rob Ferguson
Queen's Park Bureau
Tony Van Alphen
Business Reporter

Canada's three struggling automakers must come clean on plans to cut jobs if they hope to win taxpayer support for the $6 billion in aid they're seeking, Premier Dalton McGuinty says.

General Motors, Ford and Chrysler submitted their restructuring plans to Queen's Park and Ottawa last Friday but have yet to publicly reveal what would happen to their Ontario factories.

McGuinty signalled his patience is wearing thin with the companies, which employ more than 30,000 workers.

"We're on a two-way street here," the premier said yesterday. "Ontarians are people of goodwill and they do want to lend a hand ... but don't try to pull the wool over our eyes, be honest with us."

American legislators battled yesterday over a proposed $14 billion (U.S.) emergency aid package that would increase pressure on Canada to respond in kind.

The House approved bailout legislation last night that forces U.S. automakers to restructure or fail. The 237-170 vote sends the measure to the Senate where a vote could come as early as today. But some Republicans have vowed to slow or even block the legislation.

Ford and Chrysler did not respond to inquiries from the Star yesterday seeking comment on McGuinty's request, but GM pledged to release its 35-page plan by week's end after meetings with government officials, said vice-president David Paterson.

Overall, GM is seeking $800 million by year's end and $1.6 billion later, Ford wants a "standby" line of credit worth $2 billion and Chrysler $1.6 billion. GM, which is Canada's largest automaker, has signalled it may need another $1 billion if the rapid vehicle sales decline continues.

Federal Industry Minister Tony Clement said officials were going to the "data centres" of the Detroit 3 to go over their most confidential financial information as part of the decision-making process.

"I haven't seen anything on timelines," said a spokesperson for Clement.

McGuinty's push for details followed days of criticism from opposition parties worried that an aid deal could be cut with taxpayers knowing nothing about the fate of thousands of auto jobs and how their money will be spent.

"Everything is done in secret," said NDP Leader Howard Hampton. "This is the wrong way to do it."

Ontario's economic development minister said time is running short for the automakers to go public with details of their plans.

"If the industry won't do it, the government will do it," Michael Bryant said yesterday, noting the automakers have been worried that any leaks could jeopardize U.S. aid.

McGuinty noted the automakers have made public far less information about their plans in Canada compared with their U.S. parent companies, leaving lawmakers here in a difficult position in trying to sell an aid plan to taxpayers already feeling the pinch of the economic downturn themselves.

"I think Ontarians ... are entitled to know," McGuinty said.

Chrysler has already warned its car assembly plant in Brampton and minivan plant in Windsor may not be able to survive without financial help soon.

Meanwhile, a top U.S. auto watcher said yesterday Chrysler Canada's U.S. parent likely won't survive the current financial crisis.

"A controlled wind down of Chrysler is in everybody's interest," said Michael Robinet, an analyst for CSM Worldwide, adding a probable scenario would be the sale of some assets. McGuinty also reiterated the Canadian Auto Workers union must step up to help if the public is to be sold on aid. CAW president Ken Lewenza said this week the union doesn't need to cut benefits and pay because it's already agreed to wage freezes.

- With files from Tonda MacCharles and Star wire services

 

No need to chop labour costs: CAW

Canadian Auto Workers President Ken Lewenza speaks to the media following his meeting with Minister of Industry Tony Clement in Ottawa Dec. 9, 2008.

Auto union chief tells federal industry minister
concessions should not be part of sector's rescue

Dec 10, 2008 04:30 AM
Tony Van Alphen
Rob Ferguson
Staff Reporters

The Canadian Auto Workers is insisting the union doesn't need to cut wages and benefits to become "part of the solution" for massive public aid packages to the country's reeling automakers because employees are already competitive.

Union president Ken Lewenza said he told federal Industry Minister Tony Clement yesterday that current pay for workers at General Motors of Canada Ltd., Ford Motor Co. of Canada Ltd. and Chrysler Canada Inc. would not scare away future auto investment or jeopardize existing assembly plants.

"We are pretty comfortable knowing we are competitive with the U.S., Europe and Japan" Lewenza said in an interview after a 30-minute meeting with Clement and senior government staff. "Our compensation will not put us at a disadvantage when it comes to investment. In fact, our labour rates should encourage investment."

Clement called the meeting as the federal and Ontario governments work to craft an emergency aid package for the automakers.

Last week, the automakers made submissions seeking $6 billion in government aid in the form of loans, loan guarantees and lines of credit.

Clement, who could not be reached for comment last night, has indicated the union and such other stakeholders as parts suppliers would need to show their willingness to help save the automakers before Ottawa provided any multibillion-dollar aid package.

A spokesperson for Clement said after the meeting the government is still conducting "due diligence," but acknowleged Ottawa is waiting to see what U.S. lawmakers will offer the Detroit-based automakers.

The U.S. Congress could vote on a $15 billion (U.S.) interim package today.

Some union critics have said the CAW must lower labour costs to save the automakers in Canada and in view of concessions by the United Auto Workers in the U.S.

But CAW officials say the arguments are based on inaccurate information.

In talks with U.S. lawmakers, the UAW has modified a jobs bank that pays laid-off workers almost full wages. Furthermore, the union has agreed to allow the companies to delay payments to a union retirement trust.

But the CAW, which represents more than 30,000 active workers at Canadian Detroit Three plants, does not have such funding plans here.

At the meeting, Lewenza said he informed Clement that this spring, the union negotiated savings of between $750 and $900 million for the three automakers in contracts during the next three years to help them cope with looming financial problems.

Under those contracts, production technicians currently earn about $33.90 an hour and receive numerous benefits.

Lewenza added he also pressed Clement on the need to revitalize the sputtering Canadian Automotive Partnership Council; design a national auto policy to lure and nurture the industry, and deal with unfair trade that has led to a flood of imports with no corresponding access to foreign markets.

Meanwhile, Ontario Premier Dalton McGuinty said the government is still in the "investigative phase" of examining auto aid possibilities and the public will see any packages including corresponding commitments from the companies.

But McGuinty also noted again that taxpayers should brace themselves for job losses, even with government aid.

"Governments alone can't make up for a dramatic decline for auto products," McGuinty said. "There will be some more restructuring in the auto sector. I think we need to be honest about that."

But Lewenza said it's too early to predict what the industry will look like here during the next few years and whether the Canadian industry will suffer serious job losses.

McGuinty said the federal and Ontario governments will have to step up with interim aid quickly if the U.S. does so to protect the Canadian industry.

"I know that there's a real state of urgency here and I expect that if Washington comes forward with an interim support package, `a bridge to Obama as they're calling it,' there will be heightened pressure on us to respond with an interim package."

In the Ontario legislature, opposition MPPs expressed concern about a lack of transparency from the automakers about their restructuring plans, including plant and job losses.

"It's undue pressure and irresponsible on their part to expect taxpayers to come running when they're not prepared to give assurances that this money will be well spent," said Bob Runciman, who acts as leader of the Progressive Conservatives in the Legislature.



Tentative deal reached
in US auto bailout talks


WASHINGTON, Dec 9 (Reuters) - The White House and congressional Democrats on Tuesday night reached an agreement in principle on a $15 billion proposal for bailing out U.S. automakers, officials said.
A Bush administration official and a Democratic leadership aide said the accord covered key points but a few final details still needed to resolved and put in writing.

Democrats have arranged to have the U.S. House of Representatives vote on a bill as early as Wednesday and send it to the Senate for consideration.
President Bush and President-elect Barack Obama were both urged by a key Democrat to help rally support by Democrats and Republicans for the pending measure.

"Bipartisan hard work has paid off," said Democratic Sen. Carl Levin of Michigan, whose home state headquarters General Motors Corp , Ford Motor Co and Chrysler LLC.

"I understand an agreement has been reached," Levin said in a statement.
The bailout is designed to allow GM and Chrysler to avert threatened bankruptcy through March with short-term loans. Ford Motor Co is not requesting immediate help but would like a line of credit in case its finances worsen.

The parties agreed last week that the money would come from an Energy Department fund established in September to help Detroit make more fuel efficient cars.

Listen

 

China automaker eyes Ford's Volvo
December 9, 2008

BEIJING–A Chinese partner of Ford Motor Co. is talking to the U.S. automaker about the possible purchase of its Volvo unit, a Chinese newspaper reported Tuesday.

Changan Auto Co.'s president, Xu Liuping, talked with Ford executives about a possible sale at an auto show last month in China, the National Business Daily said, citing an unnamed source at Changan. It gave no other details.

A spokeswoman for Ford Motor (China) Ltd. said Ford was evaluating possible options for Volvo Car Corp. including a possible sale but declined to comment on the Chinese report.

"It will take some months to assess all of our available options," spokeswoman Lynn Ouyang said in a written statement.

Employees who answered the phone at Changan referred calls to a spokesman who they said was unavailable.

Ford is trying to raise money to see the company through a severe slump in the U.S. auto industry. Ford and rivals General Motors Corp. and Chrysler LLC are seeking government aid.

Ford bought Volvo, based in Goteborg, Sweden, in 1999.

Changan and Ford have been joint venture partners in China since 2001.

China's small but ambitious automakers have acquired other foreign brands in an effort to expand abroad.

Nanjing Automobile Group bought Britain's MG-Rover brand in 2006 after its owners went bankrupt. Shanghai Automotive Industries Corp. owns 51 per cent of South Korea's Ssangyong Motor Co.

Car sales in China, the world's second-largest auto market, have weakened but not as severely as in the United States.

China's auto sales fell 10.3 per cent in November from a year earlier, state media reported Monday, citing industry data. It was the third month out of four that car sales have contracted. Sales rose in October.

Ford sold its Jaguar and Land Rover units to India's Tata Motors Ltd. in March for $1.7 billion.


U.S. forges $15B rescue
for automakers

Dec 08, 2008 04:30 AM

Star wire services

WASHINGTON–White House and congressional negotiators sought yesterday to remove remaining differences over an emergency rescue for the auto industry, a wounded giant of the struggling U.S. economy.

Prodded by shock jobless data that showed the U.S. shed more than half a million jobs in November alone, negotiators tried to forge an agreement in principle to provide ``The Detroit Three" automakers with at least $15 billion (U.S.) in short-term loans.

Negotiators hope to reach a final deal today and win congressional passage this week. The measure would then be sent to President George W. Bush to sign into law before Democrat Barack Obama succeeds him as president on Jan. 20.

The Senate is due back in session today and backers hope to have a package ready that can win quick approval.

Lawmakers fear a recession will deepen if any of the three collapses. Primarily Republican critics contend market forces ought to determine the fate of the auto industry, not intervention from a government saddled with a record deficit.

In addition to reorganizing and protecting taxpayer investment, possible conditions include creating a government "car czar" to oversee the bailout, new corporate leadership and additional concessions by the United Auto Workers union.

Senate banking committee chair Christopher Dodd said GM Corp. chair Rick Wagoner should resign to allow new leadership to restructure the faltering company.

"He has to move on," Dodd, a Connecticut Democrat who is leading efforts to craft bailout legislation, told CBS's Face the Nation.

Faced with plummeting sales they blame largely on the credit crunch and recession, GM, Chrysler LLC and Ford Motor Co. sought $34 billion from Congress last week to avoid possible collapse. A deal negotiated by the White House and Congress would provide no more than $17 billion to last into March.

Critics have said any loans would be a waste of money unless automakers cut costs and better compete with more fuel-efficient, foreign-made cars.

 

 Bad Mouthing
American/ Canadian
Vehicles Get the
Facts Straight !

Here are some facts from the WEB that don't get the press they deserve - next time you hear negative comments about domestic this may come in handy it also has the sites that the info came from as well. Pay particular attention to #13 - It says a lot

1. Which country can boast that their brands occupy 2 of the top 3 spots for long-term reliability?
a. Germany
b. Japan
c. Korea
d. United States

2. As of August 2007, which manufacturer had the most recalled vehicles in the U.S. for that year?
a. Chrysler
b. Ford
c. GM
d. Nissan
e. Toyota
f. Volkswagen

3. Pick the brand from each group that has the highest initial quality.
a. Acura, BMW, Cadillac (all luxury makes)
b. Honda, Mercury, Nissan (all non-luxury makes)
c. Acura (lux), Chevrolet (non-lux), BMW (lux), Mazda (non-lux)

4. Which midsize sedan has the highest initial quality?
a. Accord (Honda)
b. Altima (Nissan)
c. Camry (Toyota)
d. Malibu (Chevrolet)

5. Which large sedan has the highest initial quality?
a. Avalon (Toyota)
b. Grand Prix (Pontiac)
c. Sable (Mercury)

6. Which midsize pickup has the highest initial quality?
a. Dakota (Dodge)
b. Ranger (Ford)
c. Tacoma (Toyota)

7. Which car is the most economical overall?
a. Aveo (Chevrolet)
b. Fit (Honda)
c. Prius (Toyota)

8. Which car did the LA Times describe as “a better car than BMW or Mercedes or Lexus or Infiniti”?
a. A6 (Audi)
b. CTS (Cadillac)
c. RL (Acura)

9. Which company makes the winner of the 2008 “Green Car of the Year” award?
a. Chevrolet
b. Honda
c. Toyota

10. Which car was selected by the North American automotive press corps as the “North American Car of the Year” for 2007?
a. Aura (Saturn)
b. Camry (Toyota)
c. Fit (Honda)

11. Which car won the same award for 2008?
a. Accord (Honda)
b. Altima coupe (Nissan)
c. Malibu (Chevrolet)

12. Which company had a luxury vehicle, a midsize sedan, and a large truck removed from the Consumer Reports recommended vehicles list in October 2007 because of mounting quality problems?
a. Chrysler
b. Ford
c. General Motors
d. Hyundai
e. Toyota
f. Volkswagen

ANSWERS:

1. Which country can boast that their brands occupy 2 of the top 3 spots for long-term reliability?

Answer: United States.
Per J.D. Power Vehicle Dependability Study, Mercury and Cadillac are in the top 3, along with Lexus. And in 2007, Buick was tied with Lexus for the top spot.
www.jdpower.com/corpor...

2. As of August 2007, which manufacturer had the most recalled vehicles in the U.S. for that year?

Answer: Volkswagen.
According to Business Week, Volkswagen had the most recalls at this time a year ago. The second worst was Toyota.
www.businessweek.com/a...

3. Pick the brand from each group that has the highest initial quality.

a. Answer : Cadillac (better than both Acura and BMW)
b. Answer: Mercury (better than both Honda and Nissan)
c. Answer: Chevrolet (better than Acura, BMW, and Mazda)
This is according to J.D. Power’s Initial Quality Survey.
www.jdpower.com/corpor...

4. Which midsize sedan has the highest initial quality?

Answer: The Chevrolet Malibu has better initial quality than any competitor, including the Honda Accord, Toyota Camry and Nissan Altima. The Ford Fusion also beat all 3 Japanese competitors.

This too is from the J.D. Power Initial Quality Survey, which also reveals that above average are American brands Mercury, Ford, Cadillac, Chevrolet , Pontiac, Lincoln, and Buick. Below average are import brands Acura, Kia, Nissan, BMW, Mazda, VW, Subaru, and Scion (and several others).
www.jdpower.com/autos/...
www.jdpower.com/corpor...

5. Which large sedan has the highest initial quality?

Answer: Again per J.D. Power, the highest quality large car is the Pontiac Grand Prix, beating the Toyota Avalon. Two other Detroit cars that beat the Avalon are the Mercury Sable and Mercury Grand Marquis.
www.jdpower.com/autos/...

6. Which midsize pickup has the highest initial quality?

Answer: The Dodge Dakota has the best quality for midsize pickups, proving that Chrysler too can beat the imports. Both the Dakota and the Ford Ranger beat the Toyota Tacoma.
www.jdpower.com/autos/...

7. Which car is the most economical overall?

Answer: Per Edmunds.com, the premier automotive analysis site, the most economical car in America, taking into account not only mileage but all costs, is the Chevrolet Aveo. The Honda Fit is #3 and the Toyota Prius is a distant #34.
www.edmunds.com/help/a...

8. Which car did the Los Angeles Times describe as “a better car than BMW or Mercedes or Lexus or Infiniti”?

Answer: “Cadillac makes a better car than BMW or Mercedes or Lexus or Infiniti, and that car is the 2008 CTS. No other car in the mass market dares so much as this expressive and audacious bit of automotive avant-gardism.” Dan Neil, LA Times.
www.latimes.com/classi...

9. Which company makes the winner of the 2008 “Green Car of the Year” award?

Answer: The Chevrolet Tahoe Hybrid is the winner of this award.. How could a full-size SUV defeat the media darling Toyota Prius? Read the link below and you will discover, “What’s equally eye-opening is that the Tahoe’s 21 mpg city fuel efficiency rating is the same as that of the city EPA rating for the four-cylinder Toyota Camry sedan. ”

Did you catch that? A huge, full-size SUV from Chevrolet that gets the same city mileage as a 4-cylinder Toyota Camry!! Chevy obtained this remarkable achievement through the use of its 2-mode hybrid system, a technology that Toyota does not have.
www.greencar.com/featu.../

10. Which car was selected by the North American automotive press corps as the “North American Car of the Year” for 2007?

Answer: Not only was the Saturn Aura picked by the automotive press corps as better than the Honda Fit and the Toyota Camry, “When a panel of 47 journalists named the Saturn Aura the North American Car of the Year over the Toyota Camry, the vote wasn't even close, 205-89.” Chicago Tribune, 1/15/07
www.northamericancarof...

11. Which car won the same award for 2008?

Answer: GM again crushed the Japanese competition in 2008 when the Malibu received 190 votes to the Honda Accord’s 95. The Accord actually came in 3rd since GM’s other finalist, the Cadillac CTS, received 165 votes.
www.northamericancarof...

12. Which company had a luxury vehicle, a midsize sedan, and a large truck removed from the Consumer Reports recommended vehicles list in October 2007 because of mounting quality problems?

Answer: Toyota’s much publicized quality problems resulted in Consumer Reports actually removing from their recommended vehicles list the Lexus GS luxury car, Camry V6 sedan, and Tundra pickup. This demotion occurred in October 2007.

13.If you are one of the many Americans & Canadians who gave up on Detroit’s cars because of a bad experience many years ago, it’s time to rethink your position. Rethink Detroit.

Detroit automakers: 79 U.S. jobs per 2,500 cars sold in America.
Foreign automakers: 33 U..S. jobs per 2,500 cars sold in America.
levelfieldinstitute.or.../


 

11th hour talks on
$15 billion auto aid

White House, political aides try to come up with deal to save Big 3

Dec 07, 2008 04:30 AM
Associated Press

WASHINGTON–Racing to seal a deal with the White House, Democratic congressional leaders dispatched aides yesterday to draft an emergency $15 billion (U.S.) aid package to pull Detroit's Big Three automakers from the brink of collapse.

Capitol Hill leaders prepared to sell yet another bailout to a skeptical Congress. It is an uphill battle: The anger is fresh over how the Bush administration used the $700 billion Wall Street rescue fund and lawmakers are questioning whether the once-mighty auto giants actually can survive.

Still, with Washington spooked by massive job losses that provided the latest evidence of a deepening recession, the White House said it was in "constructive discussions" with both parties. Voting on the plan is expected this week.

The emerging measure would speed short-term help to General Motors Corp., Ford Motor Co. and Chrysler LLC, while empowering the government to order a wholesale restructuring of the industry and imposing tight restrictions on the Big Three, according to officials close to the talks.

They described the developing plan on condition of anonymity because the details are not final.

It is intended to tide the companies – particularly GM and Chrysler, which have warned they are just weeks from going bust – over into March, when Barack Obama is president and a new Congress can consider a longer-term solution.

A breakthrough came Friday when House Speaker Nancy Pelosi, yielded to U.S. President George W. Bush on a key point: allowing the aid to come from an existing $25 billion fund marked for producing environmentally friendlier cars.


Car makers driving for
$6 billion rescue plan

Few details offered on plans for money from Ottawa, Queen's Park

Dec 06, 2008
Rob Ferguson
Queen's Park Bureau
Tony Van Alphen
Business Reporter

The Canadian subsidiaries of the reeling Detroit Three automakers want a total of at least $6 billion in loans and credit lines from the federal and Ontario governments to stay alive, but won't go into much detail on how they would spend the money.

General Motors of Canada Ltd., the country's biggest automaker, is seeking $800 million by year's end and $1.6 billion later, while Chrysler Canada Inc. is asking for $1.6 billion, according to sources familiar with the submissions.

GM may need a further $1 billion if vehicle sales continue to slide at a rapid rate, vice-president David Paterson told the Star last night.

Ford Motor Co. of Canada Ltd. confirmed it would need a "stand-by" line of credit of up to $2 billion, but would use it only if necessary.

The company also urged Ottawa to get into the consumer car loan business and urged both governments, struggling with their own cash crunch, to boost sales through a "tax holiday" on new car purchases.

The three automakers submitted restructuring plans – GM's spanned 35 pages – and the requests for rescue packages to the federal government and Queen's Park yesterday.

The move came on the same day GM confirmed it will lay off 700 workers and cut the third shift at its Oshawa car plant indefinitely starting the first week of February.

The extra money GM might need would boost the overall industry aid package to $7 billion.

"The numbers are going to seem big to taxpayers because they are big," said Ontario Economic Development Minister Michael Bryant.

The lack of public detail from most automakers came as a surprise after Bryant had suggested earlier in the day that more specifics would be released.

"We're certainly not going to say to taxpayers that `we're going to provide assistance, trust us, thank you very much.' No way," he said.

"Obviously, we have to be very transparent and accountable in our decision."

GM is happy to make its plan public but is keeping it private for the weekend at the request of the Ontario government.

"It's in their court," Paterson said, noting GM would use its aid to bring a hybrid variant of a yet-to-be revealed new car model planned for Oshawa, and add transmission production to its engine plant in St. Catharines.

In contrast to its U.S. parent, Chrysler Canada would not publicly disclose how much it needs.

The historic requests come after the automakers' Detroit-based parents filed restructuring plans and requests to the U.S. Congress earlier this week for a total of $34 billion (U.S.) in aid.

The North American-based automakers face a liquidity crisis because of a crash in sales south of the border and worsening economic conditions.

Analysts warn that if one of the automakers fails, it could cause a domino effect among parts suppliers, shut down the entire industry and push the economy into a depression.

If governments in both countries approve the aid packages, it would mark the first major auto industry rescue since they provided hundred of millions of dollars in loan guarantees to Chrysler in 1980.

In that case, the company paid back the money eight years before it was due.

Automakers will have to be more forthcoming to win public support for aid, said Progressive Conservative Leader John Tory. "Taxpayers have a right to know, within certain broad paramaters, what the money is going to be used for."

Ford of Canada said it expects to be profitable by 2011 and has the cash to weather the storm, but needs access to government-backed loans in case the economy worsens or a major rival goes bankrupt, causing a "ripple effect."

CAW president Ken Lewenza said the union will "do what it takes" to help the automakers stay afloat

 

Humbled auto execs
plead for lifeline

The heads of the troubled Detroit Three automakers — including Chrysler’s Robert Nardelli, shown here — arrived in Washington Dec. 4, 2008, to plead for a multibillion-dollar bailout in relatively fuel-efficient versions of their companies’ products.

Plaudits, skepticism greet call to Congress for $34 billion U.S.

Dec 05, 2008

WASHINGTON BUREAU

WASHINGTON–This time, they ditched the corporate jets, hit the Interstate in their hybrids and came armed with plans for deep cuts and a renewed commitment to fuel efficiency.

But it's not clear whether the Big Three – who have now rechristened themselves the Detroit Three – are any closer to a Congressional lifeline, one that will now cost American taxpayers at least $34 billion (U.S.), $9 billion more than the auto industry CEOs had sought just two weeks ago.

With time running out on both this Congress and at least two of the automakers, the Senate banking committee heard another stark warning yesterday.

"I believe we could lose General Motors by the end of this month,'' United Auto Workers president Ron Gettelfinger said a day after his union agreed to concessions on job security and health care for retirees.

Instead of focusing on the peril to the U.S. economy as they did in the first presentations to Congress, General Motors chair Rick Wagoner, Ford CEO Alan Mulally and Chrysler CEO Robert Nardelli outlined much more detailed plans to make their industry more competitive and cost effective.

It won them some plaudits from committee members, but no clear path to receiving the money.

And much skepticism remained.

U.S. public opinion polls are running heavily against any bailout.

"Inaction is unacceptable," said Christopher Dodd of Connecticut, the committee's Democratic chair.

"But we're not about to write a cheque and hand it over."

The auto executives, however, continued to resist suggestions they declare bankruptcy, even if all the terms of restructuring were handled ahead of the filing.

They said no one would buy cars from a bankrupt manufacturer and expressed skepticism they'd be able to emerge from bankruptcy.

Mark Zandi, co-founder of Moody's Economy.com, told the committee that while he backed a rescue, a $34 billion bailout would merely delay bankruptcy at some point over the next two years. "They would ultimately need ... somewhere between $75 billion and $125 billion to avoid this fate," he said.

Wagoner accepted GM has made mistakes, a change in tone from his testimony last month. He pledged a "renewed and expanded" commitment to new technologies, ramped-up production of fuel-efficient vehicles and a reduction in brands, models and retail outlets.

He said he'd take $1 per year in compensation from GM's board, reduce the salary of other executives and ground the corporate jet.

More than half the $34 billion, or $18 billion, is being sought by GM.

Wagoner promised to begin repaying the money by 2011 and have it fully repaid by the following year.

All the auto heads agreed to federal oversight of restructuring plans in return for federal money.

"It used to be that our approach to our customers was, if you build it, they will come," said Mulally, who heads the healthiest of the three firms, but is seeking $9 billion.

Chrysler is seeking $7 billion.

"Our plan also includes producing high-quality, fuel-efficient cars and trucks people want to buy while supporting our country's energy security and environmental sustainability goals," Nardelli pledged.

President George W. Bush told NBC News yesterday that "no matter how important the autos are to our economy, we don't want to put good money after bad." Any plan must ensure "long-term viability for the sake of the taxpayer."

 


CAW loses 'gentle giant'

Frank McAnally

Former Local 200 president mourned
Dalson Chen, Windsor Star

Thursday, December 04, 2008

Windsor's CAW family is mourning the loss of a "gentle giant" -- both in terms of physical presence and community impact -- in the passing of local labour leader Frank McAnally.

A CAW member for more than 40 years and past president of CAW Local 200, McAnally died on Wednesday morning of cancer. He was 63.

Ken Lewenza, CAW national president, said union members have been remembering McAnally's respectful way of dealing with others.

"He never once acted like the big man that he was. He always acted like a man that recognized and understood the opinions of others," Lewenza said.

"We lost one hell of a person in Windsor and Essex County."

A Windsor native, McAnally joined the union as a Ford worker in 1966, and was elected a union steward at the Windsor casting plant in 1971.

Over the years, he earned numerous elected positions in the union until he became president of Local 200 in 1984.

Lewenza described McAnally's presidency as one that improved thousands of lives through saving and creating Ford jobs. "He brought Local 200 through a time of despair, similar to what we're going through today," Lewenza said. "He was creative, he was innovative."

Mike Vince, Local 200's current president, described McAnally as a mentor and father figure. "It was absolutely a shock when we got the call this morning. Frank was an incredible trade unionist, but also an incredible human being.

"He sacrificed so much time away from his family to give back to the community and the country. He touched so many people, and some of them don't even recognize his assistance in certain things."

In 1995, McAnally joined the national office of the CAW. His positions included area director for British Columbia and Alberta, and then CAW national representative for all Ford members. He retired in 2003.

Outside of the union, McAnally played a key role in the building of the CAW Student Centre at the University of Windsor, and was a board member with the United Way and the Unemployed Help Centre.

Vince said McAnally will be sadly missed. "Frank was a very big man, and his heart was even bigger," he said. "His door was always open.... He had such a wonderful personality. He was able to deal with people at all different levels."

McAnally is survived by his wife Linda, his son Frank Jr., his daughter Jennifer and grandchildren.

 

Detroit 3 leaning on CAW

Auto executives listen as United Autoworkers Union President Ron Gettelfinger, right, testifies on Capitol Hill in Washington on Nov.19, 2008, before the House Financial Services Committee. From left are, GM chief executive Richard Wagoner; Chrysler CEO Robert Nardelli and Ford chief executive Alan Mulally.

Pressure builds after U.S. union agrees to revise contracts,
allow GM, Ford and Chrysler to delay major payments

 

Dec 04, 2008
Tony Van Alphen
Business Reporter

General Motors of Canada Ltd. is aggressively seeking help from the Canadian Auto Workers to reduce costs in support of efforts for a huge government aid package, the union's top leader says.

Ken Lewenza, the CAW's national president, confirmed yesterday the union has received individual overtures from the three reeling Detroit-based automakers, but GM is pressing harder for savings on the eve of submissions to the federal and Ontario governments for emergency aid.

"GM has been the most aggressive," Lewenza said in an interview yesterday. "They've told us we must be part of the solution and must be creative in reducing costs."

GM, the country's biggest automaker, has a policy of not talking publicly about talks with its union.

Lewenza's comments came after the United Auto Workers in the U.S. revealed it will revise contracts with GM, Ford and Chrysler to delay billions of dollars in payments to a union run health-care trust.

Furthermore, UAW president Ron Gettelfinger said the union would modify a jobs bank in which members on layoff receive up to 95 per cent of their pay.

The CAW does not have a similar health-care trust or jobs bank in Canada at the three automakers.

Lewenza, who represents about 30,000 workers at the three companies, said none of them had broached specific areas where the union could reduce costs.

"There are ongoing discussions in terms of the challenges we all face but there have been no proposals either way," he said.

Lewenza skirted questions about whether the union would consider concessions. "We have always shown a willingness to help and there are different ways of doing that," he said. "It doesn't mean we have to reopen contracts every time and cut wages and benefits.

In the last few years, the union has agreed to changes in local agreements at GM in Oshawa, Chrysler in Brampton and Ford in Oakville that altered work rules and pay schemes, he noted

Lewenza said that in talks with GM, the union reminded the company about the current freeze in wages for three years; suspension of a cost of living for almost two years and other cuts to benefits.

The union also negotiated a package for workers affected by the pending shutdown of GM's truck plant in Oshawa during the summer after the company agreed in May not to close it.

GM has suggested the Canadian industry needs as much as $3.5 billion in short-term loans, loan guarantees or credit lines.

The federal and provincial governments have instructed the three companies to make submissions for aid by today.

Submissions should include restructuring plans, cash positions, short-term liquidity details, future product programs, data on impact on suppliers and how the car firms will handle financing needs here, the governments said in letters to automakers last week.

The government did not ask for submissions from Honda Canada and Toyota Canada, who also have extensive operations here but don't face an immediate cash crisis.

Meanwhile, Detroit-based GM, Ford and Chrysler and the UAW worked yesterday to win support from a skeptical U.S. Congress for a $34 billion (U.S.) aid plan south of the border.

"If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it's a huge blow," Chrysler vice-chair Jim Press told the Associated Press. "It could trigger a depression.''

In submissions earlier this week, GM and Chrysler said they needed an immediate infusion of government cash until the end of the month and both noted they could drag the entire industry down if they fail. Ford wants a $9 billion ``standby line of credit" in case a competitor fails.

Chrysler said it needed $7 billion by year's end to keep operating. GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit to use if conditions worsen.

All three plans envision government taking a stake in the companies.


UAW plans emergency meeting today Wednesday

Union summons leaders to Detroit as firms give
survival plans to Congress.

David Shepardson / Detroit News Washington Bureau

WASHINGTON -- The United Auto Workers has called an emergency meeting in Detroit on Wednesday during which the union could consider reopening its 2007 contracts with the automakers.

Union leaders representing workers at General Motors Corp., Ford Motor Co. and Chrysler LLC plants across the country have been called to Detroit for the session, according to sources familiar with the plan.

One local UAW official who has been invited to the meeting expects the union leaders are going to be asked for their support to reopen the 2007 contracts and to agree to concessions that would help make the automakers financially viable.

The business plans GM, Ford and Chrysler have prepared for Congress include seeking additional givebacks from the UAW as one way to cut costs, according to sources with knowledge of the plans.

A person familiar with one automaker's plan said a variety of topics are being explored. Key issues include reopening the contract, eliminating the controversial jobs bank that still pays workers even when they are laid off, and how much and how quickly the automakers will contribute to a trust fund to be run by the UAW that will take over responsibility for retiree health care beginning in 2010. The health care trust was a key part of the landmark contracts negotiated last year.

UAW spokesman Roger Kerson could not be reached for comment late Monday.

Harley Shaiken, a labor expert and professor at the University of California, Berkeley, was unaware of Wednesday's meeting but was not surprised it was called.

"We truly are in uncharted waters, the stakes are enormous and when you have a situation like that, to lead effectively, you need all the local people aware of the choices and hearing directly from the top leadership what the options are."

Wednesday's meeting was first reported by Bloomberg News.

UAW President Ron Gettelfinger was criticized for the jobs bank during congressional hearings last month about giving the automakers federal aid. The number of workers in the programs has been greatly reduced under tougher time restrictions in the 2007 contract but the benefit is derided as a relic of a bygone age that erodes the automakers' ability to compete and that they can no longer afford. Gettelfinger recently said Ford has taken 40,000 workers out since 2005 and GM has removed about 47,000. About 3,500 workers are in the programs today, he said.

"The jobs bank has become the poster boy of what's gone wrong with the industry," Shaiken said. "The union knows it's the reality they have to deal with. To defend the jobs bank is just not done in the current environment."

In addition to seeking more concessions from the union, Detroit's Big Three will pledge to cut executive pay, limit corporate jet travel and take sweeping steps to return to profitability in the plans they will deliver to Congress.

The chief executives of GM, Ford and Chrysler will return to Washington later this week to make their second plea for aid before House and Senate committees and could face calls for their ouster after a leading Democrat on Monday called for their resignation in return for federal help.

"If I had my way, all three of those guys would be in the unemployment line and I think that ought to be one of the conditions for us doing this," House Majority Whip Jim Clyburn, D-S.C., told reporters in South Carolina, according to the Associated Press.

As majority whip, Clyburn would be responsible for getting the votes needed to pass a rescue plan for the automakers.

South Carolina is home to a BMW plant in Spartanburg, which is set for a $750 million expansion by 2010. Detroit's Big Three have clashed with a growing number of southern lawmakers representing districts where foreign auto companies have factories.

On Monday, the Big Three were putting the finishing touches on the plans congressional leaders required last month when they delayed a vote on $25 billion in emergency assistance.

GM's board of directors approved its plan late Monday. It will be delivered to Congress after the markets close today and will include sacrifices from executives, hourly workers and debt holders.

GM will disclose it has been discussing a proposal with holders of its debt to offer them equity in exchange, a person briefed on the plan said. GM also may announce it is putting up for sale or shuttering Saab, Saturn and Pontiac -- on top of its earlier announced plans to sell its Hummer brand -- and shrinking its dealer network.

Ford said Monday it was putting its Volvo unit up for sale and is expected to detail reductions in executive compensation and corporate travel as part of a plan the company's board approved on Monday. It will highlight its small car strategy and shift to more fuel-efficient vehicles.

Chrysler had not finalized its plan late Monday, said spokeswoman Shawn Morgan.

The companies' revamped business plans are due to Congress the same day they will report November U.S. auto sales, which are expected to be nearly as dismal as October's, when demand plummeted nearly 32 percent. All Big Three members are expected to post sales declines of more than 30 percent, according to Wall Street forecasts. GM is expected to announce more production cuts in North America along with sales.

Some analysts said sales were hurt late in the month by the intense criticism the Detroit companies faced at the congressional hearings last month and talk of a possible GM bankruptcy filing, which the company has said isn't planned.

In making their second pitch for federal aid, the automakers will try to win over a skeptical Congress with substance and symbolism.

On Monday, Ford spokesman Mike Moran said CEO Alan Mulally would drive to Washington in an as yet unidentified Ford vehicle. GM CEO Rick Wagoner also will drive, likely in a Chevrolet Malibu hybrid. Chrysler's Robert Nardelli said earlier he would not return to Washington by corporate plane, but the company hasn't said how he will travel this week.

The CEOs flew to Washington on separate corporate jets last month for the first round of hearings and drew stinging criticism from lawmakers, as did the reluctance of Mulally and Wagoner to accept new pay cuts.

All three companies' plans will disclose how much cash they have on hand and how much they need in the short term to survive. Chrysler said it had burned through $5 billion in the first nine months of the year, and was down to $6.1 billion as of Sept. 30. GM lost more than $20 billion in the first nine months of the year and burned through $6.9 billion in the third quarter. Ford ran through $7.7 billion in the third quarter. .

GM and Chrysler have warned they could run out of cash by early next year. Nardelli said last month Chrysler is in "a very fragile position."

Chrysler's plan is expected to reiterate that it is seeking additional alliances with other automakers. GM and Chrysler held merger talks this fall, but dropped them last month. Chrysler also held talks with the Renault SA-Nissan Motor Co. alliance about a possible tie-up.

Automakers face a difficult road to win approval for the loans. Even if Congress likes their plans and the hearings go well, it is not certain that both houses of Congress will agree on a plan that can be signed into law by President George W. Bush.

House Speaker Nancy Pelosi, D-Calif., and Republicans are still at an impasse over where to get the money to help the companies. Pelosi wants to tap the $700 billion Wall Street rescue package, while Republicans want to drop the fuel efficiency requirements from a $25 billion Energy Department retooling program.

"We'll see what they come up with and what the two hearings yield," said Pelosi spokesman Drew Hammill.

Sen. George Voinovich, R-Ohio, on Monday urged Pelosi and Sen. Majority Leader Harry Reid, D-Nev., to move quickly.

"The time for Congress to act is now," Voinovich, who co-chairs the Senate Auto Caucus, wrote in a letter Monday to Pelosi and Reid. "We must work swiftly to allow the domestic automotive industry to gain access to emergency assistance. The risk in doing nothing is too great."

Voinovich pointed to a study by the Center for Automotive Research in Ann Arbor, which estimated "that if even one of the domestic automakers were to fail roughly 2.5 million U.S. jobs could be lost as a result of the cascading impact that such a failure would have on auto parts suppliers and related industries such as dealers."

Voinovich and Sen. Carl Levin, D-Detroit, co-wrote a compromise bill that they had hoped would get a vote last month.

Levin said Monday he was "confident" the plans the automakers submit will be "responsive to the request of the Congress" and that "the industry will make a compelling case for bridge loans that will allow the companies to return to firm financial footing."

Detroit News Staff Writer Christine Tierney contributed to this report.

 


Ford expects to break even in 2011

Dec 02, 2008 11:18 AM

Reuters

DETROIT–Ford Motor Co said Tuesday it expects to break even or be profitable in 2011 and seeks access to up to $9 billion of government bridge loans to support its restructuring.

The news sent Ford's shares soaring about 13 per cent in morning trading.

Ford, which burned through $7.7 billion of cash in the third quarter, said it submitted a business plan to Congress and does not anticipate a liquidity crisis in 2009, barring a bankruptcy filing by one of its U.S.-based rivals, General Motors Corp or Chrysler LLC.

Ford said it expects both its overall and North American automotive business pretax results to be break-even or profitable in 2011.

Ford Chief Executive Alan Mulally, who, along with other automaker executives, drew criticism from U.S. lawmakers over their compensation and luxury travel arrangements, called the bridge loan "a critical backstop" for Ford that it may not have to access.

Ford said its CEO would take a $1 annual salary if Ford does access government funds. The automaker also said it would sell its five corporate aircraft.

GM, Ford and Chrysler have to meet a Tuesday deadline for submitting detailed plans to congressional leaders outlining restructuring efforts and their prospects for survival in order to secure $25 billion in emergency funding.

In the plan submitted to Congress, Ford said it had entered into discussions with the United Auto Workers to further reduce its cost structure and expects to continue to reduce its dealer and parts supplier base. Ford expects to have 3,790 dealers at the end of 2008.

"The Ford news has given the market a lift as it indicates that the automaker within two years will be back to profitability," said William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York.

"For Ford, government loans would serve as a critical backstop or safeguard against worsening conditions, as we drive transformational change in our company," Mulally said in a statement.

Ford said Monday it could sell the luxury Swedish car brand Volvo as it scrambles to shore up cash amid a deep industry downturn.

Ford shares were up 33 cents, or 12.94 per cent, at $2.88 on the New York Stock Exchange.

 

Ford mulls sale of
Volvo to raise cash

Dec 02, 2008 04:30 AM

DEARBORN, Mich.–Ford Motor Co. is considering selling Volvo Car Corp. as the struggling U.S. automaker seeks to raise cash and weather a global automotive sales crisis.

Ford said yesterday it expects its strategic review of the Swedish luxury automaker will take several months. The move is one of several actions Ford is taking to strengthen its balance sheet.

Spinning off Volvo into a separate entity may be a possibility, as both companies have already taken steps to allow Volvo to operate on a more stand-alone basis. That effort began in 2007, after a previous strategic review of Volvo.

The Swedish government has said it has been in talks with Volvo and with General Motors Corp.'s Saab unit following reports that the U.S. parent companies were seeking aid for their Swedish car makers.

Goteborg-based Volvo Cars, which Ford bought in 1999, has been struggling against a weak U.S. dollar and declining demand.

Even with a tight credit worldwide, Ford could pull off a sale because Volvo would be attractive to automakers in emerging markets such as Tata Motors Ltd. of India, said Kevin Tynan, an analyst with New York-based Argus Research Corp.

Tata in March bought Jaguar and Land Rover from Ford for $1.7 billion (U.S.) and the Volvo brand would complement Tata's two luxury brands, Tynan said.

Associated Press

 

Auto Facts – Pension Update

Why are Pension Plans in Trouble?


• Concerns have been raised about the implications for pension benefits given the current uncertainties and instability for the auto industry. The current financial crisis has highlighted concerns about the possible implications for pensions and has subjected pension plans and their members to two related risks.

First, the viability of many employers is being put into question by deteriorating financial conditions which are affecting their credit, the demand for their products, and the credit position of their customers.

Second, the meltdown of financial markets has meant that the various assets that pension plans have been invested in, have lost significant value.

Restructuring, Creditor Protection and Bankruptcy

There has been a great deal of speculation about the possibility of various employers becoming bankrupt, and what that would mean for pension plan members.

It is extremely difficult to speculate on the possible outcomes of these situations. In Canada, usually before recourse to any possible bankruptcy proceedings, companies often go through a restructuring process under the Companies' Creditors Arrangement Act (“CCAA”). There are many possible outcomes under a CCAA process, including a sale of some or all of the business, a restructuring of part of the business, and even the continuation of the Collective Bargaining Agreement and Pension Plan.

In the event of a bankruptcy of an auto or auto parts company, and in the event that restructuring does not involve the continuation of the Pension Plan, either with a restructured company or with some new corporate entity which would continue the operations in Canada, then there would be a wind-up of the Pension Plan. Depending on the assets available to satisfy the creditors, there may be some additional assets available for the Pension Plan, but quite often in bankruptcy proceedings, there are insufficient assets left after secured creditors have been able to satisfy their liabilities.

It is important to note however, that the current assets of Pension Plans are in separate trust accounts, and those assets are only available exclusively to pay for the pension benefits of the Plan members. These pension assets are not available for any creditors
in bankruptcy proceedings, nor can they be accessed by companies prior to such proceedings. They can never be used for any other purpose than to pay the accrued liabilities of the Pension Plan, i.e. the pensions of retirees, and the future pensions of active workers.

Should any auto company or any auto parts company enter into the CCAA process, the final outcome is very difficult to predict? Few things are certain, except that the judge with jurisdiction over the CCAA proceedings has enormous discretion to fashion a restructuring or “exit” plan. There is nothing that the law requires to be included in an“exit” plan pertaining to workers’ wage, benefit and pension compensation. For example, to return to the Air Canada situation, Air Canada wanted to change its pension plan from a defined benefit plan to a defined contribution plan, and as well, reduce benefits. CAW-Canada adamantly refused to agree to such a proposal. The CCAA judge was able to direct the process so that Air Canada backed off its pension demands. The pension plan remained intact when Air Canada left CCAA proceedings.

Certainly, companies could try to use the CCAA statute to assist future restructuring initiatives. However, the union has direct input into such proceedings, and, in our view, the law does not permit the Court to amend a collective agreement or pension plan of any kind during CCAA proceedings without the union’s explicit consent.

Wind-Ups and Pension Protection

• Concerns have been raised about the funded status of many pension plans based in the auto industry. Below, we detail some of the implications of what may happen in worst case scenarios, and we also provide information about the protection which currently exists for Plan members.

• In Ontario if an employer sponsoring a defined-benefit plan becomes insolvent, and contributions to the plan cease, the plan will be subject to a wind-up, under the procedures established by the Pension benefits Act (PBA).

• In 1980 the Pension Benefits Act of Ontario was amended to establish the PBGF. Ontario became the only Canadian province to provide a system of governmental protection for the pension promises of private employers.

• In the event of a bankruptcy, if the pension fund has insufficient assets to provide the accrued pension benefits then upon wind-up those benefits would have to be adjusted to reflect the financial state of the pension fund and the application of the Ontario

Pension Benefits Guarantee Fund (PBGF).

• It is important to note that the PBGF applies not only to the benefits of those who have retired, but also to the benefits of active participants of the plan. The benefits which the PBGF guarantees are subject to certain restrictions.

• First, the PBGF guarantee only applies to the first $1,000 of monthly
pension income, (an amount that has not been increased since 1980)

• Secondly, it does not guarantee any benefit levels that have been in place
for less than 3 years prior to the date of wind-up

• In general, the first $1,000 of monthly income is fully guaranteed, while the “excess amount” above $1,000 would be paid out at the funded ratio of the Plan on wind-up.

PBGF Examples

Because there have been so many questions about what would happen to Pension Fund assets along with any entitlement from Ontario Pension Benefits Guarantee Fund (PBGF), we have prepared the following examples.

In the event of a bankruptcy, pension benefits would have to be adjusted to reflect the financial state of the pension fund and the application of the provisions of the (PBGF).

To illustrate the way the PBGF works, we will use some examples with differing wind-up ratios, that is, the amount of assets available compared to the total liabilities for all members of the pension plan, including active employees, as well as retirees and surviving spouses.

Although the calculation of how the PBGF works can be rather complex, the general rule is the first $1,000 of monthly income is fully guaranteed, while the “excess amount” above $1,000 would be paid out at various funded ratios of the Plan on wind-up.

Example: If a Big 3 production worker had retired on Oct. 1, 2005 with 30 years of service at age 65, they would be receiving a pension of $65.00 x 30 = $1,950 per month.

In this example, upon wind-up, the funded ratio is assumed to be 60%.
Of the first $1,000, the pension plan would be paying $600 and the PBGF would be paying $400, while the amount above $1,000, namely $950, would be paid by the plan at 60%, or $570.

Based on the above scenario, the retiree would be entitled to a total amount of $1,570 or 80.5% of their normal entitlement.

Example: If a Big 3 production worker had retired on Oct. 1, 2005 with 30 years of service at age 58, they would be receiving a pension of $3,335 per month until age 65 and $65.00 x 30 = $1,950 per month after age 65. In this example, upon wind-up, the funded ratio is assumed to be 75%.

Again, based on the above “worst-case scenario”, until age 65 they would be
getting $1,000 per month from a combination of the PBGF and the pension plan, plus 75% of the “excess amount”, i.e. 75% of $2,335, or $1,751 from the Plan, for a total amount of $2,751or 82.5% of their normal entitlement.
After age 65, this retiree would be receiving $1,462.50 from the Plan, plus $250 from the PBGF, for a total of $1,712.50, or 88% of their normal entitlement of $1,950.

Example: Using the same example as above, but with a wind-up ratio 90%, the retiree would be entitled to the following.

Until age 65 they would be getting 90% of $3,335, or $3,002 from the Plan and $100 per month from the PBGF, pension plan, for a total amount of $3,102 or 93% of their normal entitlement.

After age 65, this retiree would be receiving $1,755 from the Plan, plus $100 from the PBGF, for a total of $1,855, or 95% of their normal entitlement of $1,950.

Example: If an auto parts worker had retired on Oct. 1, 2005 with 30 years of service at age 65, with a benefit rate of $48 per month per year of service, they would be receiving a pension of $48.00 x 30 = $1,440 per month. In this example, upon wind-up, the funded ratio is assumed to be 70%.

Of the first $1,000, the pension plan would be paying $700 and the PBGF would be paying $300, while the amount above $1,000, namely $440, would be paid by the plan at 70%, or $308.

Based on the above scenario, the retiree would be entitled to a total amount of $1,308 or 91% of their normal entitlement

Example: Consider the surviving spouse of a retiree who had retired in 2004, and who is presently receiving a monthly pension of $1,200. If the wind-up funded ratio was 70%, then the surviving spouse would be entitled to a monthly pension of $840 from the pension plan, and an additional $300 from the PBGF. This spouse would be receiving a total $1,140 per month, or 95% of their original entitlement.

[For simplicity’s sake, in the above examples we have ignored indexing and any spousal options. Any indexing which has occurred 3 or more years prior to the wind-up date, and any such spousal options are both subject to the PBGF]

GM, Ford and Chrysler

Based on the most recently filed reports by the auto majors, the funded status of their pension plans is as follows; on a wind-up basis GM was at 57%, Ford was at 73.5%, while Chrysler was at 91%. On a going concern basis, which is based on the Plan continuing indefinitely, GM was at 81%, while Ford and Chrysler were both above 100%. Since the filing of these reports, market conditions have deteriorated, and the value of the investments in these Plans will have declined.

Non-Pension Benefits

Health Care, other insurance benefits as well as other benefits are provided on a pay as you go basis. That means that there is no fund set aside for the purpose of paying these benefits – they are paid for from the company’s general revenues, either through premiums to insurance companies or through direct payments. In a “worst case scenario”, a bankruptcy would mean that there would be no source of funding for benefits current and future retirees.


 

Here’s 29 Crucial
Things You Need
to Know About
the Auto Crisis

The Financial Crisis and the
Collapse of U.S. Sales


FACT 1: The Big Three’s U.S. sales fell 41% in
October, compared to the previous year. But they
weren’t alone. Other automakers were hit hard by
the credit freeze, including: Suzuki (down 49%) Isuzu
(down 49%) Kia (down 41%) Lexus (down 38%)
Nissan (down 36%) Hyundai (down 34%) Honda
(down 28%) Toyota (down 26%). No company is
immune from the terrible decline in auto sales
caused by the financial crisis. And European and
Asian automakers are also getting financial
assistance from their home governments to weather
the storm.

FACT 2: Canadian auto sales have actually increased
slightly in 2008, since our banking system hasn’t
experienced the same credit freeze. But 90% of the
vehicles we assemble go to the U.S. market, which
is collapsing.

FACT 3: The Big Three operate their own internal
“banks”: large internal finance divisions that lend to
car buyers and car dealers. But until now, they
haven’t been able to access the $700 billion bank
rescue package approved by the U.S. Congress.
With no loans or leases available, car sales are
collapsing, and now the automakers are on the verge
of failure.

The Importance of Auto

FACT 4: For every job in a major auto facility
(assembly or powertrain), a total of 7.5 jobs depend
on that job – including “upstream” jobs in the supply
and parts industries, and “downstream” jobs in
consumer industries and services.

FACT 5: A total of 440,000 Canadian jobs depend
directly or indirectly on the auto industry.

FACT 6: Autoworkers alone pay $2.2 billion in federal
and provincial income taxes yearly.

FACT 7: Informetrica Inc. (economic consultants)
has estimated that a 25% decline in auto exports
(resulting from the bankruptcy of just one of the Big
Three) would eliminate 155,000 Canadian jobs, and
cost governments $6 billion per year in lost
revenues.

FACT 8: Canada has already lost 35,000 auto jobs
since 2002.

One-Way Trade


FACT 9: North America imports over 4 million vehicles
from offshore per year. This year, offshore imports
will consume almost 30% of Canadian vehicle sales.
The import market share has tripled since 1996, and
this explains most of the loss of Big Three market
share in the same period.

FACT 10: In 1999 Canada generated an auto trade
surplus of $15 billion – our best ever. But with
growing imports and falling exports, that surplus has
evaporated. We slipped into deficit for the first time
in 2006. The deficit reached $7 billion in 2007, and
will double this year to over $12 billion.

FACT 11: Since 1996, Canada’s auto imports from
Japan have grown 118%. But our auto exports to
Japan have declined 69%. Our auto trade deficit with
Japan equals $6.3 billion. For every dollar we export
to Japan, we import $135.

FACT 12: Since 1996, Canada’s auto imports from
Korea have grown 710%. But our auto exports to
Korea have declined 75%. Our auto trade deficit with
Korea equals $1.7 billion. For every dollar we export
to Korea, we import $177.

Helping Banks
(and Other Companies!)


FACT 13: Since September, the federal government
and its agencies have announced financial support
for Canadian banks totaling over $100 billion. This
includes loanguarantees, emergency low-interest
loans, “swaps” of assets to free up operating cash,
and relief from regulatory requirements.

FACT 14: The federal government owns several
banks which can provide loans and other funding to
companies (like automakers) directly, without costing
taxpayers a cent. That’s not a “bailout.” These banks
include the Bank of Canada, Export Development
Canada, the Business Development Bank, and the
Canada Mortgage and Housing Corporation.

FACT 15: In 1979 the U.S. and Canadian
governments participated in a rescue package to
prevent Chrysler from going bankrupt. It involved
guaranteeing loans from private banks, in return for
certain commitments by the company. The
Canadian government received share options in
the restructured company in return for its role. Also,
Chrysler committed to build a new assembly plant
here (which became the Windsor minivan plant).
Once Chrysler recovered, the Canadian
government sold its share options for a significant
profit. The restructuring didn’t cost taxpayers a
dollar– but if Chrysler had failed, our government
would have lost billions in tax revenues.
Labour Costs in Context

FACT 16: CAW members at the Big Three make an
average of about $35 per hour – not $70 or more
as is commonly reported in the media. CAW
members in auto parts companies make less: an
average of $24 (and often much lower). The media
often reports “total labour cost” numbers as if they
were actual wages. But in fact “total labour costs”
include all labour-related charges, including
pensions, benefits, statutory rights, and even
payroll taxes (like CPP and EI) paid to
government.

FACT 17: According to the U.S. Bureau of Labor
Statistics, hourly labour costs for Canadian
autoworkers are significantly lower than in
Germany, Japan, and the U.S.

FACT 18: Workers at Toyota and Honda’s nonunion
facilities in Canada earn hourly wages, pensions,
and other benefits virtually identical to those
earned by CAW members at the Big Three.

FACT 19: In its 2008 contract with the Big Three
(now being implemented), the CAW negotiated
cost savings that will total over $300 million per
year (once fully in place).

FACT 20: Savings from the CAW 2008 contract are
larger than would result from a two-tier wage
system (especially since the auto industry is not
hiring new workers.)

FACT 21: The decline of the Canadian dollar since
July, to a normal long-term level, reduces the Big
Three’s Canadian labour costs (in $U.S. terms) by
$750 million per year.

FACT 22: CAW members in the auto parts sector
have made dramatic changes in efficiency and
contract provisions to maximize the chances for
survival of Canadian parts plants, despite the
current crisis.

FACT 23: According to Statistics Canada and
company financial reports, direct labour costs
(including management!) make up only 7 percent
of total vehicle production costs in Canada.

FACT 24: The Big Three’s losses, centred in the
U.S. market, are so large that workers in Canada
cannot possibly rescue them through wage cuts.
CAW members could agree to work all year
without wages, and the resulting savings would
offset the Big Three’s average 2008 losses for only
11 days.

Our Productivity Advantage

FACT 25: Measured in physical output (eg. vehicles
per worker, or hours per vehicle), Canadian auto
facilities are 10-15% more productive than U.S.
plants. The auto industry is one of just four
manufacturing sectors where Canada is more
productive than the U.S.

FACT 26: Even this underestimates Canada’s true
productivity advantage. Canadian auto facilities
produce a mix of higher value-added products. In
value-added terms, our productivity advantage is
even larger.

FACT 27: Companies focus on unit labour costs,
which equals labour costs divided by productivity.
At current exchange rates, Canadian autoworkers
are 10% less expensive than in the U.S., and we
have a productivity advantage of over 10%.
Therefore, it is 20% cheaper to produce a unit of
output in Canada.

Fighting Back
Makes a Difference


FACT 28: The CAW is a mature and responsible
union. We have ensured that our facilities remain
competitive with other industrialized countries for
new investment, and we will continue to do so.

FACT 29: We don’t know what the next weeks and
months will bring. But we do know this: sticking
together in our union to fight for our shared
interests will win the best deal possible, for our
families and communities.

Please use these facts when talking
to your family & friends about what
this crisis is all about!

 

 

Sweden in talks with
U.S. auto makers

Dec 01, 2008 07:50 AM

MALIN RISING
The Associated Press

STOCKHOLM, Sweden – The Swedish government confirmed Monday it is in talks with General Motors Corp. and Ford Motor Co. after a report that the U.S. auto makers are seeking support for their struggling Swedish brands Saab and Volvo Cars.

"We are obviously in talks with Saab, Volvo, GM and Ford all the time, considering the difficult situation," government spokeswoman Lisa Warn said.

Warn declined to give details on the talks, but said the European Union's tough competition regulations restrain the options for the Swedish government should it wish to support the Swedish-based car industry.

Officials at GM-owned Saab and Ford-owned Volvo weren't immediately available for comments.

Ford, General Motors and Chrysler LLC have been lobbying the U.S. Congress for financial assistance as the companies are being squeezed by falling sales amid the world economic crisis. However, the Swedes doubt U.S. lawmakers would be willing to support the companies' international operations.

"If GM gets money from the American government, then we're convinced that it will be earmarked for American interests," said Paul Akerlund, a union representative at Saab.

U.S. legislators have demanded plans from the car makers before they will schedule votes on any new federal aid. The plans are expected Tuesday and will be scrutinized at a Senate hearing Wednesday and a House hearing on Friday.

Volvo Cars has already said it will cut some 6,000 jobs worldwide, of which more than half are in Sweden. Ford was seeking buyers for Volvo last year, but the Dearborn, Michigan-based auto maker later said Volvo is no longer for sale.

 

Auto-parts firm feels the impact

Car sector's problems catching up to Magna

Nov 27, 2008 04:30 AM
Tony Van Alphen
Business Reporter

Magna International Inc., one of the world's sturdiest auto parts makers, is starting to feel the impact of the crash of the North American vehicle industry.

While rivals slid into the ditch and turned to writeoffs during the past few years, the Aurora-based parts powerhouse has avoided a lot of the damage sweeping the sector because of a solid balance sheet and strong entrepreneurial culture.

But the industry's problems have begun to catch up to Magna and legendary industrialist Frank Stronach, who built the company and remains its chair.

Magna, a growing company for more than a decade and one of the biggest auto parts makers in the world, posted its first net quarterly loss in 17 years earlier this month. It also lowered sales forecasts.

The company lost the financial muscle of its Russian partner Oleg Deripaska, who bought a big stake for $1.54 billion in Magna last year but got squeezed out by the global credit crisis. Magna wanted to use the merger to make a big foray into Russia's emerging auto market.

Magna chopped the quarterly shareholder dividend in half to 18 cents after reporting the third quarter loss of $215 million. Furthermore, the company's stock has lost more than 60 per cent of its value this year. The shares rose 62 cents yesterday to close at $32.70 in Toronto.

And yesterday, it announced two more plant closures in York Region, the hub of Magna's operations in Canada. That followed consolidation of two powertrain operations there two days earlier. In September, Magna cut a shift from its biggest plant in the country.

The job losses are piling up and analysts expect more as Magna absorbs hits from its heavy exposure to General Motors, Ford and Chrysler – the three automakers in the deepest trouble.

The Detroit Three, whose sales have dropped dramatically this year, still account for more then 50 per cent of Magna's revenue.

However, Magna has also seen increasing business from surging Japanese-based automakers in recent years.

Don Walker, Magna's co-chief executive officer, acknowledged recently the company is not immune to the industry's problems and was already focusing on running leaner and more efficient operations through the downturn.

The company's strong cash position and relatively low debt allow an opportunity to buy struggling competitors, possibly for bargain prices, to complement existing operations.

But at the same time, one or more of the Detroit Three could fail if they don't get a multibillion-dollar aid package from the U.S. and federal governments soon.

Analysts say that would throw a major monkey wrench into the Magna machine and create a managerial nightmare as the company tries to operate, consolidate and close parts plants to align production with reduced demand – and still make money.

One industry watcher, who requested anonymity, said while Magna is dealing with the current economic headwinds, it is also preparing for what the sector will look like after the storm.

"They're putting the pieces in place so they can conquer the marketplace," the analyst added.

 

Magna to shutter plants,
cut 850 jobs

Top auto-parts firm will close Exterion operation in York Region and shift production to other sites

Nov 27, 2008
Tony Van Alphen
Business Reporter

The downturn in the North American auto industry hit mighty Magna International Inc. hard yesterday as it announced the closing of two plants and the elimination of 850 jobs north of Toronto by the middle of next year.

Magna said it will gradually shut down the Exterion plants in Aurora and Newmarket, two operations that opened during the mid-1980s and currently employ many older workers.

The news came only two days after Magna announced it is consolidating two Blau Autotec and Integrated Technologies plants in Brampton and Concord into one operation at the latter site.

It is unclear how many of the 250 workers at the two powertrain operations would lose their jobs.

The move at Exterion shocked and angered workers who make front and rear bumpers, grilles and side body panels for at least a dozen models at the two plants.

However, Magna noted it will assist some workers in their search for new employment at other plants in the region.

It will also provide severance packages based on years of service by affected workers.

Sources said many workers including skilled tradespeople have more than 20 years service.

The Newmarket plant employs about 500 workers, while the Aurora operation has 350.

Magna said in a statement that it decided to wind down operations after evaluating their financial status, future business prospects and additional capacity at other operations.

"Those factors, combined with the difficult economic conditions facing the North American auto industry due to reduced domestic production and customer demands, have made the Exterion operations no longer viable," the company added.

Magna spokesperson Tracey Fuerst said she did not know where the company would transfer the parts production next year.

The two Exterion plants, which are part of Magna's Decoma division, make bumpers, grilles and side panels for numerous Chrysler models including the Chrysler 300, Sebring, Dodge Charger, Challenger, Nitro, Caliber, Durango, Jeep Grand Cherokee and Liberty.

They also produce similar parts for the Volkswagen Routan, Chevrolet Equinox, Pontiac Torrent and Acura MDX models.

Chrysler is Magna's second biggest customer. It represents about 13 per cent of the company's parts business.

Meanwhile, Blau Autotec, which will also merge its operations by next June, is facing the same problems of falling demand and less viability.

In September, Magna eliminated 400 jobs or about 25 per cent of the workforce at its Formet plant in St. Thomas.

The plant, the company's largest operation in Canada, is cutting truck frame production after pickup sales collapsed in North America this year because of soaring fuel prices.

Magna also consolidated door parts production of KTM in Concord into other operations in Newmarket and Bradford a few weeks ago.

But the move resulted in no layoffs.

In the past decade, Magna has announced few layoffs as it expanded business dramatically with several automakers.

However, the major industry downturn, worsening conditions and a big third-quarter loss have forced the company to accelerate reductions in operations.

After reporting the first quarterly loss in 17 years earlier this month, Magna co-chief executive officer Donald Walker told analysts that the company planned to continue consolidating, closing or selling plants to remove unused production capacity.

"We want a lean and efficient operation while not sacrificing our future so we're stronger when the automotive market recovers," Walker added.

But some analysts have remained cautious about Magna's exposure to GM, Ford, Chrysler and, in particular, trucks.

They also believe the company has not taken enough steps to adjust to the much lower levels of auto production in North America in recent months.

 

Why Detroit is Different

Bailing Out the Automakers

By DAVID MACARAY

Let’s put two things on the table immediately, two things which, while not exactly logical, are nonetheless meaningful.  If you’re looking for steel-trap logic or cold, bottom-line infallibility, you won’t find them here.  But if you’re willing to consider a few realistic, peripheral considerations, some of this should make sense.

First, even though we’re being bombarded on all sides with news of economic doom, let’s not delude ourselves.  The Big Three automakers aren’t just another industry, so let’s not pretend they are.  Let’s not pretend they’re a chain of coffee joints or convenience stores, or even a big-time outfit like American Express, who, reportedly, is already sniffing around for some of that government money.

Detroit is different.  Automakers are not only the largest manufacturing industry in the United States, they are, undeniably, the most glamorous, prestigious, loyal and uniquely American corporate enterprise in our history.  They’re Industrial America’s version of the Liberty Bell, the Alamo and the Lincoln Memorial, all rolled into one.  Smirk if you like, but it’s true. 

Americans shouldn’t have to be reminded of our 100-year romance with cars, or the fact that it was we, the United States, who first mass-produced automobiles and introduced them to the rest of the world.  And the world fell in love with American cars as a consequence.  Pancho Villa drove a Ford Model-T.  The Maharaja of Kapurtala (Punjab, India) drove a ’59 Chevy Impala.  

I bring this up only to establish the fact that when we talk about the auto industry, we’re talking about a legacy enterprise, a cultural icon.  And I’m saying that people who cavalierly assert that allowing one or more of the Big Three to go bankrupt don’t have the first clue as to the enormity of what they’re suggesting.

Besides the 240,000 people who work directly for Chrysler, General Motors and Ford, there are an estimated 2.7 million more who work in related industries, who supply parts, raw materials, sales and technical services.  It’s been predicted that a collapse of the auto industry could affect as many as 3 million people, a full 5% of manufacturing jobs in the U.S. 

Second, if history doesn’t matter, if this conversation isn’t about what was, but about was is—if it’s about money, and not cultural icons and such—then let’s talk money.  Indeed, if it’s their hard-earned money that American taxpayers are concerned about, then fine, let’s talk about that.  Let’s talk about how we spend it.

We’ve already blown close to a trillion dollars on an unwinnable war (not to mention the loss of life and destruction of a country), and continue to pour an additional $14 billion a month down that same bottomless rathole.  On a dollar for dollar basis, this has been a monumental debacle, arguably, the greatest foreign policy blunder in our history.

Still, from what we’re hearing, American taxpayers and their representatives are having a problem with giving $25 billion worth of economic relief to the struggling Big Three.  They are objecting to this relief on the grounds that [drum roll] “it doesn’t make good business sense.”   Please.

Not only have we had, literally, billions of dollars stolen from us by corrupt Iraqi officials and their political stooges, we’ve paid billions of dollars to Halliburton, Blackwater and scores of lesser known but equally greedy private contractors, all in the name of “patriotism.”

Yet, given this record of pissing away money like drunken sailors, American taxpayers are now suggesting that it’s time to get all stingy and wise and fiscally conservative, drawing the line at bailing out America’s most hallowed industry—all in the name of “tightening their belt.”  If that’s what’s happening here, give me a goddamn break, people.

On the other hand, if this is about assurances or guarantees, that’s a whole other deal.  That’s an eminently reasonable request, one we should pursue.  Instead of giving away billions of dollars with no strings attached (as we’re doing in Iraq), let’s attach some economic and environmental requirements.  Insisting that Detroit develop a car that gets 85 mph, with drastically reduced carbon emissions, would be a good start. 

Let take this opportunity to reinvent the car business, but this time in the image we want.  For crying out loud, we’re the country that put a man on the moon and invented the reusable condom.  Surely, we have the technical expertise and creativity to make a radically fuel-efficient automobile.

But it’s also time we finally acknowledged the elephant in the room.  That elephant is health care.  The U.S. auto industry, which spends upwards of 30% of its payroll on employee health insurance (including premiums and administrative costs), competes with companies whose governments underwrite employee health care. 

Even though labor costs account for, roughly, 8%-10% of the price of a new car, health insurance is killing the industry.  Right out of the chute, before anything’s been bought or sold, the Big Three is already thirty cents on the dollar in the hole.  Given that crippling discrepancy, it’s fairly amazing that Detroit has managed as well as it has.

Of course, the Republicans in congress—the same faux-patriots who prevented us from joining the rest of the industrialized world in obtaining national health care by waving the hysterical banner of “socialized medicine”—don’t want to blame health insurance for contributing to the problem.  Instead, they want to blame labor unions. 

Instead of blaming Big Pharma and Big Insurance, they’re blaming the UAW; they blaming working people—people who are making $48,000 a year, hanging on to their middle-class identity by their fingernails, trying to make a living. 

By bailing out the automakers (albeit with stringent conditions) we’ll be saving one of America’s truly valuable institutions.  We’ll be giving it a second chance.  Twenty-five billion dollars is less than we spend in two months on this war.  Doesn’t Detroit deserve a small fraction of the generosity we’re showing the Iraqis? 

David Macaray, a Los Angeles playwright and writer, was a former labor union rep. 

He can be reached at dmacaray@earthlink.net 

 

 

Auto job losses to accelerate

A Ford employee works under the hood of a Flex at the Oakville assembly plant Nov. 20, 2008. Canadian jobs are in peril as U.S. demand for autos stalls.

Canadian car makers to dump 15,000 people by end of 2009: report

Nov 26, 2008 04:30 AM
Tony Van Alphen
Business Reporter

Beleaguered automakers in Canada will wipe out at least 15,000 jobs and post staggering losses of more than $3.1 billion this year and through 2009 before starting a recovery in 2010, according to the Conference Board of Canada.

The slowdown in the U.S. auto market, a shift to more fuel-efficient vehicles not built in Canada and a strong dollar will continue to pummel automakers here for another year, the board said yesterday in its latest outlook for the sector.

"Canada's automotive sector has been battered by an unrelenting barrage of structural and macroeconomic developments over the last two years, a trend that is unlikely to subside as 2009 approaches," board economist Sabrina Browarski said in the outlook report.

"Once a stalwart of the post-NAFTA (North American Free Trade Agreement) Canadian economy, the automotive sector will shrink for its fourth consecutive year in 2009."

Browarski said in an interview that employment in the assembly of cars, light and heavy trucks in Canada will drop by 10,700 jobs this year to a workforce of 62,600.

The sector will lose another 4,300 jobs in 2009, which means employment will be down 20 per cent in two years, she added.

The board, an Ottawa-based, non-profit research agency, relies on announcements by the companies and other data to establish employment levels, but Browarski said the job losses could still surpass the figure for next year.

The losses do not include the reeling Canadian parts sector, which supplies components to assembly plants here and in the United States.

At its peak, it employed more than 100,000 workers, but that level has slid to fewer than 80,000 in recent years. Analysts forecast more losses in 2009 as the impact of the economic downturn in the U.S. deepens.

The board's report forecasts financial losses for auto manufacturers that will soar from $262 million in 2007 to almost $1.7 billion this year.

In 2009, red ink will hit $1.43 billion before the industry posts a profit of $288 million in 2010 and $743 million in 2011, the board said.

The report does not break out losses, revenues and costs for each automaker.

Revenues for the automakers will plunge almost $12 billion to $48.7 billion this year and drop again to $47.5 billion in 2009 before climbing to $50.2 billion in 2010, the board said.

The board uses corporate tax filings and a variety of economic factors to generate profit and loss forecasts.

The agency bases revenues on its own price and production outlook, and costs for wages and materials, investments and depreciation.

In her report, Browarski said the number of large vehicles that General Motors Corp., Ford Motor Co. and Chrysler LLC export to the slumping U.S. market has "exacerbated the industry's challenges" in Canada because of public concerns over fuel costs and environmental issues.

The industry in Canada also faces stiff competition in its major U.S. market and could cede its position as the world's biggest supplier of vehicles to south of the border to Japan as early as this year, she noted.

Browarski said automakers in Canada will struggle with profitability until 2010, despite major cost savings on wages and materials.

Profit Chart

 

Ford and Volvo top safe car list

November 25, 2008

KEN THOMAS
The Associated Press

WASHINGTON–The insurance industry named dozens of new cars and trucks, led by Ford Motor Co. and its Volvo subsidiary, to its annual list of the safest vehicles Tuesday, helped by the increased use of anti-rollover technology.

Ford and Volvo had 16 vehicles in the 2009 model year on the Insurance Institute for Highway Safety's list of the safest new cars, followed by Honda Motor Co. with 13 vehicles.

Seventy-two cars, trucks and SUVs received the top safety pick designation for 2009, more than double the number of vehicles in the 2008 model year and three times the number in 2007.

"The sheer number of this year's winners indicates that automakers have made huge strides to improve crash protection,'' said Institute president Adrian Lund.

The selected vehicles are the best in protecting people in front, side and rear crash tests based on institute evaluations during the year. The vehicles are required to have electronic stability control, or ESC, to qualify for the award.

IIHS said electronic stability control is now standard equipment on virtually all new SUVs and three-quarters of passenger cars for the 2009 model year. ESC is standard on more than one-third of 2009 pickups.

Ford was led by the Ford Fusion and Mercury Milan midsize cars with optional ESC; the Ford F-150 pickup, Ford Edge and Ford Flex midsize sport utility vehicles; and the Ford Escape and Mercury Mariner small SUVs. The list also included the Mazda Tribute, which has the same underpinnings as the Escape and Mariner.

Ford CEO Alan Mulally argued last week in Washington that the automaker had made safety strides when he testified along with other Big Three executives seeking massive government aid.

"Every year, we're going to improve the quality, we're going to improve the fuel efficiency, we're going to improve the safety, and we're going to keep improving the productivity so we can offer the consumer the very best value," Mulally told a House committee.

Honda and its Acura unit had vehicles in nearly every category, including top-sellers such as the Honda Accord; the Honda Civic 4-door with optional ESC; and the Acura MDX and RDX midsize SUVs; and the Honda Fit with optional ESC. The Fit is the first mini-car to earn the safety award.

Volkswagen AG and its Audi brand had nine vehicles on the list, including the Volkswagen Jetta and Passat and the Audi A3, A4 and A6.

General Motors Corp. and Toyota Motor Corp. both had eight vehicles on the list. GM's included the Cadillac CTS and the Buick Enclave, Chevrolet Traverse, GMC Acadia and Saturn Outlook large SUVs.

Toyota's top performers were the Toyota Corolla with optional ESC, Toyota RAV4, Toyota Tacoma, Toyota Tundra and Scion xB.

Using the awards, consumers can compare vehicles without having to review results from multiple tests. Automakers pay close attention to the institute's findings and frequently note positive ratings in television commercials.

The institute has advocated for an early adoption of anti-rollover technology such as ESC ahead of a government requirement for the systems by the 2012 model year.

Electronic stability control senses when a driver may lose control and automatically applies brakes to individual wheels to keep the vehicle stable and avoid a rollover. It helps motorists avoid skidding across icy or slick roads or keep control when swerving to avoid an unexpected object in the road.

IIHS said Chrysler LLC was the only major automaker that did not receive a single award. They said Chrysler could have picked up five awards if the head restraints had been improved in the Dodge Avenger and Chrysler Sebring, the Sebring convertible and the Dodge Grand Caravan and Chrysler Town and Country.

Chrysler spokesman Cole Quinnell said he could not comment on whether the head restraints might be upgraded in the future. He said Chrysler vehicles are equipped with a variety of safety features and the institute's results "are just one of the sources of information about a vehicle's crash performance.''

 

No plan, no bailout,
U.S. automakers told

Listen

General Motors CEO Richard Wagoner, Chrysler chair and CEO Robert Nardelli and Ford president and CEO Alan Mulally testify at a hearing held by the House Financial Services Committee, Nov. 19, 2008.

Nov 20, 2008 07:10 PM

KEN THOMAS, JULIE HIRSCHFELD DAVIS
The Associated Press

WASHINGTON – The $25 billion rescue plan for the auto industry, desperately sought by the beleaguered Detroit Three, collapsed as U.S. Congress drew the line at one more bailout and Democrats said they wouldn't even consider it until the companies produced a convincing plan for rebuilding their once-mighty industry.

The demise of the rescue – at least for now – left fate uncertain for General Motors Corp., Ford Motor Co. and Chrysler LLC, and sent Wall Street spiralling to its lowest level in years. The Dow Jones industrials dropped 445 points, the second straight plunge of more than 400, and hit the lowest point in nearly six years.

The carmakers have been clobbered by lackluster sales and choked credit, and are battling to stay afloat through year's end. Failure of one or more of the Detroit Three would be a severe further blow to the floundering economy – and to many Americans' view of the nation's industrial strength – and throw a million or more additional workers off the job.

Just today, the government reported that laid-off workers' new claims for jobless aid had reached a 16-year high and the number of Americans searching for work had soared past 10 million. Congress approved a measure to extend jobless benefits through the holidays, and the White House said President George W. Bush would quickly sign it.

But Democratic leaders scrapped votes on the auto rescue, postponing until next month a politically tricky decision on whether to approve yet another unpopular bailout at a time of economic peril, or risk being blamed for the implosion of an industry that employs millions and has broad reach into all aspects of the U.S. economy.

"Until they show us the plan, we cannot show them the money," Speaker Nancy Pelosi said at a hastily called news conference in the Capitol.

GM and Ford quickly issued statements promising to submit the blueprint the Democrats demanded.

Pelosi and Senate Majority Leader Harry Reid said Congress might return to work in early December for a vote on aid to the carmakers – but only if they show Congress they could use the funds to transform their struggling industry into a viable one.

For now, however, the Democrats said the aid plan lacked the support to pass Congress and be signed by Bush.

Bush and congressional Republicans had balked at Democrats' suggestion to draw emergency auto industry loans from the $700 billion Wall Street rescue fund. And most Democrats were unwilling to go along with a separate, bipartisan effort backed by the White House to temporarily divert an existing program to help carmakers produce vehicles that burn less gasoline to cover the companies' immediate financial needs.

But with GM warning it could go under before year's end, Democratic leaders were unwilling to close up shop for the year and turn a deaf ear to the industry. They called for a Detroit Three viability plan by Dec. 2, scheduled hearings that week on the report, and said a vote on a bailout could come the week of Dec. 8.

"Yes, we're kicking the can down the road, because that will give us the opportunity to do something positive," Reid said. "But that will only happen if they get their act together."

The White House criticized the delay, saying the plan to let the automakers tap the fuel-efficiency loans for their short-term cash needs should be considered.

"If there are lawmakers who want to help the automakers, and they have a path to do so, why are they going to kick the can down the road?" said Dana Perino, the White House press secretary.

The chief executives of the Detroit Three automakers appealed personally to lawmakers for the loans this week, saying their problem was the economic meltdown that has walloped their industry – not that they were manufacturing unappealing cars.

But whatever support they found sagged when it became known that each of them had flown into Washington aboard multimillion-dollar corporate jets. Reid observed that was "difficult to explain" to taxpayers in his hometown of Searchlight, Nev.

Pelosi said she had little patience left for excuses from the carmakers on why they haven't turned their businesses around.

Beyond the auto industry, lawmakers said the public has little appetite for anything else that smacks of a bailout, following the backlash against the $700 billion financial rescue.

"There is a sense that we did not do a good enough job of safeguarding the use of those funds, or providing prevention against abuse. And you could not get, I believe, through either house of Congress today what some people might think was a repeat. That's why we need to take time," said Rep. Barney Frank.

Even if lawmakers return to vote, they are likely to insist on numerous conditions on any loans. Democrats and Republicans alike want the government to get a chance to share in future profits by the auto companies, require them to limit executives' pay packages and prohibit use of the funds for lobbying or paying shareholders dividends.

In scrapping plans for a vote this week, the Democratic leaders sidetracked a bipartisan agreement to temporarily divert the fuel-efficiency funds to cover the auto companies' operations.

Sen. Carl Levin said that plan had a "reasonable chance" of passing, and that the leaders' decision to delay it was "risky and unnecessary."

"We need speed. This is a very, very important moment," Levin said.

Indeed, the Democratic Congress – having just expanded its majorities in this month's elections – was under immense pressure to show it could govern in a difficult situation.

"I can't imagine a scenario where they wouldn't come back, unless the answer is that they just don't care. And if that's the case, then the American people ought to know that," Perino said.

The leaders of the Detroit Three automakers have painted a grim picture of their financial position. They burned through nearly $18 billion in cash reserves during the last quarter – about $7 billion at GM, almost $8 billion at Ford and $3 billion at Chrysler. GM and Chrysler have said they could collapse in weeks.

The stakes are high. The Detroit automakers employ nearly a quarter-million workers, and more than 730,000 other workers produce car-related materials and parts. About 1 million more people work in dealerships nationwide. If just one of the automakers declared bankruptcy, some estimates put U.S. job losses next year as high as 2.5 million.

 

Big 3's bankruptcy could cost Ontario 'billions'

If car companies fail, Ontario could be on hook to help retirees

Nov 20, 2008

Tanya Talaga
James Daw
Staff reporters

Ontario Finance Minister Dwight Duncan says it could cost the province "billions" if the Detroit Three automakers go bankrupt and cannot make full pension payments to retirees.

There are 49,000 retired auto workers, thousands more retired salaried staff and thousands still working at General Motors, Ford and Chrysler in Canada who stand to see pension benefits cut if the companies go under.

"What people need to realize is that there are very real costs with the demise of one or all or any of the Detroit Three," Duncan told reporters yesterday. "Those range from pension costs and tax revenues to government."

GM is the only remaining employer that takes advantage of a 1992 agreement brokered by then-Ontario premier Bob Rae that relieved a handful of large companies deemed "too big to fail" from fully funding their pension plans against the possibility they would go out of business.

Instead, General Motors pays $5 million yearly into the provincial Pension Benefits Guarantee Fund, which promises to cover any shortfall from the first $1,000 a month of an employee's pension. The fund had a $102 million deficit as of the end of March.

"The valuations could change literally on a daily basis," said Duncan, who added he has not seen the company's recent actuarial report.

There is no law that obliges the province to cover a shortfall in the guarantee fund. However, earlier governments lent money to the fund – interest free – after the bankruptcies of Massey Combines and Algoma Steel.

Of the Detroit Three companies, it would be most costly for the government to top up pensions for GM retirees because of the size of its workforce and the poor state of its pension plan.

As the Toronto Star reported Saturday, GM's actuaries estimated the pension plan for hourly workers would have been short $4.9 billion if the company had gone out of business at the end of November, 2007. But because the pension fund is heavily invested in stocks, the recent fall in stock markets would have left the fund short another $1.5 billion, assuming no other changes in the meantime.

Paul Duxbury, an actuary who has advised GM pensioners in the past, said yesterday that such a shortfall would cost Ontario's guarantee fund as much as $3 billion, if the province provided the money.

Duxbury said it could cost the fund another $1 billion to cover shortfalls for Ford and Chrysler's hourly pension plans.

"This is one of the very real costs associated with GM not able to continue viable operations," Duncan said.

Progressive Conservative MPP Bob Runciman said taxpayers could be resentful for bailing out a pension plan – especially when many people don't have pensions.

"People who have saved for RRSPs over the years and seen the value decline precipitously over the past couple of months, they don't have that fixed (benefit)," he said.

Sym Gill, director of the pension and benefits department with the CAW, does not think the Canadian and U.S. governments will allow the carmakers to fail.

"I don't think the situation is one where there is going to be a bankruptcy," he said.

"Theoretically, in the event of a bankruptcy there would be significant shortfalls in terms of pension assets being available to fulfill all the pension liabilities. That would hit the guaranteed fund to a significant extent. I don't have any numbers for you but it would be in the many hundreds of millions of dollars, at least."

 

GM Canada beset by pension crisis
Massive pension deficit presents a quandary for governments that would be on the hook in the event of bankruptcy

REG KEENAN AND MURRAY CAMPBELL

Globe and Mail

November 19, 2008 at 1:00 AM EST

TORONTO — The General Motors of Canada Ltd. pension funds had a shortfall of $4.5-billion as of last November – before the stock market collapse – creating a massive financial headache for the Ontario government and pension cuts for retired employees if the company falls into bankruptcy protection.

Senior GM officials revealed the shortfall between the assets in the company's unionized and salaried plans and their liabilities in a meeting yesterday with the editorial board of The Globe and Mail. The shortfalls are measured on a solvency deficiency basis, which would apply if the plans have to be wound up in the event of bankruptcy.

“That's another good reason why we want to continue to operate,” David Paterson, GM Canada's vice-president of corporate and environmental affairs, said as he joined chief financial officer John Stapleton in outlining the reasons for the request for financial help from Ontario and Ottawa to help it survive a cash crunch.

Backstopping GM's pension fund would further complicate any Canadian moves to support the struggling sector in tandem with a broader U.S.-led bailout of the Detroit Three auto makers. As Ontario and the federal government grapple with their options, GM CEO Rick Wagoner led a parade of industry executives and politicians in making impassioned pleas for aid to Congress in Washington.

Mr. Wagoner focused on the dire economic impact of a failure of the industry, warning a Senate panel that personal income in the U.S. would fall by $150-billion (U.S.) and governments would face tax losses of $156-billion over three years.

“Such a level of economic devastation would far exceed the government support that our industry needs. This is about much more than just Detroit. It's about saving the U.S. economy from a catastrophic collapse.”

In Canada, the auto maker is in compliance with all legal requirements and has a smaller shortfall when the pension funds are measured on a going-concern basis, which essentially amounts to pay-as-you-go.

GM is the only company in Ontario that is permitted to make annual payments into the province's Pension Benefits Guarantee Fund instead of being required to finance its pensions on a solvency basis.

GM became eligible to do that in the early 1990s when the Canadian units of the Detroit Three and steel makers Algoma Steel Inc. and Stelco Inc. were granted relief from onerous pension payments in part because the government agreed they were too big to fail.

A senior Ontario government official said the province is aware of GM's pension shortfall and it will be taken into account in negotiations over providing assistance to the auto industry. The government has not yet seen the auto maker's books.

“The ramifications are enormous,” the official said.

The government would have to determine not just the impact on individuals of the collapse of GM's pension, but also the cost to the treasury of providing assistance. He noted that the government added money to the pension fund at Stelco as part of a 2006 rescue package and “that's what you'd be looking at, some way of solidifying it.”

The official emphasized that Ontario is in the early stages of examining GM's financial situation, although he promised the company's books would be scoured as part of the talks with the auto industry.

“We're going to engage some pretty smart people to help us with these kind of negotiations,” the official said.

The GM plans have a target of 69-per-cent equities and 31-per-cent fixed-income instruments, Mr. Stapleton said.

That kind of ratio almost certainly means the assets in the plans have plunged, pension industry sources and others said yesterday, based on the crash of North American equity markets and studies showing that the value of assets held by pension plans in publicly traded companies has fallen by between 15 and 20 per cent.

“One would suspect” the value of assets has fallen, said Sym Gill, director of pensions and benefits for the Canadian Auto Workers union, which represents tens of thousands of GM retirees and active workers.

The unionized plan for Ford Motor Co. of Canada Ltd. employees had a solvency deficiency of about $900-million as of this January, Mr. Gill said. The Chrysler Canada Inc. plan was fully funded as of May, 2007, which was the most recent data for that company, he said.

Retirees would take a hit in a GM bankruptcy because the provincial fund covers only a portion of the monthly payments up to the first $1,000.

If, for example, a pension plan held assets equal to 80 per cent of liabilities when it was wound up, a retiree receiving $3,000 a month before the wind-up would get $800 of the first $1,000 a month, financed by the assets in the plan. The Ontario fund would make up another $200.

But the remaining $2,000 a month would be reduced to $1,600 a month – based again on that 80-per-cent figure – leaving a shortfall of $400 a month because of the $1,000 cap on the fund.


 

Rough Ride for Big Three
The heads of America's ailing auto companies testify before a Senate hearing Nov. 18, 2008 on Capitol Hill. They warned of "catastrophic" fallout to the U.S. economy if they are allowed to fail.

Automakers' pleas to Congress for $25 billion
in aid fall on unsympathetic ears

Nov 19, 2008 04:30 AM


WASHINGTON–The men who run The Big Three looked distinctly tiny in a congressional hearing room yesterday, a trio of auto industry paupers pleading for money and carrying a common message:

It's not our fault.

The Diminished Three – Richard Wagoner of General Motors, Alan Mulally of Ford and Robert Nardelli of Chrysler – all used the same apocalyptic language to describe the national economic fallout if any one of them went under, one-time cutthroat competitors uniting in front of a bevy of skeptical senators.

If one went under, the other two would surely be dragged down as well, they said.

"What would it mean if the domestic industry were allowed to fail?'' Wagoner told the Senate banking committee.

"The societal costs would be catastrophic – 3 million jobs lost within the first year, U.S. personal income reduced by $150 billion and a government tax loss of more than $156 billion over three years."

Richard Shelby, the Alabama Republican who has been a critic of the industry, said he believes if taxpayers fork over $25 billion today, the industry will be back soon looking for more.

"You've burned billions and billions and billions of dollars trying to turn around your business," Shelby said.

"Are we here in the Senate being asked to facilitate a stronger, more competitive auto manufacturing sector or to perpetuate a market failure?"

It was surely the most closely watched loan application in recent history – the committee chair joked he should have held the hearing in a downtown sports stadium – as the three men, joined by United Auto Workers union president Ron Gettelfinger and an industry critic from academia, explained why they needed $25 billion immediately to stay afloat.

That would come on top of another $25 billion for plant retooling, already approved by Congress, earmarked for the production of fuel-efficient vehicles.

Their prospects of receiving this bailout request, at least before Barack Obama becomes president in January, are extremely slim.

Democrats sympathetic to their plight want the money to come from the $750 billion financial bailout package passed by Congress earlier this autumn, but Republicans are adamant in resisting that call.

The automakers are also running up against serious bailout fatigue, even among Democrats, who felt they had a gun placed at their head in order to pass the Wall Street bailout less than two months ago.

Banking committee chair Christopher Dodd, a Connecticut Democrat, said all three men run companies that have shown no vision and he asked them if they had made mistakes.

Nardelli was the only one of the three to directly answer the question.

He said the auto market got caught up in the general U.S. economic exuberance, catering to people who dined out on faux real estate wealth, seeking bigger and bigger gas guzzlers.

"The mistake Chrysler probably made during that period is that we were responding to the customer who wanted bigger, more expansive, higher horsepower vehicles to go with their second homes, their boats, their trailers, and we chased that consumer demand up," he said.

They all called their request a "bridge loan," promised to pay it back with interest and abide by strong government oversight.

All ticked off a series of tough restructuring moves already undertaken, salaries and bonuses wiped off the books and all extolled their hybrid and fuel-efficient models.

The three agreed they were making progress until the economy went off the cliff.

They were victims of the global credit crisis, they said.

People who want to buy their cars can't get loans, they said.

GM's Wagoner had previously warned that his company cannot wait much longer for help and is danger of running out of cash.

Nardelli joined him yesterday, saying Chrysler was in the same situation, adding bankruptcy was not an option.

"We cannot be confident that we will able to successfully emerge from bankruptcy,'' he said.

Chrysler is a private company and does not have to make its finances public, but Nardelli told senators that at the end of the third quarter, it had $6.1 billion in cash. During that July-September period, however, it spent $3 billion more than it took in, Nardelli said.

Mulally said if Ford can get through this, it will come through on the other side of this crisis "like a turbo."

Dodd said the injuries in the auto industry have been self-inflicted.

Auto industry leaders have approached 21st-century challenges with a decidedly 20th-century mindset, and they're now paying the price for it, Dodd said.

"They have been content ... to not only satisfy, but in too many respects drive, the demand for inefficient, gas-powered vehicles that Americans have been going broke to gas up," he said.

The leaders of the industry no more deserve government help than did the financial titans who created the subprime housing crisis, Dodd said, but, he added Washington must act to avoid an economic implosion.

But Jon Tester, a Montana Democrat, said everyone is in trouble these days, and pointed to the timber and mining industry laying off workers in his home state.

He also warned the trio that if they received any taxpayers' help, they better make sure they spend it in this country.

"If Canada wants a dollar spent up there, go see the Canadian taxpayers," he said. "But if we're putting American taxpayer money on the line, it ought to be spent here."

All three said the money would stay in the U.S.

Peter Morici, a University of Maryland business professor, told the senators the auto industry "sooner or later" has to go through the painful restructuring that gets their costs in line with foreign competitors.

"America is over-carred, just as it is over-housed," said Morici.

But Debbie Stabenow, a Michigan Democrat, said her state has been restructuring for a decade and it has cost Michigan 400,000 jobs.

"We need this industry as a basic part of the fabric of our economy," she said.

"Somebody has to make something in America."

 

 

The Big 3: Myths & Their Realities

The debate over aid to the Detroit-based automakers is awash with half-truths and misrepresentations that are endlessly repeated by everyone from members of Congress to journalists. Here are six myths about the companies and their vehicles, and the reality in each case.

Myth No. 1
Nobody buys their vehicles.
Reality
General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of about 560,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.
Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year.
Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.

Myth No. 2

They build unreliable junk.
Reality
The creaky, leaky vehicles of the 1980s and '90s are long gone. Consumer Reports recently found that "Ford's reliability is now on par with good Japanese automakers." The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands' overall quality as high or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.
Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry.

Myth No. 3
They build gas-guzzlers.
Reality
All of the Detroit Three build midsize sedans the Environmental Protection Agency rates at 29-33 miles per gallon on the highway. The most fuel-efficient Chevrolet Malibu gets 33 m.p.g. on the highway, 2 m.p.g. better than the best Honda Accord. The most fuel-efficient Ford Focus has the same highway fuel economy ratings as the most efficient Toyota Corolla. The most fuel-efficient Chevrolet Cobalt has the same city fuel economy and better highway fuel economy than the most efficient non-hybrid Honda Civic. A recent study by Edmunds.com found that the Chevrolet Aveo subcompact is the least expensive car to buy and operate.

Myth No. 4
They already got a $25-billion bailout.
Reality
None of that money has been lent out and may not be for more than a year. In addition, it can, by law, be used only to invest in future vehicles and technology, so it has no effect on the shortage of operating cash the companies face because of the economic slowdown that's killing them now.

Myth No. 5
GM, Ford and Chrysler are idiots for investing in pickups and SUVs.
Reality
The domestic companies' lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and BMW have all spent billions of dollars on pickups and SUVs because trucks are a large and historically profitable part of the auto industry. The most fuel-efficient full-size pickups from GM, Ford and Chrysler all have higher EPA fuel economy ratings than Toyota and Nissan's full-size pickups.

Myth No. 6

They don't build hybrids.
Reality
The Detroit Three got into the hybrid business late, but Ford and GM each now offers more hybrid models than Honda or Nissan, with several more due to hit the road in early 2009.

 

 

Nash back at CAW after poll defeat

Peggy Nash lost the federal riding of Parkdale-High Park to Liberal Gerard Kennedy Oct. 14, 2008.
Former Parkdale-High Park MP opts not to run
for Ontario NDP leadership, saying timing not right

Nov 18, 2008 04:30 AM
Tony Van Alphen
Business Reporter

Peggy Nash, who was defeated in the Oct. 14 federal election, has returned to a top post with the Canadian Auto Workers union.

Nash, 57, elected for the New Democrats in 2006 in Toronto's Parkdale-High Park riding, resumed her $135,000 job yesterday as one of five assistants to CAW president Ken Lewenza after deciding not to seek the job of Ontario NDP leader.

"Many people have approached me about it," Nash said in an interview. "It certainly was something I considered, but the timing was never good. Other candidates had been at this for some time."

Nash lost her riding to Liberal Gerard Kennedy last month, prompting speculation among party insiders that she would be a candidate for the party's top Ontario job.

Howard Hampton is leaving as NDP leader in March, after 13 years. MPPs Michael Prue (Beaches-East York), Peter Tabuns (Toronto-Danforth), Gilles Bisson (Timmins-James Bay) and Andrea Horwath (Hamilton Centre) have declared their candidacy.

New Democrat officials consider Nash a major talent, and it's felt she only lost because of the high profile Kennedy had in the riding as a former Ontario cabinet minister.

In her return, Nash will be responsible for CAW members in airlines, post-secondary institutions and technical professionals in offices. She will also head CAW campaigns and act as the union's liaison to the Canadian Labour Congress.

Nash was a ticket agent and union activist when the Canadian Airline Employees Association merged with the CAW in 1985. She became an assistant to national president Bob White in 1990 and had several key assignments including bargaining at Ford in 2005.

She took a leave of absence to run in the 2006 election.


 

Ottawa, Ontario share
auto bailout concerns
AARON LYNETT/TORONTO STAR FILE PHOTO

Bryant to join Clement on fact-finding trip in U.S.
as both countries study bailout packages

Nov 18, 2008 04:30 AM
Richard Brennan
in Ottawa
Robert Benzie
in Toronto

OTTAWA–Ontario will team up with Ottawa on a visit to Washington to get the "lay of the land" regarding a U.S. bailout of the auto industry.

The federal and provincial governments are on the same page when it comes to salvaging the battered sector, Ontario Economic Development Minister Michael Bryant said yesterday. But the Ontario minister appears to want a decision on financial assistance sooner than does federal Industry Minister Tony Clement, who is leading the trip.

"We, in Ontario, continue to be of the view that Canada ought to be moving prior to any U.S. package, if that is at all possible, so as to avoid being either a minority shareholder in setting the terms and also to ensure that we are not locked into a proportion that is unrealistic for Canada," Bryant told reporters at Queen's Park.

Bryant said the federal and provincial governments should "obtain security, obtain a high position on the balance sheet in the hopefully unlikely event of a bankruptcy filing, obtain warrants to avoid a situation where companies down the line might be able to profit from these investments" and ensure factories remain in Ontario.

Noting the expected $25 billion bailout in the U.S. is "unlikely" this week, Bryant emphasized that Canada does not want "to be a position where we are playing a `me, too' role."

Ontario officials said the fact-finding trip, which may include Detroit, could begin as early as tomorrow.

"Obviously part of the information-gathering is to canvass whether what we are doing is consistent with what is going on there and to what extent there are differences," Clement told the Toronto Star yesterday, noting that Ottawa has not even decided yet whether to inject cash into the struggling industry.

"I want to make the right decision rather than the quickest decision. I understand there is some pressure on us, but the last thing I want to do is make a wrong quick decision," Clement said, adding that part of his fact-finding mission is to determine what is needed short- and long-term to keep the industry viable. "It's premature to say that we will do one-tenth of whatever the Americans do, or jump to those conclusions just yet."

Clement said Prime Minister Stephen Harper, Ontario Premier Dalton McGuinty and U.S. President-elect Barack Obama have agreed that "just getting a big shovel and dumping money over the side without any long-term objective or plan is not the appropriate way to handle taxpayers' money."

Most Canadians would agree to financial assistance if the industry starts making fuel-efficient vehicles that consumers want to buy, he added.

Clement agreed "we don't have the luxury of waiting forever" to let the Big Three know what Ottawa is prepared to do and what conditions will be attached.

The minister also wants to know what the CAW and the UAW are prepared to do to see that the industry survives but he wouldn't be specific on what he expects from the Canadian and U.S. auto workers' unions.

Prior to a conference call yesterday with Harper and the other provincial and territorial leaders, McGuinty vowed that Queen's Park would work together with Ottawa.

"We are going to find a way to address the crisis faced by our automotive sector, suppliers included, but the best way for us to do that is together with the federal government," McGuinty told the Legislature.

Progressive Conservative MPP Tim Hudak (Niagara West-Glanbrook) said he was encouraged that the provincial Liberals have put aside their partisan wrangling with the federal Tories.

Still, he warned that there should be "job guarantees for more money to flow," adding that even though the province has spent $1 billion in incentives to the auto industry, 30,000 jobs have been lost in the last three years.

Federal NDP Leader Jack Layton said if Ottawa doesn't take a proactive approach to the auto sector "the troubles we are having in our economy are going to become dramatically more severe."

"I think what we have here is a golden opportunity to have a government that steps in, helps to transform the industry using some of the best and most productive workers in the world to produce the car that Canadian increasingly want to buy: ones that use less fuel and create less pollution and cost them less to operate," Layton told reporters.


 

CAW's Mike Vince Receives Award

CAW Local 200 president Mike Vince is the 2008 recipient of the Charles E. Brooks Labour Community Service Award.

Grace Macaluso, The Windsor Star

November 17, 2008

CAW Local 200 president Mike Vince never met Charlie Brooks.

He got to know the legendary union leader only by reputation, by the stories recounted by his labour buddies, like CAW national president Ken Lewenza and Gary Parent, president of the Windsor and District Labour Council.

Brooks "was a person ahead of his time," says Vince. "He was a real visionary with his focus on social and community values."

For the 49-year-old Vince, it is "an honour and humbling" to be this year's recipient of the Charles E. Brooks Labour Community Service Award.

Though cited for his 29-year commitment to the local labour movement, Vince was chosen in part for his contribution to community service, Sheila Wisdom, executive director of the United Way, Windsor-Essex County, said Thursday.

"Mike has been a longtime volunteer with the United Way, including many positions in the annual fundraising campaign as well as a longtime member of the board of directors," Wisdom said. "As the Ford Nemak site co-chair in 2000, he led a team raising $3,250,710 -- the highest total ever at this site."

Vince, who started his career at Ford in 1983, will mark his sixth year next January as president of CAW Local 200. During his tenure, he has faced "incredible" challenges with continuing closures and layoffs.

His local has had to endure the loss of hundreds of jobs from Ford operations in the city.

However, a silver lining emerged just prior to the federal election, when the Conservative government came through with an $80 million investment to retool the shuttered Essex Engine plant.  

About 300 workers are expected to start work in the third quarter of next year at the plant, which will produce a new, fuel-efficient engine for the 2010 Ford Mustang model, said Vince.

That Ford appears to be proceeding as planned is about the only good piece of news amid  the turmoil gripping the Detroit Three automakers as concerns mount over whether Chrysler, General Motors and Ford will survive the current economic crisis.

"Everyone's on pins and needles as to what exactly is going to happen," says Vince. "Our priority is to do the best we can to entice new investment and to give some stability to our members and our community."

Vince was recognized last Friday at an awards presentation at the Caboto Club. While awards and recognition are appreciated, "I'd trade them in for jobs in a heartbeat," he says.

 

        GM Canada's pension plan
      troubled before market collapse
 


Nov 15, 2008 04:30 AM
James Daw

General Motors pensioners in Canada are seeking advice from a leading pension lawyer as the embattled automaker holds out its hand for help from the American and Canadian governments.

Mark Zigler of Koskie Minsky LLP, whose firm has represented everyone from pensioned hockey stars to Eaton's store clerks, has agreed to speak at an autoworkers' union hall in Oshawa Dec. 1.

His topic: What happens to pensioners when a company fails and its pension fund is seriously short of money?

The pensioner who helped get Zigler to attend the pensioners' meeting has vowed to grill him on what he thinks he and his contemporaries should expect from the provincial government.

"I think it's the province that is at fault (for allowing the GM pension plan to fall so far behind in its funding)," said Karl Zimmerman, of Oakwood, Ont.
He fears the health of the plan will only get worse next year, as losses in stock markets spread to Canadian real estate.

At the moment, the pensioners' concerns are hypothetical, but their anxiety and suspicions are real. GM of Canada's spokesmen are refusing to talk about the pension plan in light of recent stock market losses and the parent company's dwindling cash reserves.

"We will not respond to the wild and inaccurate speculation of the Star regarding GM's future," spokesman Stewart Low replied in an email message yesterday.

GM had representation at a meeting yesterday with Premier Dalton McGuinty, whose province is home to most of General Motors of Canada's more than 30,000 blue-collar retirees – and which collects tax revenue on average pensions of $16,376 a year. (GM has announced it will have fewer than 9,000 factory workers by 2010.)

Ontario is also the only province with a Pension Benefits Guaranty Fund and a record of making loans to that fund when it is short of money, as it is today. That precedent, and the potential for a lawsuit over the province's failure to require GM to meet certain funding rules, makes Ontario a cheerleader for GM getting help from Washington.

GM's pension plan for current and former factory workers was in depressingly sick shape a year ago, with potential liabilities of $11.5 billion and a shortfall of $4.9 billion if it were to wind up without further contributions from GM.

The fund would be in much worse shape today if investments managers maintained their investing target of 69 per cent of the fund in stocks.
David Burke, a retirement practice director with Watson Wyatt Worldwide, said a pension plan with 96 per cent of the funds required to pay all earned benefits without further contributions a year ago would have had about 72 per cent funding by the end of October, and less today.

For those companies required to make up that shortfall within five years, "this will present a significant challenge."

Burke cannot comment on GM, which is a client. But GM is the only Ontario company not required to eliminate its funding shortfall, and its fund will be harder hit by falling stock prices than most.

A more typical weighting in stocks is 60 per cent and GM's U.S. pension fund has less than 30 per cent. The Canadian fund would have lost $1.4 billion or 32 per cent of its holding in stocks since the end of last November if it performed no better or worse than major market indices. Of course, the fund may have avoided the market mayhem if it sold off much of its equity holdings.

But if it stuck to its target this could leave the fund with as little as 55 per cent of the assets needed to pay all benefits.

This could result in a heavy claim on the Ontario guarantee fund, which is supposed to cover losses on the first $12,000 of an annual pension.

 

PM, premier warn Big Three

No financial assistance unless firms build more
eco-friendly autos Harper, McGuinty say

Reid Bigland, president of Chrysler Canada, after meeting with Premier Dalton McGuinty Nov. 14, 2008. Bigland joined the heads of GM, Ford, Honda and Toyota to discuss financial support for the flailing industry.

Nov 15, 2008 04:30 AM
Robert Benzie
in Toronto
Bruce Campion-Smith
In Winnipeg

Listen

Ottawa and Queen's Park warn there will be no unconditional "bailouts" for the sputtering North American automakers seeking government help.

While Prime Minister Stephen Harper and Premier Dalton McGuinty agree they want the vital domestic auto industry kept afloat, they signalled they are not prepared to invest public money unless General Motors, Ford and Chrysler change their ways.

McGuinty met for 55 minutes in his office late yesterday with the presidents of the five major auto companies in Ontario – Detroit's Big Three as well as Toyota and Honda – and lectured the U.S.-based automakers on their past short-sightedness.

"If we are going to come to the table ... with additional financial support they're going to have to demonstrate to us that that somehow serves the greater public interest," the premier said before the closed-door session.

"It can't be just some short-term ... maintenance of the status quo," he said, adding GM, Ford and Chrysler better start "producing products that are highly sought after and that are friendlier to the environment" instead of gas-guzzling trucks, SUVs and sedans.

After the meeting – where no specific financial aid requests were made by the struggling three automakers – Economic Development Minister Michael Bryant was more pointed.

"The premier made it very clear that taxpayers are not going to tolerate any bailouts of the auto industry," Bryant told reporters.

GM Canada president and CEO Arturo Elias and Charles Bilyeu, president of Ford Credit Canada Ltd., refused to speak with the media before or after the meeting.

But Chrysler Canada president and CEO Reid Bigland summed up the case for bailing out Ontario's most important industry, which employs 400,000 people and generates $28 billion of economic activity.

"It's a significant impact on the Canadian economy as well as the Ontario economy," said Bigland, whose company is the most vulnerable of the three North American manufacturers.

In Winnipeg, federal Industry Minister Tony Clement said consensus is emerging among Ottawa, Queen's Park and the incoming U.S. administration led by President-elect Barack Obama that any aid cannot simply prop up companies with no hope of success.

Clement, who is watching developments in Washington "with great interest" as American lawmakers weigh a $25 billion auto rescue package, said assistance "has to be about long-term solutions and not short-term cash infusions."

"Our obligation is the long-term viability of the auto sector. That is the balancing act that we play with the auto sector and with taxpayers' money," he said.

 

Ottawa holding auto talks with U.S.

Any deal on aid must be co-ordinated between countries, Flaherty says

Nov 14, 2008 04:30 AM
Bruce Campion-Smith
tonda maccharles
rob Ferguson
staff reporters

WINNIPEG–The federal government is holding informal talks with Washington to co-ordinate financial aid for struggling Big Three automakers, Finance Minister Jim Flaherty says.

But he's warning that any infusion of federal cash will be contingent on automakers changing their product lines to produce fuel-efficient vehicles, including hybrids, that appeal to consumers bruised by gas prices.

Flaherty said yesterday it's vital Ottawa talk to the U.S. administration about help for the auto sector since the two markets are deeply integrated and auto manufacturing straddles the border.

"We need to talk to each other. Of course we do because this is an integrated production system," he said. He characterized the discussions so far with U.S. officials as "informal" and suggested that Industry Minister Tony Clement was spearheading the effort. Flaherty also cautioned that there are still questions about the aid package Congress may ultimately provide for the American auto firms.

"The bridge has to be towards vehicles that will be technologically sophisticated, hybrids, fuel-efficient, that Canadians are going to want to buy and Americans are going to want to buy because 90 per cent of our vehicle production goes to the United States," Flaherty said.

While Flaherty has appeared publicly cool to the idea of a government bailout for the car makers, it's apparent that intense work is going on behind the scenes involving Queen's Park, executives from General Motors, Ford and Chrysler and U.S. officials to hammer out a package that is acceptable to all.

Premier Dalton McGuinty will meet today with executives for the struggling Detroit Three, as well as Honda and Toyota. But a senior provincial government source said the automakers shouldn't expect to walk away from the talk with cheques in hand. "It's a listening meeting and, while it comes at a time of turmoil, it's part of an ongoing dialogue between the government and the industry."

The automakers need cash to help get them through the hard times when loans are difficult to get from other sources because of the global credit crunch, said Mark Nantais, president of the Canadian Vehicle Manufacturers Association.

"We need affordable credit," he said, declining to set a dollar figure because the companies have their own individual needs. "That's the message we need to get across."

McGuinty, whose government is grappling with a $500 million deficit, sounded cautious as he prepared for the meeting.

Characterizing the late-afternoon confab as a "listening opportunity," the premier said he will have a blunt message for the automakers, as they press for financial help.

"Tell me exactly why we should do this, what are we going to get out of this," said McGuinty, whose government's previous aid includes a $175 million, 50-year loan to GM, which is closing its Oshawa pickup truck plant next year.

"We've provided support in the past and experienced job losses nonetheless. What assurance can you provide us with respect to your long-term viability; why is this a good thing for the public to do?" he said.

Meanwhile, federal Liberal leadership candidate Michael Ignatieff said it's time to put the money on the table for the Big Three and not the time to demonize them, as he suggests the Conservative government is doing.

The industry is far too important to the country and Ontario to let it drift into bankruptcy, which would throw tens of thousands of people out of work, Ignatieff said.

 

Flaherty, CAW spar over
bailout for automakers

November 12, 2008
Tamsyn Burgmann

Clint Thomas
THE CANADIAN PRESS

Federal Finance Minister Jim Flaherty says the issue of whether the government should bail out struggling auto manufacturers is controversial, and people in his own Ontario riding – the Canadian home of General Motors – are telling him not to do it.

"There are many people saying we should do something with respect to the auto sector," Flaherty said today at a conference of economists.

"But I can tell you even in my own riding, where I was yesterday, in Whitby-Oshawa ... there are lots of people who say, `Don't do anything. Don't use my tax money to bail out an enterprise that may not survive."'

"These are not highfalutin' rich people that are saying this to me – these are people on the street."

Automakers have said they need more than $1 billion in loan guarantees to help tide over the sector until demand in the U.S. recovers for North American-produced vehicles.

The three U.S.-based automakers have been pressing for an additional $50 billion in loans from Congress to help them survive the tough economy and pay for health-care obligations for retirees. That's on top of a previously approved $25-billion government loan package for new technology.

On Friday, GM reported a $2.5-billion loss in the third quarter and warned that its cash levels could fall below what's needed to run its business by the end of the year if the U.S. economy doesn't turn around and it doesn't get government aid.

The federal Conservatives have long rejected direct intervention in the auto sector.

But Flaherty suggested for the first time Sunday that Ottawa may be willing to help, with the proviso that aid is targeted at auto plants with viable prospects.

He confirmed today that discussions with Canada's Big Three auto manufacturers are in progress, and reiterated there is money to be spent under certain conditions.

"We have been having discussions with the Detroit Three here in Canada," Flaherty said.

"We have money available for innovation – transformational money, if I may call it that. Because at the end of the day, we need car makers who are making cars people want to buy."

Flaherty stressed the government must ensure any bailout would be tied to the "sustainability" of the sector, or the government risks a taxpayer backlash.

"We need to find a way, if we are going to be able to do something, find a way to ensure sustainability, survivability," he said.

"That has to be the goal, otherwise ... there's a backlash to governments using taxpayers' money in what is perceived to be a bailout of a failing business."

Chris Buckley, president of CAW Local 222 in Oshawa, said it's "absolutely disgusting" that Flaherty says he's only monitoring the situation when immediate action is required.

Buckley said Canada can't wait for the United States and president-elect Barack Obama to take office in January, saying he's worried GM in Canada could be gone by then.

"We're asking Flaherty and (Prime Minister Stephen) Harper to react immediately and not wait for the U.S. to take some kind of action," Buckley said in a phone interview.

"This is not just about autoworkers – this is about good-paying Canadian jobs, and as they evaporate, what it does to our community."

He said it would "be absolutely devastating" if the Harper Conservatives decide against financial help for automakers.

Any money for the auto industry should not be viewed as a bailout but an investment in the Canadian economy, said CAW national president Ken Lewenza.

"It can't be just giving...cash," Lewenza said, noting any solution should also address the growth of vehicles imported into Canada while North American automakers can't sell equal numbers into foreign markets.

In a meeting with Harper today ahead of next week's throne speech, NDP Leader Jack Layton called on the prime minister to match a bailout proposal for the auto sector being floated in the United States.

Federal Industry Minister Tony Clement said later today the government does have a plan for the auto sector, but he didn't say whether the industry has made a formal request for financial aid.

"Certainly they've given me a real good sense on the ground as to what they're facing," Clement said. "We're examining our options."

However, Clement said the situation changes day by day, and Ottawa will act in the long-term interests of the industry.

"There's no point making a decision that affects cash flow in the industry for three or four months and then is of no further use or help," he said.

"We believe in the long-term viability of this industry in Canada."

Ontario Premier Dalton McGuinty is planning to meet with auto industry representatives, but the date hasn't been decided, government officials said.

Progressive Conservative Leader John Tory said Ontario should look at appointing an "auto czar," an idea floated by Obama for the U.S.

Tory said it would be ideal to appoint "someone who is a person who understands the automobile industry and that could sit down with all the people involved ... and say, `What could we do and how could we do it most effectively?"'

While the government has avoided direct help for the auto sector, it again came to the aid of Canadian banks today, announcing it will buy another $50 billion in residential mortgages to ease the credit crunch, tripling the amount of insured mortgages Ottawa can buy from banks by the end of the fiscal year.

 

Ford cash burn hits $7.7 billion

Struggling automaker posts $129 million loss in
third quarter, plans cuts to jobs, production

Nov 08, 2008 04:30 AM

Tom Krisher
James Prichard
Associated Press

DEARBORN, Mich.–Ford Motor Co. lost $129 million (U.S.) in the third quarter as the struggling automaker burned through $7.7 billion in cash and set plans for more job cuts.

Ford said yesterday it will eliminate the jobs of another 2,260 white-collar employees in North America as it battles weak demand, the credit crisis and the worst economic downturn in decades.

"We remain absolutely convinced that we have the right plan and are taking the right actions to weather this difficult period and emerge as a lean, globally integrated company poised for long-term profitable growth," CEO Alan Mulally told analysts during a teleconference.

Ford said it lost 6 cents a share for the quarter, compared with a loss of $380 million, or 19 cents a share, last year.

The company posted a pretax loss of $2.7 billion from continuing operations, but it was offset partly by a $2 billion gain as Ford shifted retiree health-care liabilities to a trust run by the United Auto Workers.

Ford's global automotive operations had a pretax loss of $2.98 billion for the quarter, compared with a pretax loss of $362 million a year earlier.

Sales fell 22 per cent to $32.1 billion from $41.1 billion due to lower volume and the sale of Jaguar and Land Rover.

Excluding special items, Ford lost $1.31 a share, worse than Wall Street had expected. Analysts surveyed by Thomson Reuters predicted a loss of 94 cents a share on sales of $28 billion.

Dearborn-based Ford reported its worst three-month performance on record in the second quarter, when it lost nearly $8.7 billion.

The cash burn – in which a company spends more money than it takes in – was about 3 1/2 times higher than the $2.1 billion Ford used up in the second quarter.

Ford said the cash burn primarily reflected pretax automotive losses, changes in working capital and payments to its credit arm to reduce interest rates for buyers. It was exacerbated by sales drops and production cuts of 500,000 fewer vehicles from second-quarter levels, resulting in $3 billion less in incoming cash for the quarter.

Chief financial officer Lewis Booth would not say if he expects the cash-burn rate to continue at present levels, but said he was confident the company can make it through 2009.

Industry analysts say if the economy doesn't improve, Ford could run out of money sometime after 2010.

 

Ford stands alone

While GM and Chrysler continue their flirtation - with Renault-Nissan watching from afar - the No. 2 automaker remains a wallflower.

By Alex Taylor, senior writer

NEW YORK (Fortune) -- With the U.S. auto industry sinking faster than a wildebeest in quicksand, the headlines have belonged to General Motors and Chrysler as they continue to work on a deal that might save the failing companies. Ford, meanwhile, has stayed above the fray, in the apparent belief that is has enough resources to survive the downturn - and a sufficiently robust plan to come out the other side when it does.

Ford's inaction isn't for lack of opportunities. It was courted by both of the other Detroit companies over the summer.

According to a knowledgeable source, GM chairman and CEO Rick Wagoner approached Ford executive chairman Bill Ford about a merger. Ford listened politely to the pitch from Wagoner but turned him down.
Chrysler chairman and CEO Bob Nardelli also approached Bill Ford about combining forces - this time in a three-way merger that included GM. Sensing desperation in Nardelli's approach, Ford said no again.

The source of Bill Ford's determination to remain independent, besides a desire to maintain control of his family's company, is a strong balance sheet.
At the end of the second quarter, Ford had $26.8 billion of cash on hand - likely enough to fund its operations into 2010. Ford also has some saleable assets in Volvo and in its 33.9% stake in Mazda - assuming it can find buyers with enough cash or a strong enough credit rating to execute a transaction. Ford also expects to get a share of some $25 billion in government loans that Congress has approved to help automakers convert to more fuel-efficient vehicles, which will also ease the cash crunch.

Frayed nerves


Ford's liquidity position hasn't prevented hand wringing by Ford dealers, however. At a regional dealer council meeting in Florida last week, one dealer announced that Ford would not be able to continue as manufacturer by the end of next year, and added that he expected government assistance to kick in if the company should falter. The automaker quickly moved to distance itself from the unauthorized comments.

The dealers' confidence was likely not enhanced by investor Kirk Kerkorian's decision, made public Tuesday, to perhaps sell his entire 6% stake in the company at a significant loss. Kerkorian paid up to $8.50 a share for Ford stock earlier in the year that he is now selling for $2 and change. Kerkorian said he's shifting his investment focus to other sectors of the economy.

The prospect of financial Armageddon hasn't put an end to the palace intrigue in Dearborn. The latest victim is chief financial officer Don LeClair. Other executives, complaining that LeClair was secretive and difficult to work with, threatened to quit if he wasn't moved aside, according to two people with knowledge of the situation.

LeClair was responsible for arranging $23.5 billion in financing two years ago that has helped keep Ford afloat - and that would be impossible to arrange today. He was close to CEO Alan Mulally, but Bill Ford concluded a change was necessary after hearing from the dissidents. LeClair was described as "shell-shocked" when he learned of the decision at a board meeting. The company declined to discuss what it called "rumours" or to make LeClair available for comment.

Last week, two outside directors also decided to leave, due to, they said, the press of other business. Sir John Bond, a former HSBC chairman who gave the board some substantial financial muscle, will be missed. Nokia chairman Jorma Ollila was a less vigorous presence.

How long Ford can remain on the sidelines is anyone's guess. Its recovery plan looks a little skimpy. According to a dealer, the Lincoln-Mercury franchise will shrink to eight vehicles by 2010 - three for Mercury and five for Lincoln-- from 11 today.

What could push Ford into the fray? Now that its stock-market capitalization has collapsed to $4.5 billion, some members of the Ford family, who control 40% of the shareholder vote, may be looking to cash out.

Furthermore, there's at least one more global player stalking the Detroit Three in search of a deal: Renault-Nissan. The Franco-Japanese company is supposed to be looking over Chrysler, but a smarter play might be to leave GM to sort out Chrysler's problems - and go after healthier Ford. Though CEO Carlos Ghosn has been repulsed before, the current times are sufficiently harrowing that any offer deserves a closer look. Even at Ford.

 

 

How economic meltdown
& Ford crashed one family

By MARIANNE MEED WARD

2nd November 2008

A few months ago, Maurice Bastien was in an enviable position. He lived mortgage-free in a six-bedroom home near Windsor with his wife Wanda and four of his six children -- Elijah, 7, Natalie, 6, and two of four sons from a previous marriage.

But Maurice, a skilled trade worker for 31 years, had been unemployed for four years.

Then a phone call came that promised to change that -- and instead delivered a nightmare. Ford in Oakville was offering Maurice a job on the midnight shift.

"We had 48 hours to make a decision," recalls Maurice. "The wife and I decided we had to go for it."

Wanda quit her job at a local Christian school, and the family bought a house in St. George, just north of Brantford -- the closest they could afford to live to Oakville. The move came with a hefty price: a $150,000 mortgage after they sold for $167,000 and bought for $300,000.

But the move was worth it, they thought, for the promise of steady work. Then the bottom fell out the first day.

"We were all gravied up in the morning," Maurice recalls. "Everyone telling us we couldn't go wrong, 'you got it made,' 'you made the right choice,' 'you'll get lots of overtime.'"

After lunch, everything changed.

"We were watching a training video and they came in and turned it off and said our shift was cancelled. We were floored. We moved our families, sold our houses -- you couldn't see that coming?!" Maurice recalls.

"We're in more debt now than in our whole lives. For the first time in my life, I might not be able to make payments and we might lose our house. We were getting set up to retire, and now we could lose everything. It's devastating."

Maurice is not alone. The layoff statistics and lost manufacturing jobs mask a human toll that is mounting, with no foreseeable end.

My neighbour Gary Beck, president of Local 707 of the Canadian Auto Workers union, which covers the Oakville Ford plant, knows the stories well.

One family moved from Calgary, only to have a promised job at Ford disappear days before the start date.

Beck's own nephew quit his job and rearranged daycare to take a Ford job that disappeared. He got his old job back, but not his daycare, and had to move his kids to an unfamiliar setting.

Other workers who left jobs for Ford can't get their old jobs back.

"We've had people come to our office with their spouses and little kids, crying, saying 'What am I going to do?'" said Beck. "This is the worst I've seen in 25 years. Even in the '80s when we went to one shift, we could see the light at the end of the tunnel. Now it's hard to see."

At its peak, Ford had 17,000 workers nationwide. That's shrunk to 5,000. The Oakville plant has lost 1,850 people in the last four years. But in July, when Maurice got the call, everything still looked rosy.

"Ford was calling Oakville the crown jewel," recalls Beck.

There were plans to build close to 300,000 vehicles. Then the market bottomed out and the build was cut to 130,000. Ford's stock dropped below $2 a share.

Beck recalls being in a convenience store with CAW President Kenny Lewenza and seeing the price on a Twinkie: $1.98.

"I turned to Kenny and said 'That twinkie is worth more than Ford stock. Which do you think I should buy?' Lewenza says, 'Judging by your waistline, I know what you're buying.'"

Beck smiles at the memory, but it's a brief drop of levity in a sea of human misery.

NO EXPLANATION

Why didn't the automaker see the downturn earlier, before people uprooted their lives? It's a question that may never be answered, and Ford wasn't returning calls for an interview.

Some displaced workers have launched a lawsuit against Ford. Others, like Maurice, though grateful for the unemployment payments he gets, just want a job.

"I believe in earning your stars everyday. I stand on working hard," said Bastien. "But they've got to be held accountable.

"(Ford) can't do that to people. It's absolute insanity."


 

 

Rough Ride for Big Three
The heads of America's ailing auto companies testify before a Senate hearing Nov. 18, 2008 on Capitol Hill. They warned of "catastrophic" fallout to the U.S. economy if they are allowed to fail.

Automakers' pleas to Congress for $25 billion
in aid fall on unsympathetic ears

Nov 19, 2008 04:30 AM


WASHINGTON–The men who run The Big Three looked distinctly tiny in a congressional hearing room yesterday, a trio of auto industry paupers pleading for money and carrying a common message:

It's not our fault.

The Diminished Three – Richard Wagoner of General Motors, Alan Mulally of Ford and Robert Nardelli of Chrysler – all used the same apocalyptic language to describe the national economic fallout if any one of them went under, one-time cutthroat competitors uniting in front of a bevy of skeptical senators.

If one went under, the other two would surely be dragged down as well, they said.

"What would it mean if the domestic industry were allowed to fail?'' Wagoner told the Senate banking committee.

"The societal costs would be catastrophic – 3 million jobs lost within the first year, U.S. personal income reduced by $150 billion and a government tax loss of more than $156 billion over three years."

Richard Shelby, the Alabama Republican who has been a critic of the industry, said he believes if taxpayers fork over $25 billion today, the industry will be back soon looking for more.

"You've burned billions and billions and billions of dollars trying to turn around your business," Shelby said.

"Are we here in the Senate being asked to facilitate a stronger, more competitive auto manufacturing sector or to perpetuate a market failure?"

It was surely the most closely watched loan application in recent history – the committee chair joked he should have held the hearing in a downtown sports stadium – as the three men, joined by United Auto Workers union president Ron Gettelfinger and an industry critic from academia, explained why they needed $25 billion immediately to stay afloat.

That would come on top of another $25 billion for plant retooling, already approved by Congress, earmarked for the production of fuel-efficient vehicles.

Their prospects of receiving this bailout request, at least before Barack Obama becomes president in January, are extremely slim.

Democrats sympathetic to their plight want the money to come from the $750 billion financial bailout package passed by Congress earlier this autumn, but Republicans are adamant in resisting that call.

The automakers are also running up against serious bailout fatigue, even among Democrats, who felt they had a gun placed at their head in order to pass the Wall Street bailout less than two months ago.

Banking committee chair Christopher Dodd, a Connecticut Democrat, said all three men run companies that have shown no vision and he asked them if they had made mistakes.

Nardelli was the only one of the three to directly answer the question.

He said the auto market got caught up in the general U.S. economic exuberance, catering to people who dined out on faux real estate wealth, seeking bigger and bigger gas guzzlers.

"The mistake Chrysler probably made during that period is that we were responding to the customer who wanted bigger, more expansive, higher horsepower vehicles to go with their second homes, their boats, their trailers, and we chased that consumer demand up," he said.

They all called their request a "bridge loan," promised to pay it back with interest and abide by strong government oversight.

All ticked off a series of tough restructuring moves already undertaken, salaries and bonuses wiped off the books and all extolled their hybrid and fuel-efficient models.

The three agreed they were making progress until the economy went off the cliff.

They were victims of the global credit crisis, they said.

People who want to buy their cars can't get loans, they said.

GM's Wagoner had previously warned that his company cannot wait much longer for help and is danger of running out of cash.

Nardelli joined him yesterday, saying Chrysler was in the same situation, adding bankruptcy was not an option.

"We cannot be confident that we will able to successfully emerge from bankruptcy,'' he said.

Chrysler is a private company and does not have to make its finances public, but Nardelli told senators that at the end of the third quarter, it had $6.1 billion in cash. During that July-September period, however, it spent $3 billion more than it took in, Nardelli said.

Mulally said if Ford can get through this, it will come through on the other side of this crisis "like a turbo."

Dodd said the injuries in the auto industry have been self-inflicted.

Auto industry leaders have approached 21st-century challenges with a decidedly 20th-century mindset, and they're now paying the price for it, Dodd said.

"They have been content ... to not only satisfy, but in too many respects drive, the demand for inefficient, gas-powered vehicles that Americans have been going broke to gas up," he said.

The leaders of the industry no more deserve government help than did the financial titans who created the subprime housing crisis, Dodd said, but, he added Washington must act to avoid an economic implosion.

But Jon Tester, a Montana Democrat, said everyone is in trouble these days, and pointed to the timber and mining industry laying off workers in his home state.

He also warned the trio that if they received any taxpayers' help, they better make sure they spend it in this country.

"If Canada wants a dollar spent up there, go see the Canadian taxpayers," he said. "But if we're putting American taxpayer money on the line, it ought to be spent here."

All three said the money would stay in the U.S.

Peter Morici, a University of Maryland business professor, told the senators the auto industry "sooner or later" has to go through the painful restructuring that gets their costs in line with foreign competitors.

"America is over-carred, just as it is over-housed," said Morici.

But Debbie Stabenow, a Michigan Democrat, said her state has been restructuring for a decade and it has cost Michigan 400,000 jobs.

"We need this industry as a basic part of the fabric of our economy," she said.

"Somebody has to make something in America."

 

 

The Big 3: Myths & Their Realities

The debate over aid to the Detroit-based automakers is awash with half-truths and misrepresentations that are endlessly repeated by everyone from members of Congress to journalists. Here are six myths about the companies and their vehicles, and the reality in each case.

Myth No. 1
Nobody buys their vehicles.
Reality
General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of about 560,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.
Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year.
Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.

Myth No. 2

They build unreliable junk.
Reality
The creaky, leaky vehicles of the 1980s and '90s are long gone. Consumer Reports recently found that "Ford's reliability is now on par with good Japanese automakers." The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands' overall quality as high or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.
Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry.

Myth No. 3
They build gas-guzzlers.
Reality
All of the Detroit Three build midsize sedans the Environmental Protection Agency rates at 29-33 miles per gallon on the highway. The most fuel-efficient Chevrolet Malibu gets 33 m.p.g. on the highway, 2 m.p.g. better than the best Honda Accord. The most fuel-efficient Ford Focus has the same highway fuel economy ratings as the most efficient Toyota Corolla. The most fuel-efficient Chevrolet Cobalt has the same city fuel economy and better highway fuel economy than the most efficient non-hybrid Honda Civic. A recent study by Edmunds.com found that the Chevrolet Aveo subcompact is the least expensive car to buy and operate.

Myth No. 4
They already got a $25-billion bailout.
Reality
None of that money has been lent out and may not be for more than a year. In addition, it can, by law, be used only to invest in future vehicles and technology, so it has no effect on the shortage of operating cash the companies face because of the economic slowdown that's killing them now.

Myth No. 5
GM, Ford and Chrysler are idiots for investing in pickups and SUVs.
Reality
The domestic companies' lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and BMW have all spent billions of dollars on pickups and SUVs because trucks are a large and historically profitable part of the auto industry. The most fuel-efficient full-size pickups from GM, Ford and Chrysler all have higher EPA fuel economy ratings than Toyota and Nissan's full-size pickups.

Myth No. 6

They don't build hybrids.
Reality
The Detroit Three got into the hybrid business late, but Ford and GM each now offers more hybrid models than Honda or Nissan, with several more due to hit the road in early 2009.

 

 

Nash back at CAW after poll defeat

Peggy Nash lost the federal riding of Parkdale-High Park to Liberal Gerard Kennedy Oct. 14, 2008.
Former Parkdale-High Park MP opts not to run
for Ontario NDP leadership, saying timing not right

Nov 18, 2008 04:30 AM
Tony Van Alphen
Business Reporter

Peggy Nash, who was defeated in the Oct. 14 federal election, has returned to a top post with the Canadian Auto Workers union.

Nash, 57, elected for the New Democrats in 2006 in Toronto's Parkdale-High Park riding, resumed her $135,000 job yesterday as one of five assistants to CAW president Ken Lewenza after deciding not to seek the job of Ontario NDP leader.

"Many people have approached me about it," Nash said in an interview. "It certainly was something I considered, but the timing was never good. Other candidates had been at this for some time."

Nash lost her riding to Liberal Gerard Kennedy last month, prompting speculation among party insiders that she would be a candidate for the party's top Ontario job.

Howard Hampton is leaving as NDP leader in March, after 13 years. MPPs Michael Prue (Beaches-East York), Peter Tabuns (Toronto-Danforth), Gilles Bisson (Timmins-James Bay) and Andrea Horwath (Hamilton Centre) have declared their candidacy.

New Democrat officials consider Nash a major talent, and it's felt she only lost because of the high profile Kennedy had in the riding as a former Ontario cabinet minister.

In her return, Nash will be responsible for CAW members in airlines, post-secondary institutions and technical professionals in offices. She will also head CAW campaigns and act as the union's liaison to the Canadian Labour Congress.

Nash was a ticket agent and union activist when the Canadian Airline Employees Association merged with the CAW in 1985. She became an assistant to national president Bob White in 1990 and had several key assignments including bargaining at Ford in 2005.

She took a leave of absence to run in the 2006 election.


 

Ottawa, Ontario share
auto bailout concerns
AARON LYNETT/TORONTO STAR FILE PHOTO

Bryant to join Clement on fact-finding trip in U.S.
as both countries study bailout packages

Nov 18, 2008 04:30 AM
Richard Brennan
in Ottawa
Robert Benzie
in Toronto

OTTAWA–Ontario will team up with Ottawa on a visit to Washington to get the "lay of the land" regarding a U.S. bailout of the auto industry.

The federal and provincial governments are on the same page when it comes to salvaging the battered sector, Ontario Economic Development Minister Michael Bryant said yesterday. But the Ontario minister appears to want a decision on financial assistance sooner than does federal Industry Minister Tony Clement, who is leading the trip.

"We, in Ontario, continue to be of the view that Canada ought to be moving prior to any U.S. package, if that is at all possible, so as to avoid being either a minority shareholder in setting the terms and also to ensure that we are not locked into a proportion that is unrealistic for Canada," Bryant told reporters at Queen's Park.

Bryant said the federal and provincial governments should "obtain security, obtain a high position on the balance sheet in the hopefully unlikely event of a bankruptcy filing, obtain warrants to avoid a situation where companies down the line might be able to profit from these investments" and ensure factories remain in Ontario.

Noting the expected $25 billion bailout in the U.S. is "unlikely" this week, Bryant emphasized that Canada does not want "to be a position where we are playing a `me, too' role."

Ontario officials said the fact-finding trip, which may include Detroit, could begin as early as tomorrow.

"Obviously part of the information-gathering is to canvass whether what we are doing is consistent with what is going on there and to what extent there are differences," Clement told the Toronto Star yesterday, noting that Ottawa has not even decided yet whether to inject cash into the struggling industry.

"I want to make the right decision rather than the quickest decision. I understand there is some pressure on us, but the last thing I want to do is make a wrong quick decision," Clement said, adding that part of his fact-finding mission is to determine what is needed short- and long-term to keep the industry viable. "It's premature to say that we will do one-tenth of whatever the Americans do, or jump to those conclusions just yet."

Clement said Prime Minister Stephen Harper, Ontario Premier Dalton McGuinty and U.S. President-elect Barack Obama have agreed that "just getting a big shovel and dumping money over the side without any long-term objective or plan is not the appropriate way to handle taxpayers' money."

Most Canadians would agree to financial assistance if the industry starts making fuel-efficient vehicles that consumers want to buy, he added.

Clement agreed "we don't have the luxury of waiting forever" to let the Big Three know what Ottawa is prepared to do and what conditions will be attached.

The minister also wants to know what the CAW and the UAW are prepared to do to see that the industry survives but he wouldn't be specific on what he expects from the Canadian and U.S. auto workers' unions.

Prior to a conference call yesterday with Harper and the other provincial and territorial leaders, McGuinty vowed that Queen's Park would work together with Ottawa.

"We are going to find a way to address the crisis faced by our automotive sector, suppliers included, but the best way for us to do that is together with the federal government," McGuinty told the Legislature.

Progressive Conservative MPP Tim Hudak (Niagara West-Glanbrook) said he was encouraged that the provincial Liberals have put aside their partisan wrangling with the federal Tories.

Still, he warned that there should be "job guarantees for more money to flow," adding that even though the province has spent $1 billion in incentives to the auto industry, 30,000 jobs have been lost in the last three years.

Federal NDP Leader Jack Layton said if Ottawa doesn't take a proactive approach to the auto sector "the troubles we are having in our economy are going to become dramatically more severe."

"I think what we have here is a golden opportunity to have a government that steps in, helps to transform the industry using some of the best and most productive workers in the world to produce the car that Canadian increasingly want to buy: ones that use less fuel and create less pollution and cost them less to operate," Layton told reporters.


 

CAW's Mike Vince Receives Award

CAW Local 200 president Mike Vince is the 2008 recipient of the Charles E. Brooks Labour Community Service Award.

Grace Macaluso, The Windsor Star

November 17, 2008

CAW Local 200 president Mike Vince never met Charlie Brooks.

He got to know the legendary union leader only by reputation, by the stories recounted by his labour buddies, like CAW national president Ken Lewenza and Gary Parent, president of the Windsor and District Labour Council.

Brooks "was a person ahead of his time," says Vince. "He was a real visionary with his focus on social and community values."

For the 49-year-old Vince, it is "an honour and humbling" to be this year's recipient of the Charles E. Brooks Labour Community Service Award.

Though cited for his 29-year commitment to the local labour movement, Vince was chosen in part for his contribution to community service, Sheila Wisdom, executive director of the United Way, Windsor-Essex County, said Thursday.

"Mike has been a longtime volunteer with the United Way, including many positions in the annual fundraising campaign as well as a longtime member of the board of directors," Wisdom said. "As the Ford Nemak site co-chair in 2000, he led a team raising $3,250,710 -- the highest total ever at this site."

Vince, who started his career at Ford in 1983, will mark his sixth year next January as president of CAW Local 200. During his tenure, he has faced "incredible" challenges with continuing closures and layoffs.

His local has had to endure the loss of hundreds of jobs from Ford operations in the city.

However, a silver lining emerged just prior to the federal election, when the Conservative government came through with an $80 million investment to retool the shuttered Essex Engine plant.  

About 300 workers are expected to start work in the third quarter of next year at the plant, which will produce a new, fuel-efficient engine for the 2010 Ford Mustang model, said Vince.

That Ford appears to be proceeding as planned is about the only good piece of news amid  the turmoil gripping the Detroit Three automakers as concerns mount over whether Chrysler, General Motors and Ford will survive the current economic crisis.

"Everyone's on pins and needles as to what exactly is going to happen," says Vince. "Our priority is to do the best we can to entice new investment and to give some stability to our members and our community."

Vince was recognized last Friday at an awards presentation at the Caboto Club. While awards and recognition are appreciated, "I'd trade them in for jobs in a heartbeat," he says.

 

        GM Canada's pension plan
      troubled before market collapse
 


Nov 15, 2008 04:30 AM
James Daw

General Motors pensioners in Canada are seeking advice from a leading pension lawyer as the embattled automaker holds out its hand for help from the American and Canadian governments.

Mark Zigler of Koskie Minsky LLP, whose firm has represented everyone from pensioned hockey stars to Eaton's store clerks, has agreed to speak at an autoworkers' union hall in Oshawa Dec. 1.

His topic: What happens to pensioners when a company fails and its pension fund is seriously short of money?

The pensioner who helped get Zigler to attend the pensioners' meeting has vowed to grill him on what he thinks he and his contemporaries should expect from the provincial government.

"I think it's the province that is at fault (for allowing the GM pension plan to fall so far behind in its funding)," said Karl Zimmerman, of Oakwood, Ont.
He fears the health of the plan will only get worse next year, as losses in stock markets spread to Canadian real estate.

At the moment, the pensioners' concerns are hypothetical, but their anxiety and suspicions are real. GM of Canada's spokesmen are refusing to talk about the pension plan in light of recent stock market losses and the parent company's dwindling cash reserves.

"We will not respond to the wild and inaccurate speculation of the Star regarding GM's future," spokesman Stewart Low replied in an email message yesterday.

GM had representation at a meeting yesterday with Premier Dalton McGuinty, whose province is home to most of General Motors of Canada's more than 30,000 blue-collar retirees – and which collects tax revenue on average pensions of $16,376 a year. (GM has announced it will have fewer than 9,000 factory workers by 2010.)

Ontario is also the only province with a Pension Benefits Guaranty Fund and a record of making loans to that fund when it is short of money, as it is today. That precedent, and the potential for a lawsuit over the province's failure to require GM to meet certain funding rules, makes Ontario a cheerleader for GM getting help from Washington.

GM's pension plan for current and former factory workers was in depressingly sick shape a year ago, with potential liabilities of $11.5 billion and a shortfall of $4.9 billion if it were to wind up without further contributions from GM.

The fund would be in much worse shape today if investments managers maintained their investing target of 69 per cent of the fund in stocks.
David Burke, a retirement practice director with Watson Wyatt Worldwide, said a pension plan with 96 per cent of the funds required to pay all earned benefits without further contributions a year ago would have had about 72 per cent funding by the end of October, and less today.

For those companies required to make up that shortfall within five years, "this will present a significant challenge."

Burke cannot comment on GM, which is a client. But GM is the only Ontario company not required to eliminate its funding shortfall, and its fund will be harder hit by falling stock prices than most.

A more typical weighting in stocks is 60 per cent and GM's U.S. pension fund has less than 30 per cent. The Canadian fund would have lost $1.4 billion or 32 per cent of its holding in stocks since the end of last November if it performed no better or worse than major market indices. Of course, the fund may have avoided the market mayhem if it sold off much of its equity holdings.

But if it stuck to its target this could leave the fund with as little as 55 per cent of the assets needed to pay all benefits.

This could result in a heavy claim on the Ontario guarantee fund, which is supposed to cover losses on the first $12,000 of an annual pension.

 

PM, premier warn Big Three

No financial assistance unless firms build more
eco-friendly autos Harper, McGuinty say

Reid Bigland, president of Chrysler Canada, after meeting with Premier Dalton McGuinty Nov. 14, 2008. Bigland joined the heads of GM, Ford, Honda and Toyota to discuss financial support for the flailing industry.

Nov 15, 2008 04:30 AM
Robert Benzie
in Toronto
Bruce Campion-Smith
In Winnipeg

Listen

Ottawa and Queen's Park warn there will be no unconditional "bailouts" for the sputtering North American automakers seeking government help.

While Prime Minister Stephen Harper and Premier Dalton McGuinty agree they want the vital domestic auto industry kept afloat, they signalled they are not prepared to invest public money unless General Motors, Ford and Chrysler change their ways.

McGuinty met for 55 minutes in his office late yesterday with the presidents of the five major auto companies in Ontario – Detroit's Big Three as well as Toyota and Honda – and lectured the U.S.-based automakers on their past short-sightedness.

"If we are going to come to the table ... with additional financial support they're going to have to demonstrate to us that that somehow serves the greater public interest," the premier said before the closed-door session.

"It can't be just some short-term ... maintenance of the status quo," he said, adding GM, Ford and Chrysler better start "producing products that are highly sought after and that are friendlier to the environment" instead of gas-guzzling trucks, SUVs and sedans.

After the meeting – where no specific financial aid requests were made by the struggling three automakers – Economic Development Minister Michael Bryant was more pointed.

"The premier made it very clear that taxpayers are not going to tolerate any bailouts of the auto industry," Bryant told reporters.

GM Canada president and CEO Arturo Elias and Charles Bilyeu, president of Ford Credit Canada Ltd., refused to speak with the media before or after the meeting.

But Chrysler Canada president and CEO Reid Bigland summed up the case for bailing out Ontario's most important industry, which employs 400,000 people and generates $28 billion of economic activity.

"It's a significant impact on the Canadian economy as well as the Ontario economy," said Bigland, whose company is the most vulnerable of the three North American manufacturers.

In Winnipeg, federal Industry Minister Tony Clement said consensus is emerging among Ottawa, Queen's Park and the incoming U.S. administration led by President-elect Barack Obama that any aid cannot simply prop up companies with no hope of success.

Clement, who is watching developments in Washington "with great interest" as American lawmakers weigh a $25 billion auto rescue package, said assistance "has to be about long-term solutions and not short-term cash infusions."

"Our obligation is the long-term viability of the auto sector. That is the balancing act that we play with the auto sector and with taxpayers' money," he said.

 

Ottawa holding auto talks with U.S.

Any deal on aid must be co-ordinated between countries, Flaherty says

Nov 14, 2008 04:30 AM
Bruce Campion-Smith
tonda maccharles
rob Ferguson
staff reporters

WINNIPEG–The federal government is holding informal talks with Washington to co-ordinate financial aid for struggling Big Three automakers, Finance Minister Jim Flaherty says.

But he's warning that any infusion of federal cash will be contingent on automakers changing their product lines to produce fuel-efficient vehicles, including hybrids, that appeal to consumers bruised by gas prices.

Flaherty said yesterday it's vital Ottawa talk to the U.S. administration about help for the auto sector since the two markets are deeply integrated and auto manufacturing straddles the border.

"We need to talk to each other. Of course we do because this is an integrated production system," he said. He characterized the discussions so far with U.S. officials as "informal" and suggested that Industry Minister Tony Clement was spearheading the effort. Flaherty also cautioned that there are still questions about the aid package Congress may ultimately provide for the American auto firms.

"The bridge has to be towards vehicles that will be technologically sophisticated, hybrids, fuel-efficient, that Canadians are going to want to buy and Americans are going to want to buy because 90 per cent of our vehicle production goes to the United States," Flaherty said.

While Flaherty has appeared publicly cool to the idea of a government bailout for the car makers, it's apparent that intense work is going on behind the scenes involving Queen's Park, executives from General Motors, Ford and Chrysler and U.S. officials to hammer out a package that is acceptable to all.

Premier Dalton McGuinty will meet today with executives for the struggling Detroit Three, as well as Honda and Toyota. But a senior provincial government source said the automakers shouldn't expect to walk away from the talk with cheques in hand. "It's a listening meeting and, while it comes at a time of turmoil, it's part of an ongoing dialogue between the government and the industry."

The automakers need cash to help get them through the hard times when loans are difficult to get from other sources because of the global credit crunch, said Mark Nantais, president of the Canadian Vehicle Manufacturers Association.

"We need affordable credit," he said, declining to set a dollar figure because the companies have their own individual needs. "That's the message we need to get across."

McGuinty, whose government is grappling with a $500 million deficit, sounded cautious as he prepared for the meeting.

Characterizing the late-afternoon confab as a "listening opportunity," the premier said he will have a blunt message for the automakers, as they press for financial help.

"Tell me exactly why we should do this, what are we going to get out of this," said McGuinty, whose government's previous aid includes a $175 million, 50-year loan to GM, which is closing its Oshawa pickup truck plant next year.

"We've provided support in the past and experienced job losses nonetheless. What assurance can you provide us with respect to your long-term viability; why is this a good thing for the public to do?" he said.

Meanwhile, federal Liberal leadership candidate Michael Ignatieff said it's time to put the money on the table for the Big Three and not the time to demonize them, as he suggests the Conservative government is doing.

The industry is far too important to the country and Ontario to let it drift into bankruptcy, which would throw tens of thousands of people out of work, Ignatieff said.

 

Flaherty, CAW spar over
bailout for automakers

November 12, 2008
Tamsyn Burgmann

Clint Thomas
THE CANADIAN PRESS

Federal Finance Minister Jim Flaherty says the issue of whether the government should bail out struggling auto manufacturers is controversial, and people in his own Ontario riding – the Canadian home of General Motors – are telling him not to do it.

"There are many people saying we should do something with respect to the auto sector," Flaherty said today at a conference of economists.

"But I can tell you even in my own riding, where I was yesterday, in Whitby-Oshawa ... there are lots of people who say, `Don't do anything. Don't use my tax money to bail out an enterprise that may not survive."'

"These are not highfalutin' rich people that are saying this to me – these are people on the street."

Automakers have said they need more than $1 billion in loan guarantees to help tide over the sector until demand in the U.S. recovers for North American-produced vehicles.

The three U.S.-based automakers have been pressing for an additional $50 billion in loans from Congress to help them survive the tough economy and pay for health-care obligations for retirees. That's on top of a previously approved $25-billion government loan package for new technology.

On Friday, GM reported a $2.5-billion loss in the third quarter and warned that its cash levels could fall below what's needed to run its business by the end of the year if the U.S. economy doesn't turn around and it doesn't get government aid.

The federal Conservatives have long rejected direct intervention in the auto sector.

But Flaherty suggested for the first time Sunday that Ottawa may be willing to help, with the proviso that aid is targeted at auto plants with viable prospects.

He confirmed today that discussions with Canada's Big Three auto manufacturers are in progress, and reiterated there is money to be spent under certain conditions.

"We have been having discussions with the Detroit Three here in Canada," Flaherty said.

"We have money available for innovation – transformational money, if I may call it that. Because at the end of the day, we need car makers who are making cars people want to buy."

Flaherty stressed the government must ensure any bailout would be tied to the "sustainability" of the sector, or the government risks a taxpayer backlash.

"We need to find a way, if we are going to be able to do something, find a way to ensure sustainability, survivability," he said.

"That has to be the goal, otherwise ... there's a backlash to governments using taxpayers' money in what is perceived to be a bailout of a failing business."

Chris Buckley, president of CAW Local 222 in Oshawa, said it's "absolutely disgusting" that Flaherty says he's only monitoring the situation when immediate action is required.

Buckley said Canada can't wait for the United States and president-elect Barack Obama to take office in January, saying he's worried GM in Canada could be gone by then.

"We're asking Flaherty and (Prime Minister Stephen) Harper to react immediately and not wait for the U.S. to take some kind of action," Buckley said in a phone interview.

"This is not just about autoworkers – this is about good-paying Canadian jobs, and as they evaporate, what it does to our community."

He said it would "be absolutely devastating" if the Harper Conservatives decide against financial help for automakers.

Any money for the auto industry should not be viewed as a bailout but an investment in the Canadian economy, said CAW national president Ken Lewenza.

"It can't be just giving...cash," Lewenza said, noting any solution should also address the growth of vehicles imported into Canada while North American automakers can't sell equal numbers into foreign markets.

In a meeting with Harper today ahead of next week's throne speech, NDP Leader Jack Layton called on the prime minister to match a bailout proposal for the auto sector being floated in the United States.

Federal Industry Minister Tony Clement said later today the government does have a plan for the auto sector, but he didn't say whether the industry has made a formal request for financial aid.

"Certainly they've given me a real good sense on the ground as to what they're facing," Clement said. "We're examining our options."

However, Clement said the situation changes day by day, and Ottawa will act in the long-term interests of the industry.

"There's no point making a decision that affects cash flow in the industry for three or four months and then is of no further use or help," he said.

"We believe in the long-term viability of this industry in Canada."

Ontario Premier Dalton McGuinty is planning to meet with auto industry representatives, but the date hasn't been decided, government officials said.

Progressive Conservative Leader John Tory said Ontario should look at appointing an "auto czar," an idea floated by Obama for the U.S.

Tory said it would be ideal to appoint "someone who is a person who understands the automobile industry and that could sit down with all the people involved ... and say, `What could we do and how could we do it most effectively?"'

While the government has avoided direct help for the auto sector, it again came to the aid of Canadian banks today, announcing it will buy another $50 billion in residential mortgages to ease the credit crunch, tripling the amount of insured mortgages Ottawa can buy from banks by the end of the fiscal year.

 

Ford cash burn hits $7.7 billion

Struggling automaker posts $129 million loss in
third quarter, plans cuts to jobs, production

Nov 08, 2008 04:30 AM

Tom Krisher
James Prichard
Associated Press

DEARBORN, Mich.–Ford Motor Co. lost $129 million (U.S.) in the third quarter as the struggling automaker burned through $7.7 billion in cash and set plans for more job cuts.

Ford said yesterday it will eliminate the jobs of another 2,260 white-collar employees in North America as it battles weak demand, the credit crisis and the worst economic downturn in decades.

"We remain absolutely convinced that we have the right plan and are taking the right actions to weather this difficult period and emerge as a lean, globally integrated company poised for long-term profitable growth," CEO Alan Mulally told analysts during a teleconference.

Ford said it lost 6 cents a share for the quarter, compared with a loss of $380 million, or 19 cents a share, last year.

The company posted a pretax loss of $2.7 billion from continuing operations, but it was offset partly by a $2 billion gain as Ford shifted retiree health-care liabilities to a trust run by the United Auto Workers.

Ford's global automotive operations had a pretax loss of $2.98 billion for the quarter, compared with a pretax loss of $362 million a year earlier.

Sales fell 22 per cent to $32.1 billion from $41.1 billion due to lower volume and the sale of Jaguar and Land Rover.

Excluding special items, Ford lost $1.31 a share, worse than Wall Street had expected. Analysts surveyed by Thomson Reuters predicted a loss of 94 cents a share on sales of $28 billion.

Dearborn-based Ford reported its worst three-month performance on record in the second quarter, when it lost nearly $8.7 billion.

The cash burn – in which a company spends more money than it takes in – was about 3 1/2 times higher than the $2.1 billion Ford used up in the second quarter.

Ford said the cash burn primarily reflected pretax automotive losses, changes in working capital and payments to its credit arm to reduce interest rates for buyers. It was exacerbated by sales drops and production cuts of 500,000 fewer vehicles from second-quarter levels, resulting in $3 billion less in incoming cash for the quarter.

Chief financial officer Lewis Booth would not say if he expects the cash-burn rate to continue at present levels, but said he was confident the company can make it through 2009.

Industry analysts say if the economy doesn't improve, Ford could run out of money sometime after 2010.

 

Ford stands alone

While GM and Chrysler continue their flirtation - with Renault-Nissan watching from afar - the No. 2 automaker remains a wallflower.

By Alex Taylor, senior writer

NEW YORK (Fortune) -- With the U.S. auto industry sinking faster than a wildebeest in quicksand, the headlines have belonged to General Motors and Chrysler as they continue to work on a deal that might save the failing companies. Ford, meanwhile, has stayed above the fray, in the apparent belief that is has enough resources to survive the downturn - and a sufficiently robust plan to come out the other side when it does.

Ford's inaction isn't for lack of opportunities. It was courted by both of the other Detroit companies over the summer.

According to a knowledgeable source, GM chairman and CEO Rick Wagoner approached Ford executive chairman Bill Ford about a merger. Ford listened politely to the pitch from Wagoner but turned him down.
Chrysler chairman and CEO Bob Nardelli also approached Bill Ford about combining forces - this time in a three-way merger that included GM. Sensing desperation in Nardelli's approach, Ford said no again.

The source of Bill Ford's determination to remain independent, besides a desire to maintain control of his family's company, is a strong balance sheet.
At the end of the second quarter, Ford had $26.8 billion of cash on hand - likely enough to fund its operations into 2010. Ford also has some saleable assets in Volvo and in its 33.9% stake in Mazda - assuming it can find buyers with enough cash or a strong enough credit rating to execute a transaction. Ford also expects to get a share of some $25 billion in government loans that Congress has approved to help automakers convert to more fuel-efficient vehicles, which will also ease the cash crunch.

Frayed nerves


Ford's liquidity position hasn't prevented hand wringing by Ford dealers, however. At a regional dealer council meeting in Florida last week, one dealer announced that Ford would not be able to continue as manufacturer by the end of next year, and added that he expected government assistance to kick in if the company should falter. The automaker quickly moved to distance itself from the unauthorized comments.

The dealers' confidence was likely not enhanced by investor Kirk Kerkorian's decision, made public Tuesday, to perhaps sell his entire 6% stake in the company at a significant loss. Kerkorian paid up to $8.50 a share for Ford stock earlier in the year that he is now selling for $2 and change. Kerkorian said he's shifting his investment focus to other sectors of the economy.

The prospect of financial Armageddon hasn't put an end to the palace intrigue in Dearborn. The latest victim is chief financial officer Don LeClair. Other executives, complaining that LeClair was secretive and difficult to work with, threatened to quit if he wasn't moved aside, according to two people with knowledge of the situation.

LeClair was responsible for arranging $23.5 billion in financing two years ago that has helped keep Ford afloat - and that would be impossible to arrange today. He was close to CEO Alan Mulally, but Bill Ford concluded a change was necessary after hearing from the dissidents. LeClair was described as "shell-shocked" when he learned of the decision at a board meeting. The company declined to discuss what it called "rumours" or to make LeClair available for comment.

Last week, two outside directors also decided to leave, due to, they said, the press of other business. Sir John Bond, a former HSBC chairman who gave the board some substantial financial muscle, will be missed. Nokia chairman Jorma Ollila was a less vigorous presence.

How long Ford can remain on the sidelines is anyone's guess. Its recovery plan looks a little skimpy. According to a dealer, the Lincoln-Mercury franchise will shrink to eight vehicles by 2010 - three for Mercury and five for Lincoln-- from 11 today.

What could push Ford into the fray? Now that its stock-market capitalization has collapsed to $4.5 billion, some members of the Ford family, who control 40% of the shareholder vote, may be looking to cash out.

Furthermore, there's at least one more global player stalking the Detroit Three in search of a deal: Renault-Nissan. The Franco-Japanese company is supposed to be looking over Chrysler, but a smarter play might be to leave GM to sort out Chrysler's problems - and go after healthier Ford. Though CEO Carlos Ghosn has been repulsed before, the current times are sufficiently harrowing that any offer deserves a closer look. Even at Ford.

 

 

Ford posts loss, warns of job cuts

Ford said Friday Nov. 7, 2008 that it lost $129 million (U.S.) in the third quarter as the stuggling automaker burned up $7.7 billion in cash.

Nov 07, 2008

DEARBORN, Mich–Ford Motor Co. says it lost $129 million in the third quarter as the struggling automaker burned through $7.7 billion in cash.

The automaker also said Friday it will cut about 2,260 more white-collar employees in North America as it tries to weather the worst economic downturn in decades.

Ford says it lost 6 cents per share for the quarter, compared with a loss of $380 million, or 19 cents per share, a year ago.

The company posted a pretax loss of $2.7 billion from continuing operations. But it was offset partly by a $2 billion gain as the company shifted retiree health care liabilities to a trust run by the United Auto Workers.

Sales fell 22 per cent to $32.1 billion from $41.1 billion due to lower volume and the sale of Jaguar and Land Rover.

Excluding special items, Ford lost $1.31 per share, worse than Wall Street expected. Analysts surveyed by Thomson Reuters predicted a loss of 94 cents per share on sales of $28 billion.

Dearborn-based Ford reported its worst three-month performance ever in the second quarter, when it lost nearly $8.7 billion.

The cash burn – in which a company spends more money than it takes in – was far higher than the $2.1 billion it burned through in the second quarter.

Ford said the cash burn primarily reflected pretax automotive losses, changes in working capital and payments to its credit arm to reduce interest rates for buyers. It was exacerbated by sales drops and production cuts of 500,000 fewer vehicles from second-quarter levels, resulting in $3 billion less in incoming cash for the quarter.

Chief Financial Officer Lewis Booth would not say if he expects the cash burn rate will continue at the present levels.

"With our present assumptions, we are comfortable with our liquidity position," Booth told reporters Friday morning. "I think it goes without saying, forecasting the future at the moment is extremely difficult. Trying to find out just exactly what is happening with the consumer is really tough.''

Industry analysts say that if the economy doesn't improve, Ford could run out of money sometime after 2010.

U.S. automakers have approached the U.S. government for low-interest loans as they try to weather the global economic slowdown.

Ford is among automakers that are talking with the European Commission for a 40 billion euro low-interest loan. It also is talking to other governments.

Ford said it will cut North American production in the fourth quarter by 40,000 units more than what was announced in September, primarily with shift reductions and temporary plant shutdowns. In September, the company announced a fourth-quarter production cut of 171,000 units over the fourth quarter of last year, mainly in trucks.

The salaried cuts, Ford said, equate to about 10 per cent of its North American salaried work force of 22,600.

It also said that it has no plans to offer more buyout or early retirement packages to blue-collar workers.

Ford announced that some of its vehicle programs will be deferred, although the company described the moves as minor timing changes.

 

 

U.S. rejects GM's aid request

Barack Obama, who is expected to be the next U.S. president, has said in recent days that he supports increasing aid to the troubled Detroit automakers.

Funding for Detroit to focus on fuel-efficient vehicles rather than helping merger with Chrysler
Bill Vlasic and Micheline Maynard

New York Times

Nov 03, 2008

DETROIT–The Treasury Department has rejected a request by General Motors for up to $10 billion U.S. to help finance the automaker's possible merger with Chrysler, according to people close to the talks.

Instead of providing new assistance, the Treasury Department told GM on Friday, the Bush administration will shift its focus to speeding up the $25 billion loan program for fuel-efficient vehicles approved by Congress in September and administered by the Energy Department.

Treasury officials were said to be reluctant to broaden the $700 billion financial rescue program to include industrial companies or to play a part in a GM-Chrysler merger that could cost tens of thousands of people their jobs.

But it remained unclear whether the officials were also seeking to avoid making any decision that would conflict with the goals of a new presidential administration.

The Democratic candidate, Barack Obama, has said in recent days that he supports increasing aid to the troubled automakers. Republican candidate John McCain has not said whether he would support aid beyond the $25 billion.

While GM and Chrysler continue to talk, no deal is expected until the government clarifies its role, if any. Potential investors in the deal have been hesitant to back the merger without federal assistance.

GM chair Rick Wagoner had lobbied Treasury secretary Henry Paulson to provide aid to the automakers under the bailout program to stabilize the financial firms.

The Bush administration is still considering a range of options to aid the Detroit automakers, which are losing billions of dollars and rapidly depleting their cash reserves, said auto industry and administration officials, who did not want to be identified because of the sensitive nature of the discussions.

The first step is to get the Energy Department to expedite the release of the $25 billion in low-interest loans for GM, Chrysler and the Ford Motor Co.

Beyond that, the administration is also bringing the Commerce Department into discussions about channelling additional aid to the automakers. With auto sales deteriorating to their lowest level in 15 years, the Detroit Three are struggling to stay solvent.

The deepening troubles led GM into merger talks in September with Chrysler's majority owner, the private equity firm Cerberus Capital Management, and the request for Treasury Department aid.

Auto industry executives and analysts said over the weekend that the loan program is essential to retooling plants and developing vehicles that meet more stringent government fuel-economy mandates.

Getting the loans will allow GM, Ford and Chrysler to redirect money already budgeted for cleaner cars to other capital needs.

"The auto companies are clearly running out of cash, and badly in need of more liquidity," said David Cole, chair of the Center for Automotive Research in Ann Arbor, Mich. "Releasing the $25 billion in loans is a necessary first step.''

Cerberus has had discussions with the Japanese automaker Nissan Motor and its French partner, Renault, about bringing Chrysler into their international alliance. But people familiar with the discussions said Cerberus is now focused solely on a potential GM deal.

The depth of Detroit's problems will become more evident this week with the release of October sales figures and third-quarter earnings of GM and Ford.

Sales fell 26.6 per cent in September, but October's totals could be worse. Auto research website Edmunds.com forecasts sales of new vehicles during the month will drop nearly 30 per cent from the same period last year.

 

How economic meltdown
& Ford crashed one family

By MARIANNE MEED WARD

2nd November 2008

A few months ago, Maurice Bastien was in an enviable position. He lived mortgage-free in a six-bedroom home near Windsor with his wife Wanda and four of his six children -- Elijah, 7, Natalie, 6, and two of four sons from a previous marriage.

But Maurice, a skilled trade worker for 31 years, had been unemployed for four years.

Then a phone call came that promised to change that -- and instead delivered a nightmare. Ford in Oakville was offering Maurice a job on the midnight shift.

"We had 48 hours to make a decision," recalls Maurice. "The wife and I decided we had to go for it."

Wanda quit her job at a local Christian school, and the family bought a house in St. George, just north of Brantford -- the closest they could afford to live to Oakville. The move came with a hefty price: a $150,000 mortgage after they sold for $167,000 and bought for $300,000.

But the move was worth it, they thought, for the promise of steady work. Then the bottom fell out the first day.

"We were all gravied up in the morning," Maurice recalls. "Everyone telling us we couldn't go wrong, 'you got it made,' 'you made the right choice,' 'you'll get lots of overtime.'"

After lunch, everything changed.

"We were watching a training video and they came in and turned it off and said our shift was cancelled. We were floored. We moved our families, sold our houses -- you couldn't see that coming?!" Maurice recalls.

"We're in more debt now than in our whole lives. For the first time in my life, I might not be able to make payments and we might lose our house. We were getting set up to retire, and now we could lose everything. It's devastating."

Maurice is not alone. The layoff statistics and lost manufacturing jobs mask a human toll that is mounting, with no foreseeable end.

My neighbour Gary Beck, president of Local 707 of the Canadian Auto Workers union, which covers the Oakville Ford plant, knows the stories well.

One family moved from Calgary, only to have a promised job at Ford disappear days before the start date.

Beck's own nephew quit his job and rearranged daycare to take a Ford job that disappeared. He got his old job back, but not his daycare, and had to move his kids to an unfamiliar setting.

Other workers who left jobs for Ford can't get their old jobs back.

"We've had people come to our office with their spouses and little kids, crying, saying 'What am I going to do?'" said Beck. "This is the worst I've seen in 25 years. Even in the '80s when we went to one shift, we could see the light at the end of the tunnel. Now it's hard to see."

At its peak, Ford had 17,000 workers nationwide. That's shrunk to 5,000. The Oakville plant has lost 1,850 people in the last four years. But in July, when Maurice got the call, everything still looked rosy.

"Ford was calling Oakville the crown jewel," recalls Beck.

There were plans to build close to 300,000 vehicles. Then the market bottomed out and the build was cut to 130,000. Ford's stock dropped below $2 a share.

Beck recalls being in a convenience store with CAW President Kenny Lewenza and seeing the price on a Twinkie: $1.98.

"I turned to Kenny and said 'That twinkie is worth more than Ford stock. Which do you think I should buy?' Lewenza says, 'Judging by your waistline, I know what you're buying.'"

Beck smiles at the memory, but it's a brief drop of levity in a sea of human misery.

NO EXPLANATION

Why didn't the automaker see the downturn earlier, before people uprooted their lives? It's a question that may never be answered, and Ford wasn't returning calls for an interview.

Some displaced workers have launched a lawsuit against Ford. Others, like Maurice, though grateful for the unemployment payments he gets, just want a job.

"I believe in earning your stars everyday. I stand on working hard," said Bastien. "But they've got to be held accountable.

"(Ford) can't do that to people. It's absolute insanity."



Pension crisis looming

Companies brace for shortfalls exacerbated by deflated stock prices

Oct 30, 2008 04:30 AM
Ann Perry
Brett Popplewell
Business Reporters

The end of December represents a massive, looming crisis for some Canadian companies this year.

The companies must submit their employee pension plans to a valuation process every three years, although federally regulated pension plans are forced to revalue annually if they have a shortfall.

Companies due to have new valuations at the end of this year are at risk of having to fund their pension plans based on severely deflated stock prices, triggering large cash contributions at a time of tight credit, even if markets recover in 2009, industry analysts say.

Paul Forestell, leader of the Canadian retirement professional group at benefits consulting firm Mercer, said many pension plans will see "a significant increase" this year in their unfunded pension liability.

"If the company's not doing well and the pension plan (has) double or triple the contribution requirements, then I think that will be a major problem for companies," Forestell said.

The scope of the problem is difficult to pin down. The latest data from the Office of the Superintendent of Financial Institutions (OSFI) – which oversees about 1,400 pension plans in federally regulated industries such as airlines, banks, telecommunications and transportation – is from June, predating the market crash by several months.

It shows that some 70 per cent of the 400 defined benefit plans under its jurisdiction – plans in which the company guarantees retirement benefits and assumes investment risks – were less than fully funded at that time, and on average the shortfall was less than 10 per cent.

But the numbers do not take into account the turmoil of the past few months.

The Financial Services Commission of Ontario, the provincial pension regulator, also does not yet have numbers that reflect the recent market upheaval.

In early October, Mercer estimated that a pension fund that had been fully funded a decade ago would have only 72 per cent of the assets needed to meet all its pension promises.

But Forestell argues that, in the current economic climate, there is a need for governments to look at pension funding rules – a move Finance Minister Jim Flaherty said yesterday Ottawa is considering.

One option would be to give companies more time to fund pension shortfalls. Under current rules, they generally have five years. Some companies want that to be increased to 10 or 15 years. This solution assumes stock markets will recover over that longer time frame.

Another option would be to let companies put off revaluing their pension liabilities and assets, which determine funding requirements.

The status of the pension plans of some large companies is known.

As of January this year, Air Canada's various employee plans were underfunded by nearly $1.2 billion, according to filings with regulators.

BCE had a deficit of $449 million on obligations of $15.7 billion, and Nortel Networks Corp. a deficit of $1.1 billion on $9.3 billion of pension promises.

The federal government has already shown some willingness to change the rules to help companies withstand current economic conditions. OSFI said this week it will allow insurance companies to set aside less capital to back segregated funds. There appeared little doubt yesterday that pension plans also need help.

Air Canada officials would not say yesterday if the company had approached the government for pension help, but spokesperson Peter Fitzpatrick said it's no secret the company would welcome relief from its funding obligations.

A spokesperson for Ford of Canada told the Star: "We have not asked for any funding exceptions – our pension plans meet legal and regulatory funding requirements."



Pension relief in works

Ottawa reviewing rules for company plans
hit by market crisis, finance minister says

Oct 30, 2008 04:30 AM

Ann Perry
Brett Popplewell
Business Reporters

The company pension plans of millions of Canadians, battered and bloodied by weeks of stock market turmoil, will likely receive some form of relief from the federal government, federal Finance Minister Jim Flaherty indicated yesterday.

Flaherty said the government is considering easing rules that require companies to top up plans that fall below levels required to meet pension commitments.

"We're reviewing (the rules) now in the Department of Finance with a view to seeing what can be done to help the pension funds at this particular time given the global circumstance."

He hinted that one of the options on the table may include extending the five-year time period companies have to make up shortfalls.

Pension consultants Mercer Human Resource Consulting told the Star in late September that the stock market slide to that point had sliced about $10 billion from the pension assets of the 125 major employers it tracks. Since then, things have worsened dramatically and Toronto's S&P/TSX composite index has lost 31 per cent of its value from the beginning of the year.

Industry insiders say a number of large Canadian companies began organizing recently to lobby the federal finance department to extend the window to make up shortfalls to 10 or 15 years.

The situation is most difficult for firms facing a year-end assessment of pension fund assets to determine their funding requirements. Some firms could be forced to divert cash into pension funds rather than operations, insiders say.



Why Ford Needs The
GM-Chrysler Deal Done

 Joann Muller, 10.28.08

DETROIT - In the talks between General Motors and Chrysler, no one has more at stake than Ford Motor.

The entire U.S. auto industry is teetering, and it wouldn't take much to push Ford over the edge. A bankruptcy filing by GM would surely do so, since it would give GM an opportunity to toss out costly labor agreements and supplier contracts, leaving Ford at a competitive disadvantage. Ford wouldn't be able to survive very long paying higher costs for labor and parts than GM.

But if GM and Chrysler do merge--potentially with assistance from the federal government--Ford stands to gain the most. Credit Executive Chairman William C. Ford Jr. for that. His decision to dial back Ford's ambitions in recent years left the company in a fundamentally stronger position than either of its Detroit rivals.

That doesn't mean Ford is healthy. The automaker lost $8.6 billion so far this year. Expect poor third-quarter results on Nov. 7. Despite massive cost-cutting, Ford is burning cash at a rate of $1 billion per month. Through September, Ford sales are down 17%, and analysts predict October sales will be even worse.

But under Bill Ford and his successor as chief executive, Alan Mulally, Ford's done a good job lately of getting its house in order, and if it's not dragged down by a GM bankruptcy in the next year or two, Ford will be in good shape to take advantage of an economic rebound when it comes.

One reason: a fairly comfortable cash cushion. As of June 30, Ford had $26.6 billion in cash (probably down to $23 billion in the third quarter). That's because shortly after Mulally's hiring in fall 2006, Ford mortgaged virtually all of its assets to obtain a $23 billion line of credit that would ensure it had adequate liquidity to restructure.

The move was considered risky at the time, but in retrospect, it looks smart. Ford was able to access the credit markets before the door slammed shut for automakers. If GM had taken similar action, it probably wouldn't be seeking capital now by trying to buy Chrysler from private equity firm Cerberus Capital Management (and the $11.7 billion on Chrysler's balance sheet).

Aside from its balance sheet, Ford's relative strength during the current crisis is due mostly to Bill Ford's "back-to-basics" directive earlier this decade and to Mulally's grip on reality during his two years in charge.
After a disastrous expansion under former Chief Executive Jacques Nasser in the late 1990s, Bill Ford wrested control of the company and sold off non-core operations. He forced out the head of Ford Motor Credit, too, tightening lending terms five years ago and resisting the temptation to get into the mortgage business that had been so lucrative for GM's former captive finance company, GMAC.

That conservatism meant Ford Credit probably missed out on the chance to reap its share of the housing boom three or four years ago, but it also avoided the ugly mortgage meltdown that followed.

Now Ford Credit is a key to Ford Motor's survival. Unlike GM, which sold a 51% interest in GMAC to Cerberus in 2006, Ford steadfastly refused to sell its finance company, which it considers a strategic asset.
An automaker's finance arm is more than just a bank that lends money to consumers and dealers, says Andrew Shapiro, managing partner at Casesa Shapiro Group. "At the end of the day, it's a marketing tool" that can be used to help manage inventory, he says.

GM lost that opportunity when it ceded control of GMAC to Cerberus. It paid the price recently when Cerberus--likely seeking to pressure GM into a deal for Chrysler--announced GMAC would no longer provide loans to consumers with credit scores below 700. That choked off sales at GM dealerships, forcing the automaker to spend precious millions on a national advertising campaign to reassure consumers that credit was still available (through other lenders) for GM vehicles.

The moral of this story is don't lose control of your captive finance company. When sales of a certain model turn soft, for instance, Ford can turn to Ford Credit for subsidized incentives to woo buyers and make way for better-selling models.

Though Ford has clung tightly to Ford Credit, it sold weak brands like Jaguar, Land Rover and Aston Martin. It would sell Volvo tomorrow if it could find a buyer, and it is considering selling part of its controlling stake in Mazda.

Operationally, Ford is getting better, too. Its quality ratings are now among the world's best, and under Mulally's vision of "one Ford" worldwide, it is working hard to combine product development efforts around the world, which will lower costs and boost manufacturing efficiency.

It's all left Ford in better shape than General Motors. And if GM gets a bailout from the federal government, or new concessions from the United Auto Workers union, you can bet Ford will insist on equal treatment. That will only strengthen Ford as it comes out of the current downturn.
The next year or two will be extremely difficult for Ford, but if it can skirt the present danger, its stock (currently at $2 a share) may be worth holding down the road.

 

GM, Cerberus ask
Uncle Sam for $10B

Unprecedented rescue package would help carmakers merge, sources say

Oct 28, 2008 04:30 AM

Jui Chakravorty Das
Reuters News Agency
Kevin Krolicki
Reuters news AGency

General Motors Corp. and Cerberus Capital Management have asked the U.S. government for roughly $10 billion (U.S.) in an unprecedented rescue package to support a merger between GM and Chrysler LLC, two sources with direct knowledge of the talks said yesterday.

The government funding would include roughly $3 billion in exchange for preferred stock in the merged automaker, according to one of the sources, who was not authorized to discuss the matter publicly.

The U.S. Treasury Department is considering a request for direct aid to facilitate the merger and a decision could come this week, sources familiar with the still-developing government response said earlier yesterday.

An injection of $3 billion in equity to support a GM acquisition of Chrysler would be roughly equivalent to the current, depressed value of the top U.S. automaker.

It would also give U.S. taxpayers a large stake in the turnaround of a struggling auto industry that employs more than 350,000 American workers and is credited with supporting employment for another 4.5 million in related fields.

Analysts see GM, Chrysler and rival Ford Motor Co. as having been driven to the brink of failure by a combination of management missteps, slowing global growth and problems in credit markets.

In addition to its equity stake, the U.S. government is also being asked to provide support for the GM-Chrysler merger by taking over some $3 billion in pension obligations under the terms of a proposal now before the government for review, the first source said.

The final component of the proposed support package would be a credit line that could include U.S. government purchases of commercial paper issued by GM to relieve short-term pressure on liquidity, the source said.

A combined GM-Chrysler would control roughly a third of the U.S. auto market by sales and would face immediate pressure to cut costs stemming from excess capacity in almost every facet of its business. Those would include a stable of 11 brands, roughly 10,000 dealers and some 97,000 union-represented factory workers, analysts have said.

 

Asian brands dominate
Consumer Reports rankings

(Ford being the best out of the big 3)


By David Bailey and Poornima Gupta

DETROIT, Oct 23 (Reuters) - Asian auto brands dominated Consumer Reports' influential study of the most reliable new vehicles with Ford Motor Co's Lincoln and Mercury ranking as the only U.S. brands in the top 15.
Toyota Motor Corp's Scion was the top-ranked brand followed by fellow Japanese Honda Motor Co's Acura and Honda nameplates. Toyota's flagship brand placed fourth, followed by the Toyota luxury brand Lexus in fifth place.

The annual study is influential with American car shoppers and watched by major automakers as an indicator of their performance in improving and maintaining vehicle quality.

Japanese vehicles were the most reliable overall, leading 15 of 16 categories in its ratings, the study said.

The Scion xD had the best score of all new cars, with about 80 percent fewer problems than the average model, according to the nonprofit magazine, which does not accept advertising.

Other Asian carmakers that finished above the U.S. companies were South Korea's Hyndai Motor and Kia Motors Corp .

Among the U.S.-based automakers, Ford's three nameplates -- Lincoln, Mercury and Ford -- led the pack in 11th, 15th and 17th place, respectively.
General Motors Corp brands ranged from an 18th place ranking for Buick to No. 33 for Saturn, second from last. Chrysler LLC ratings slipped further under the ownership of Cerberus Capital Management.
GM has been in talks to acquire Chrysler from Cerberus, people familiar with those talks have said. Analysts have viewed the possibility of that combination with scepticism since both automakers are struggling with many of the same problems, including weak brand images.
The Consumer Reports study showed a combined GM/Chrysler would own 7 of the 10 lowest-rated auto brands for reliability, including Saturn, Chrysler and Cadillac.

Excluding some truck-based models, Ford's reliability is on a par with good Japanese automakers, Consumer Reports said.
"The last five years, we have seen Ford generally get better and better incrementally," said David Champion, senior director of Consumer Reports' auto test center. "The systematic structural changes we have seen within Ford produces very reliable vehicles."

CHRYSLER RELIABILITY DECLINES
"We feel good about the results, but we know we still have work to do so we are continuing to do that," Ford vice president of quality Bennie Fowler said.
Champion said the result for GM was mixed.

"I think General Motors has a very good model portfolio at the moment," Champion said. "They have a lot of good products there, they just need to get the reliability right."

GM spokeswoman Janine Fruehan said the results were somewhat disappointing, but not a surprise. "We know what areas we have to improve in and the areas where our strengths lie and we are working to close the gap," Fruehan said.

Chrysler's Jeep brand ranked 28th, Dodge 30th and the Chrysler namesake brand 32nd on the list -- with interiors, electrical systems and other issues of concern.

"Their biggest issue is trying to hold the vehicle together inside -- squeaks, rattles, pieces of trim dropping off, just annoying features for the customer," Champion said.

Chrysler had sought to address interiors shortcomings early in 2008 by investing $150 million on upgrades to over 260 vehicle features.
"We are not satisfied with our performance, with the report that came out," Chrysler spokeswoman Beverly Thacker said. "We do continue to work aggressively to improve every aspect of customer satisfaction with our vehicles."

British luxury brand Land Rover, owned by Tata Motors , was the least reliable brand, according to the survey.

Consumer Reports is published by the nonprofit Consumers Union. The publication's "predicted reliability" study for new model vehicles is based on an average of consumer ratings of the same model in the recent years.
The magazine surveys readers and visitors to its web site about their experience with the cars and trucks they own.

 

Chrysler may be sold in pieces

Cerberus said talking to GM, Nissan and Renault

Oct 23, 2008 04:30 AM
Tom Krisher
Associated Press

DETROIT–Chrysler LLC could be sold in pieces to other companies as majority owner Cerberus Capital Management LP seeks to exit the auto business, according to a person briefed on the discussions.

The New York private equity firm has been shopping the beleaguered automaker to General Motors Corp., the combined Nissan Motor Co. and Renault SA and other companies.

Many combinations are being discussed, said the source who asked not to be identified.

Chrysler spokesperson Shawn Morgan and Cerberus spokesperson Peter Duda declined to comment.

Cerberus's efforts to quit the automobile industry have been widely reported and speculation has swirled over what shape a deal might take.

One proposal being discussed reportedly calls for Cerberus to hand over Chrysler to General Motors in exchange for GM's 49 per cent stake in GMAC Financial Services.

GM sold a 51 per cent interest in its finance arm to Cerberus in 2006. Cerberus also would get an equity stake in GM, hoping for a good return should GM recover when U.S. sales recover from a serious slump.

GM is said to be interested in Chrysler for its cash. Chrysler, whose sales have dropped 25 per cent during the first nine months of the year, reportedly has about $11 billion (U.S.) available.

It also has debt, but the amount hasn't been disclosed because Chrysler is a private company. Cerberus bought 80.1 per cent of Chrysler from Germany's Daimler AG in a $7.4 billion deal last year.

 

Kerkorian takes loss
in sale of Ford stake

Activist investor Kirk Kerkorian's investment firm may lose more than half a billion dollars on the sale of 7.3 million Ford Motor shares.

Now sees value in gambling, hotels, oil and gas

Oct 22, 2008 04:30 AM

Bree Fowler
Associated Press

NEW YORK–Kirk Kerkorian's investment firm has sold 7.3 million of its shares in Ford Motor Co. and plans to further cut what is now a 6.1 per cent stake, for a potential loss of more than half a billion dollars on the investment.

Tracinda Corp. sold the shares at an average price of $2.43 (U.S.) per share and said it may sell its remaining 133.5 million shares depending on market conditions.

Kerkorian has tried to leave his mark on the Detroit-based automakers over the past decade. But Tracinda said that in light of current economic conditions it now sees "unique value" in other industries such as gambling, hotels, and oil and gas, so it's moving its resources.

Tracinda, which is named after Kerkorian's daughters, Tracy and Linda, has the majority stake in the casino and hotel operator MGM Mirage Inc.

The sale comes just four months after Tracinda purchased 20 million of the Dearborn, Mich.-based automaker's shares at market rates to boost his stake to 6.49 per cent. Those purchases were announced two days after Kerkorian met with Ford chief executive Alan Mulally and executive chair Bill Ford to discuss the company's turnaround plan.

A week earlier, Kerkorian had acquired another 20 million shares through a tender offer for about $170 million, or $8.50 per share. Based on that share price, Kerkorian lost about $44.3 million in Tuesday's sale.

At the time the tender offer was announced, Tracinda said it owned 100 million Ford shares at an average cost of $6.91 per share. If the firm sold those shares at Monday's closing price of $2.33 apiece, it would translate to a loss of about $458 million.

Ford shares fell 16 cents to $2.17 yesterday.

In announcing the June tender offer, Tracinda said it believed that Ford was starting to make progress on its restructuring plan, adding that it expected the automaker to post continued improvements.

Ford shares are down 63 per cent since the tender offer was announced. On Oct. 10, they fell to $1.88. Kerkorian has a mixed track record with the other U.S. automakers. He made an unsuccessful $4.5 billion cash offer for Chrysler last year and pushed for General Motors Corp. to form an alliance with Nissan Motor Co. and Renault SA in 2006 after acquiring nearly 10 per cent of GM.

Kerkorian sold his stake in the Detroit-based automaker after the proposed alliance was scrapped.

 

CAW pleas fail to move
Daimler on shutdown

CAW's Ken Lewenza says Daimler rejected plea to retool truck plant.

Oct 22, 2008

WINDSOR–Canadian Auto Workers president Ken Lewenza says Daimler Trucks officials have told him that "no money in the world" could change the fate of a plant the company plans to shut down in St. Thomas next year.

The CAW leader was in Windsor yesterday to plead for Daimler to idle the Sterling truck factory instead of shutting it down.

Federal and provincial politicians who represent the area have said there could be government funds made available to retool the plant.

But Lewenza said Chris Patterson, president and CEO of Daimler Trucks North America, wouldn't bite.

"Mr. Patterson was pretty clear that all the investment in the world at this particular time can't produce a truck that would sell in this market," Lewenza said.

"They don't have anything today that would increase market share. Therefore, the investment today is basically irrelevant regardless of what the provincial and federal government would do."

But Lewenza said the federal government needs to be more aggressive in keeping manufacturing jobs in Canada.

"We're going to still demand that the federal government step in and say, `If you want to sell in Canada, then you have to manufacture in Canada.' You've got to give a commitment to the Canadian economy and to Canadian workers," he said.

The union is now looking to change the terminology in the close-out agreement so the plant could be reopened if the market improves. Lewenza said Daimler told him it would consider this.

Lewenza said he will also be contacting Daimler AG chair Dieter Zetsche in the next few days to secure a meeting in Germany to discuss future truck opportunities in Canada.

Daimler has said it will close the factory next March, eliminating almost 2,000 jobs, including workers previously laid off.

The Canadian Press

 

Nash touted to energize
NDP leadership race

Peggy Nash lost the federal riding of Parkdale-High Park to Liberal Gerard Kennedy Oct. 14, 2008.

Ex-MP denies interest in replacing Hampton

Oct 19, 2008 04:30 AM
Robert Benzie
Queen's Park Bureau Chief
Francine Kopun
Feature Writer

She's telling friends she's not interested, but Peggy Nash, who lost Parkdale-High Park to Liberal Gerard Kennedy in Tuesday's federal election, is being touted as a contender for the leadership of the provincial NDP.

Senior New Democrats at Queen's Park have confided that Nash's entry into the race to replace Howard Hampton would energize an otherwise lacklustre campaign.

"She would be a terrific candidate," said a high-ranking party official, who has been part of an effort to encourage Nash to run. "Peggy could bring some excitement to our leadership race. Let's face it, leadership contests are supposed to generate excitement, not put people to sleep, and ours is putting people to sleep," said the insider.

Nash declined requests from the Star for an interview. Her friend and colleague, MPP Cheri DiNovo, said Nash told her Thursday she is absolutely not interested in pursuing leadership of the provincial NDP, a point she has made before.

"First and foremost, she was interested in federal politics, it was her gift and her joy. The other thing, of course, is she doesn't have a seat provincially and we've all seen how difficult it is to be a leader without a seat," said DiNovo, referring to provincial Progressive Conservative Leader John Tory and Green Leader Elizabeth May.

So far MPPs Gilles Bisson (Timmins-James Bay), Michael Prue (Beaches-East York), and Peter Tabuns (Toronto-Danforth) have registered as leadership candidates. MPP Andrea Horwath (Hamilton Centre) is expected to announce her candidacy soon. Hampton's successor will be chosen in March.

Nash, widely regarded as an excellent MP, lost to Kennedy by 2,301 votes. Kennedy, a former Ontario cabinet minister, previously represented the riding provincially.

Defeated candidates are seldom so quickly courted for other elected posts, but NDP sources say Nash is too good a talent to lose. They believe Kennedy's personal popularity – not Nash's performance as an MP – cost her the election.

"Peggy Nash is a major talent in our party," said the senior New Democrat. "We could use someone like her at (Queen's) Park."

DiNovo says Nash, who speaks French and Spanish, is "fascinated with all things international."

Although her long experience with the Canadian Auto Workers led to her appointment as NDP industry critic after her election in 2006, Nash had previously travelled to South Africa and Ukraine as a Canadian election monitor. She went to Lebanon in 2006 on a parliamentary fact-finding mission and to Israel and the West Bank as a member of a parliamentary delegation earlier this year.

Former union leader Buzz Hargrove, who worked with Nash for 20 years at the CAW, where she headed collective bargaining, said she would be an excellent leader. "I think she left only because – and I say this with a little trepidation – she didn't see an opportunity for a woman to be able to lead the union," said Hargrove.

 

Ford to sell Mazda shares to insurers, others - media


TOKYO, Oct 17 (Reuters) - Ford Motor Co is finalising plans to sell shares in Mazda Motor Co to about 20 Japanese firms, including insurers, and will likely outline the deal by next month, local media reported on Friday.
Ford is considering selling some of its 33.4 percent stake in Mazda as it struggles with weakening sales and the global credit crunch, according to a person familiar with the matter.

Media have said that Ford is looking to sell 20 percent and that Mazda will also buy back some of the shares.

Ford has approached five nonlife insurers: Tokio Marine Holdings , Mitsui Sumitomo Insurance Group Holdings , Sompo Japan Insurance , Nipponkoa Insurance , Aioi Insurance, the Nikkei business daily said.

Besides the insurers, companies including trading houses Sumitomo Corp and Itochu Corp , parts maker Denso Corp , and steel makers are likely buyers of Mazda shares, the Mainichi daily reported.

Each company is to buy about 1 percent in Mazda, the equivalent of about $40 million based on Mazda's market value on Thursday, and Ford is expected to raise some 100 billion yen ($1 billion), media said.

Ford does not want to sell Mazda shares to rival automakers because the two companies intend to continue their business partnership that include operations of jointly owned factories in Thailand, China, and the United States, the Mainichi said.

Both Ford and Mazda have declined to comment on reports.
Mazda shares were up 6.5 percent at 297 yen as of 0021 GMT. The Nikkei average was up 3.2 percent.

 

 

Risk seen in GM-Chrysler talk

Massive consolidation and massive job losses' feared, CAW chief says

Oct 15, 2008 04:30 AM
Kevin Krolicki
Reuters News Agency

DETROIT–The Canadian Auto Workers union has asked General Motors Corp. and Chrysler LLC to clarify whether they were considering a merger, since any such transaction would risk "massive consolidation and massive job losses," union president Ken Lewenza said yesterday.

"We have already tried to contact the companies. We're waiting for calls back," Lewenza said from Toronto. "The workers are going into the plant today with the same unease based on all of the speculation and weekend news reports."

Lewenza said the reported merger talks, which came just five months after the conclusion of a bargaining round with the automakers, reinforced the union's long-held position that concessions on wages and benefits cannot bring job security for auto workers.

"Even with the incredible compromises of UAW and CAW workers, that hasn't secured one single job on either side of the border."

Lewenza said Chrysler's owner, Cerberus Capital Management, had told the union that it has enough cash to ride out the downturn in auto sales, although the union was not privy to the private company's financial information.

"In our latest meeting, they said they had enough cash flow to get them through this troubled period. But you don't have to be a rocket scientist and you don't have to be loaded up with data to see that the market loss of Chrysler is significant," he said.

Lewenza said the CAW supported the quick implementation of a $25 billion (U.S.) loan program approved last month for the auto industry by the U.S. government, provided that funding was tied directly to preserving hourly production jobs.

Without government aid, one or more of the U.S. automakers was in danger of failing, he added.

"Now I never like to be that negative. I never like to be that direct. But when one takes a look at the market share decline, takes a look at this perfect economic storm, you've got to ask yourself how these companies that were already in trouble are going to be able to pull it off."

People familiar with the talks said over the weekend that Cerberus had approached GM about a merger with Chrysler. Cerberus has also shopped Chrysler around to other potential bidders without immediate success, sources have said.

Chrysler chief executive Bob Nardelli said Monday the company was talking to a number of parties about business tie-ups, but declined to comment directly on the reports of the GM talks.

GM, Ford Motor Co. and Chrysler have all said their focus is on restructuring to get back to profitability and have ruled out bankruptcy.

U.S. auto sales have hit 15-year lows and could dip further in 2009. Markets in Asia and Europe have also begun to slow because of the turmoil in global financial markets, analysts say.

 

Ford plans to sell most of stake in Mazda

TOKYO, Oct (Reuters) - Ford Motor Co plans to sell most of its stake in Japan's Mazda Motor Co, Japanese public broadcaster NHK said on Saturday.

The U.S. automaker, which has 33.4 percent of Mazda, plans to sell about 20 percent and has already approached Japanese companies on the sale, NHK said

 

Ford not interested in GM tie-up

Bryce G. Hoffman / The Detroit News

General Motors Corp. approached Ford Motor Co. about a possible merger prior to contacting Chrysler LLC, according people close to the situation.
Though there were direct communications between GM CEO Rick Wagoner and Ford CEO Alan Mulally, those talks never evolved into actual negotiations.

"There were never in-depth, substantive discussions that went on," said one of those sources, who spoke to The Detroit News on the condition of anonymity. " "It was more an expression of interest, as in, 'Do you want to talk?'

Ford said no.

The Dearborn automaker would not officially comment on the reports, but sources familiar with Mulally's thinking on the topic told The News that such a tie-up would be contrary to his plan for saving Ford.

Mulally wants to simplify Ford's own operations and better integrate them on global scale. He wants fewer brands and fewer dealers. And he is jealously guarding Ford's cash reserves, which have so far insulated the Dearborn automaker from the bankruptcy speculation swirling around GM.
Adding more brands, more factories and more dealers just does not make sense in this environment, those sources said.

Mulally has repeatedly pointed to rival Toyota Motor Corp. as his model for success, noting that Japan's largest automaker competes successfully around the world with just one major brand and closely integrated global operations.

Reports that GM had contacted Ford first surfaced in the New York Times earlier today.

Ford contacted GM two years ago to discuss the idea of merging some elements of their operations, such as purchasing and information technology, but those talks never panned out.

As The News first reported in August, GM contacted Ford this summer to discuss possible collaborations on powertrains, vehicle architectures and other areas. The two companies have had several meetings to discuss the joint development of engine technologies, but have so far nor reached any concrete agreement.

 

Fly solo, crash together - Big 3

BY ROB COX AND ANTONY CURRIE

Detroit on the brink: In the airline industry, bankruptcies follow like dominoes ­ one after the other. The reason is pretty straightforward. In a highly competitive industry, a Chapter 11 filing gives the guy under protection from creditors a leg up on his rivals. The car industry is different from airlines in many respects, but could easily fall prey to the same dynamic. That's just one reason investors, politicians and consumers should brace for a three-car crash from Detroit.

General Motors, Ford Motor and Chrysler insist they aren't considering pressing the reboot button by filing for bankruptcy. That looks like wishful thinking, especially for GM, which seems to have run out of options to finance its business. The ones it put on the table a few months ago, ranging from secured loans to raising equity, look unachievable given the extraordinary shift in debt and stock markets.

With GM incinerating something like $1bn in cash a month, the steward of Chevy, Pontiac, GMC, Buick, Saab, Hummer and other brands would not see the end of 2009 as a solvent corporation. Actually, given the recent acceleration of car sales declines in the US, it's hard to see how GM would make it to next summer in solvent condition.

Ford should have more leeway. It has a bigger pile of cash, smaller operations and could hold a firesale of its Volvo division. Chrysler's backers at private equity firm Cerberus could always dig into their pockets. But the possibility of a GM bankruptcy might be enough to dissuade either from pulling the trigger on these potentially last-ditch options.

Under the protection of Chapter 11, GM could do what the airlines have done again and again: rescind promises to workers and retirees, even jettison some of these liabilities to the government through the Pension Benefit Guarantee Corp. GM could also slash ties to its 7,000-strong army of
dealerships: a bankruptcy court would be less likely to offer compensation, especially to aggrieved dealers of brands like Pontiac and Buick, which must be euthanized.

By focusing on fewer, stronger brands, GM would save significant production and marketing costs, which could be deployed against rivals Chrysler and Ford. That's how it has worked in the skies. Historically, when one carrier filed for bankruptcy, and thus slashed staff and other costs, it undercut pricing on competitive routes, sending rivals scrambling for their own restart buttons.

Costs aren't the only finger pushing the domino over, though. A chapter 11 filing by any of the Big Three would put the squeeze on car parts suppliers they all rely on. The bankrupt car maker would try to slash the prices it pays for parts, while suppliers may have to take their place in line for payment of any unpaid debts with other unsecured creditors. In fact, the fallout on suppliers could even infect healthier carmakers in the US like Toyota.

Sure, the guys still standing could use a rival's financial woes and filing as a marketing tool. If GM sought protection, Ford could try to drum up fears that GM wouldn't honour warranties or skimp on quality. But if that didn't work in the airline business ­ where one would think safety issues are paramount ­ it's hard to see how that would work on the roads.

rob.cox@breakingviews.com ,antony.currie@breakingviews.com

 

Risk of bankruptcies
at automakers: S&P
Listen

Warning comes amid reports GM set to slash output, idle more plants

Oct 11, 2008 04:30 AM

From the Star's wire services

General Motors Corp., Ford Motor Co. and Chrysler LLC may be forced into bankruptcy by slowing economies and dwindling U.S. auto sales, Standard & Poor's analyst Robert Schulz said yesterday.

The companies said they have no plans to seek bankruptcy protection.

But the assessment underscored the pressure on the industry as the worsening credit crisis makes it harder for buyers to get loans and dealers to finance their operations. U.S. industry-wide sales tumbled 27 per cent in September, the most in 17 years.

S&P said yesterday that it may further trim credit ratings for GM and Ford on forecasts for 2009 auto demand to fall to its lowest level since 1992.

"Macro factors could overwhelm them at some point" even with the three biggest U.S. automakers committed to turnarounds, said Schulz, S&P's lead automotive credit analyst.

GM, which has said it will idle assembly factories in Oshawa, Janesville, Wis., and Toluca, Mexico, by 2010, is likely to announce further production cuts and possible plant closures as early as next week as it deals with the sales slump and a collapse in its stock price, sources told Associated Press.

A source said the cuts likely will hit engine, transmission and stamping operations.

With all three companies working to boost cash, any bankruptcy filing would be a last resort, not a "strategic" decision, said Schulz.

He said the "trigger" for a forced restructuring under bankruptcy protection would be based on the automakers' ability to preserve liquidity as sales decline.

GM shares will fall further, Barclays Capital analyst Brian Johnson said in a report yesterday, reducing his stock price for the Detroit-based automaker to $4 (U.S.)

"With auto sales stalled in the U.S. and beginning to contract in the rest of the world, we believe GM's cash needs are increasing," wrote Johnson.

GM and Dearborn, Mich.-based Ford lost a combined $24.1 billion last quarter. GM last posted an annual profit in 2004, while Ford hasn't had a full-year profit since 2005.

 

General Motors and Chrysler have held merger talks, reports say

 

General Motors Corp. and Chrysler LLC have held preliminary talks about a merger or an acquisition of Chrysler by GM, according to published reports Saturday.

The Wall Street Journal, citing people it described as familiar with the discussions, said Cerberus Capital Management, the private equity firm that owns 80.1 per cent of Chrysler and 51 per cent of GMAC Financial Services, proposed trading Chrysler's automotive operations to GM.

The Journal said Cerberus would receive GM's remaining 49 per cent stake in GMAC.

The New York Times, also citing people familiar with the talks, said the automakers were discussing a merger. The Times did not mention GMAC, a traditional auto lender hit hard by the housing market downturn.

The talks have stalled because of the recent turmoil in the financial markets, according to the Journal. Its sources said negotiations could resume if markets stabilize because both GM and Cerberus want to quickly divest the assets under discussion.

The negotiations between 100-year-old GM and 83-year-old Chrysler began more than a month ago, according to the Times. Its sources said the chances of a merger were "50-50" as of Friday and likely would take weeks to complete.

Both newspapers posted their stories on their websites late Friday.

"Without referencing this specific rumor, as we've often said, GM officials routinely discuss issues of mutual interest with other automakers," GM spokesman Tony Cervone said.

"The company is looking at a number of potential global partnerships as it explores growth opportunities around the world," Chrysler spokeswoman Lori McTavish said.

"Beyond those partnerships already announced however, Chrysler has not formed any new agreements and has no further announcements to make at this time."

 

 

CAW puts the boots to Flaherty
Hundreds of Canadian Auto Worker Union members gathered to present Finance Minister Jim Flaherty with thousands of old work boots collected from laid off workers from across Ontario. The CAW left the boots at Flaherty's Whitby-Oshawa riding office Oct. 6.

Oct 7, 2008

Tamara King

THE CANADIAN PRESS

WHITBY – Hundreds of angry autoworkers descended on Finance Minister Jim Flaherty's campaign office Monday to unload a mound of used workboots in a call for the minister's removal, but the sharpest rebukes were saved for Prime Minister Stephen Harper.

A heap of discarded footwear more than a metre high was dumped in front of Flaherty's office door for the political stunt dubbed "Give Flaherty the Boot," organized by the Canadian Auto Workers.

The manufacturing sector in Ontario has been hammered by an economic downturn, and the union had called on workers in several cities to donate their footwear.

The event attracted hundreds of people – many carrying signs and waving union flags – to Flaherty's headquarters in Whitby.

In addition to piling the boots in front of the office, laid-off autoworkers shared their stories about how their families have been affected by cutbacks in the industry.

For Heather Hall, 47, who used to work at the Ford plant in Windsor, Ont., the job losses have hit her family hard. She's out of work and trying to support two children on her own, and said she can't find a decent-paying job.

"I don't think I'm entitled to a $30-an-hour job," Hall told the crowd. "I can work for less money."

She's considered going back to school, but feels she's at a disadvantage because of her age.

"I'll be competing with (people) my son's age for a job," she said, as some in the crowd yelled "shame."

The union said it targeted Flaherty because he holds the purse strings of government, but it was his boss's name that was continually raised among the speakers.

Mary Beth Boeyen, 51, a laid-off auto worker, said she will never collect a pension. Although she's been in the auto industry for 30 years, Boeyen said she has been forced to find a new job every few years.

"(Prime Minister Stephen) Harper says, 'We're creating jobs.' Yeah, they're minimum wage. I think Mr. Harper's wage should be minimum wage – see if he likes that," Boeyen said, her voice shaking with emotion.

Like Boeyen, others at the rally took aim squarely at the prime minister.

"Since his government took over two-and-a-half years ago, 200,000 jobs lost," said CAW president Ken Lewenza.

Lewenza went to lengths to attack Harper's political beliefs as ``anti-labour, anti-union, anti-collective bargaining rights, anti-human rights, anti-working class."

"This is the Preston Manning Reform Party, the Stockwell Day Alliance Party," Lewenza said.

Flaherty did not make an appearance at the rally. His spokesperson Dan Miles said Flaherty was campaigning with other Conservative candidates in southwestern Ontario.

Miles said the footwear will be donated to the Salvation Army.

 

Canada braces as auto sales crash
The Canadian auto industry continues to slump.

Industry facing `substantial layoffs' as crucial U.S. market for vehicles and parts skids out of control

Oct 02, 2008 04:30 AM
Tony Van Alphen
Business Reporter

Canada's sputtering auto industry faces more serious trouble as sales in its key U.S. market continue plunging.

"If conditions don't change, there will be a lot of blood on the floor here very soon," Gerald Fedchun, president of the Automotive Parts Manufacturers' Association, warned last night after seeing the latest gloomy U.S. sales numbers.

Canada exports more than 80 per cent of its vehicle production and 60 per cent of parts output to the United States, where sales declines are worsening each month.

In September, U.S. auto sales crashed 27 per cent, or more than 350,000 vehicles, to 965,160 from the same month last year.

Sales south of the border are down almost 13 per cent in the first three quarters of the year.

The steep declines overshadowed an improvement in the Canadian market, where sales climbed 1.7 per cent, or about 2,300, to 134,131 vehicles last month.

Toyota led the gainers with record sales for September while General Motors and Ford posted declines.

But in the U.S., their losses were far worse.

Ford's sales tumbled 34 per cent last month; Chrysler's volumes fell 33 per cent; Toyota's deliveries slid 32.3 per cent; Honda's business dropped 24 per cent and GM's sales were down 15.6 per cent. All five automakers operate major assembly plants in Canada.

"When there are no customers and no production, substantial layoffs have to come," said Fedchun.

Ken Lewenza, president of the Canadian Auto Workers union, agreed the drop in U.S. sales will undoubtedly trigger more layoffs here.

"You can't have this much of a decline in sales without more down time coming and increased insecurity for everyone in the long term," said Lewenza.

Scores of parts-makers in southern Ontario have already closed plants and eliminated thousands of manufacturing jobs in the past year because of a high Canadian dollar, increasing energy and commodity costs, stiff offshore competition and lower auto demand, particularly south of the border.

GM and Chrysler plan thousands of job cuts in Canada over the next two years at assembly and parts operations.

That will mean less business for other suppliers and service providers, and more job losses.

Tighter credit terms tied to the U.S. subprime loan crisis are making borrowing even more difficult for many auto companies operating on the edge.

Credit restrictions have turned into a bigger obstacle for consumers buying vehicles than the impact of soaring gasoline prices, noted industry analyst Carlos Gomes.

The persistent sales decline in the U.S., and an abrupt shift in the market to smaller fuel-efficient vehicles has prompted Toyota and Ford to cancel plans for new shifts and output at assembly plants in Woodstock and Oakville, respectively, during the past few months.

In Canada, auto production has fallen about 20 per cent in the first eight months of the year and analysts don't see a recovery soon.

Gomes, an economist at Scotiabank who specializes in the auto industry, said deteriorating conditions have caused his firm to lower its U.S. sales forecast to 13.7 million autos this year and 13.5 million for 2009.

That's a steep decline from U.S. sales of 16.1 million in 2007.

Some industry watchers are forecasting overall production will remain flat in Canada, despite additional output at Toyota's new plant in Woodstock and GM's car complex in Oshawa.

"It certainly suggests declining production elsewhere in Canada and job cuts will have to come at other plants here," Gomes said.

Industry officials say Chrysler's minivan operations in Windsor could be vulnerable to losing one of three shifts because of continuing lower demand in that segment of the market.

"It's a three-shift operation so there is a concern," acknowledged Lewenza.

"First, they (the company) cuts overtime. Then they go to more downtime, and then they decide if the direction of sales is permanent and take a shift out.

"We've already got some time scheduled there in January."

Meanwhile, Grant Thornton LLP, a major consulting firm, said in a forecast that the sharp decline in U.S. sales could cause the closing by next year of up to 3,800 dealerships, or 18 per cent of the auto retailers south of the border, because of higher costs and the credit crunch.

Bill Heard Enterprises Inc., the largest chain of Chevrolet dealerships in the U.S., this week filed for bankruptcy protection against a "perfect storm" of woes including soaring gasoline prices, declining demand for big vehicles and the nationwide credit crunch.

CarMax, America's biggest used-auto retailer, also revealed yesterday that it is laying off 600 service employees because of the industry turmoil.

 

Bush approves $25 bln
loan package for auto makers

Tue Sep 30, 2008 8:59pm EDT

WASHINGTON, Sept 30 (Reuters) - President George W. Bush on Tuesday signed into law a mammoth spending bill to keep the government running until early March 2009 that includes a $25 billion loan package for troubled automakers.

The action came after the Senate over the weekend gave final congressional approval to the more than $630 billion spending bill that was was needed to finance defence, education, farm, health, foreign aid and other government programs after the current fiscal year expired on Sept. 30.

The spending legislation allows a ban on offshore drilling to expire on Sept. 30. Democrats had hoped to extend the ban, but did not have the votes to overcome strong opposition from Republicans.

Bush, in a statement announcing that he had signed the legislation, said the measures to lift the ban on offshore drilling "will allow us to reduce our dependence on foreign oil."

The bill sets aside $7.5 billion in taxpayer funds needed to guarantee $25 billion in low-interest loans to help General Motors Corp, Ford Motor Co and Chrysler LLC produce more fuel-efficient cars and trucks.
U.S. automakers have said the taxpayer-backed loan package would give them access to capital at a time when credit markets are shut and they are being driven to invest in new technologies to meet tough new federal fuel economy standards.

The $25 billion loan package, the biggest federal subsidy for the auto industry since the 1980 bailout of Chrysler, cleared Congress last weekend when the focus was on the debate over the $700 billion financial rescue package.

GM, Ford and Chrysler had said they could manage without the federal loans but also suggested that without the federal subsidy thousands more industry jobs could be at risk.

Both presidential candidates, Democrat Barack Obama and Republican John McCain, backed the auto loan package, which had strong support in battleground election states like Michigan and Ohio.

U.S. auto sales have been slumping for three consecutive years, forcing Detroit automakers to slash jobs and cap new investment. Through August, U.S. sales were down 11 percent and on track to hit the lowest level in 15 years.

The loan package was authorized -- but not funded -- in a 2007 energy law that requires automakers to improve the fuel efficiency of their vehicles by 40 percent by 2020.

Major automakers have said that will require up to $100 billion in combined new investment to retool factories and invest in new technology, including next-generation battery-packs for electric vehicles.

Industry executives, including GM Chief Executive Rick Wagoner and Chrysler Chief Executive Bob Nardelli, said they would press for liberal federal guidelines once the law was sent to regulators in order to use the funds to offset the cost of a wide range of investment.

Japanese automakers Toyota Motor Corp and Honda Motor Co could be eligible for the low-cost federal funding but have said they have no intention of applying for the loans.

Congress passed the massive spending bill before the new fiscal year began Oct. 1 because lawmakers failed to approve any of the 12 spending bills needed every year to fund government operations.

 

CAW head urges members
to vote against Tories

Sep 30, 2008 08:37 PM

THE CANADIAN PRESS

WINDSOR, Ont.–The new national president of the Canadian Auto Workers is calling on members to vote strategically, but makes it clear his union's support doesn't belong to one party.

Ken Lewenza is asking members nationwide to vote for the candidate most likely to beat the Conservative candidate in their riding.

Lewenza told CAW members in Windsor, Ont., on Tuesday if they normally vote Liberal, to hold their nose and vote NDP if that candidate stands a better chance at beating the Tory in the riding.

Lewenza says this election is about a choice between ideology – individualism versus collectivism.

He quoted former prime minister Brian Mulroney by saying "you won't recognize this country" if the Harper government gets a majority.

 

 

 

This financial hurricane will hit Canadian shores
JIM STANFORD

September 28, 2008

In two incredible weeks, the United States has been turned upside-down, both economically and politically. Washington is suddenly nationalizing big swaths of the financial industry, at massive cost to taxpayers. Regulations are being rewritten so quickly that the financial rulebook now resembles a gigantic dry-erase board. From one trading day to the next, the markets alternate between partying and panicking. And in the political realm, John McCain is “wearing” the mess (quite rightly, given his personal role in deregulating the financial system) while Barack Obama has surged ahead in the polls.

From our perch not so far away, we Canadians watch this stunning drama with growing unease. How is it all going to affect us? Here, too, that question has both economic and political dimensions.

Economists have been wondering for months if we can avoid following the U.S. economy into recession. But it turns out that we had the question backward: In fact, we may be leading the United States into recession, not the other way around. Despite the more dire financial news south of the border, the U.S. economy still managed to grow (at a 2 per cent annual rate) in the first half of this year - while Canada 's GDP shrank. Our national productivity (output per hour of work) has declined dismally, and is now lower than at the beginning of 2006. Fewer Canadians were working in August than six months earlier. Among the G7 industrial economies, only Italy is forecast to grow more slowly than Canada this year.

Shrugging off the negative indicators, Prime Minister Stephen Harper and Finance Minister Jim Flaherty insist we're safe in their hands. Mr. Flaherty keeps reaffirming his faith in Canada 's economic fundamentals: “as solid as the Rock of Gibraltar,” he once put it.

Well, the Rock of Gibraltar doesn't need emergency injections of liquidity to stay above the waves, but our banking system apparently does. Since Sept. 18, the Bank of Canada has announced $12-billion in new low-interest loans to Canadian banks and other financial institutions. It has arranged for $10-billion worth of U.S.-dollar reserves to be thrown into the brew as well, if necessary. And it has even started accepting asset-backed commercial paper (ABCP) from financiers as collateral for these loans. (Too bad mom-and-pop investors can't convert their frozen ABCP assets into cash so easily.)

True, most Canadian financial institutions didn't jump into subprime lending and other dangerous waters nearly as deeply as their U.S. counterparts. That was thanks more to their inherent conservatism, rather than stronger regulations or clearer foresight. Nevertheless, there is growing evidence of financial vulnerability in Canada .

As of the end of June, the debt of Canadian households equalled 107 per cent of their income - an 11-point increase from the beginning of 2006. Canadian house prices are heading firmly south: down 5 per cent in the past year, with the decline accelerating. Americans have already learned the hard way that falling house prices can unleash an unpredictable collapse in the debt chain, as assets that were borrowed against suddenly lose much of their value. Merrill Lynch Canada reported last week that Canadian debt levels were reaching a “tipping point,” and expressed concern over the potential for financial chaos on this side of the border.

This inconvenient warning elicited a very defensive reaction from the campaigning Prime Minister. After all, the Conservative campaign has worked hard to ensure that nothing untoward intrudes on their ruthlessly disciplined drive for a majority.

It's certain that at least some of the waves battering the U.S. financial system are now hitting Canadian shores. What's unknown is whether their arrival will have the same political impact on our incumbent Conservatives, as they're having on the incumbent Republicans.

Mr. Harper's claim that we're fundamentally stronger than the Americans is iffy at best. And lots of Canadians realize that, at a gut level. Many have lost their jobs; many more fear for them. Many lost money on ABCP. And many are now watching the wealth in their homes evaporate, too.

There are two weeks left in this campaign. I predict that concerns over the economy, and the success or failure of the opposition's efforts to pin those concerns on the Conservatives, will determine whether Mr. Harper gets his longed-for majority.

Jim Stanford is an economist with the Canadian Auto Workers union and the author of Economics for Everyone.

 

Hargrove to help coach NHL union
Buzz Hargrove at the Reuters Autos Summit in Detroit, Michigan, Sept. 17, 2008

Never played organized hockey, but retired CAW leader prized as adviser


Sep 23, 2008 04:30 AM
Tony Van Alphen
Business Reporter

Former union leader Buzz Hargrove is moving behind the bench to help the National Hockey League Players' Association.

Hargrove, who retired as president of the Canadian Auto Workers union earlier this month, confirmed yesterday he has agreed to join a special group of the NHLPA that would advise the association on key issues.

"The association wanted to set up an advisory group some time ago to offer assistance on various issues that affect them," Hargrove said in an interview.

"It's a non-paying position. We would meet a few times a year or more, depending on the situation. I won't be doing any collective bargaining."

The group's formation comes after the most tumultuous period in the union's history.

It included the dismissal of executive director Ted Saskin for allegedly hacking into player email accounts last year and the contract dispute and lockout that wiped out the 2004-05 season.

An NHLPA spokesperson would not disclose any details of the advisory group or provide the telephone numbers of executive director Paul Kelly and general counsel Ian Penny.

"We'll be putting out a news release on the group," said Jonathan Weatherdon, the association's director of communications.

But sources say the union has appointed at least two retired players to the eight-member group and one of them is Steve Larmer.

Larmer, a former star with the Chicago Blackhawks and the New York Rangers, abruptly quit as association head of player relations in 2005, primarily because of Saskin's hiring.

The sources added that veteran labour lawyer Ron Pink, of Halifax, will chair the advisory group.

Pink, who has practised labour, employee benefits, employment and pension law for more than three decades, received the Queen's Golden Jubilee Medal for community service in 2002.

Daniel O'Neill, former chief executive of Molson Inc., which at one time owned the Montreal Canadiens hockey club, will be a member of the advisory group, according to sources.

Hargrove, who never played organized hockey, said the NHLPA approached him a few months ago. Penny and Glenn Healy, association director of player affairs, interviewed him before confirming Hargrove's appointment to him about two weeks ago.

Hargrove led the CAW for 16 years, as a skilled contract negotiator, strategist and communicator.

Despite some public perceptions that Hargrove was a strike-happy militant union leader, he encountered only one major walkout at the Big Three domestic automakers. when General Motors refused to match a pattern contract in major bargaining in 1996.

At the start of the NHL lockout in the summer of 2004, Hargrove spoke out publicly in support of a mediator to resolve the dispute because the sides were so entrenched in their bargaining positions. The players' association can opt out of its league contract next summer, two years before its expiry date.

 

Key union strategist
Hemi Mitic quits CAW

'We had a disagreement on succession planning,' said long-time assistant to Buzz Hargrove

Sep 22, 2008 04:30 AM
Tony Van Alphen
Business Reporter

A top official of the Canadian Auto Workers, who was a contender to replace Buzz Hargrove as president this summer, is leaving the union.

Hemi Mitic, a long-time assistant to Hargrove, confirmed yesterday he will depart early next year to pursue labour consulting opportunities.

The 57-year-old Mitic, one of the CAW's most experienced negotiators, organizers and strategists, could have remained with the union until he was 65. But he said the union's selection process and the election of Local 444 president Ken Lewenza to replace Hargrove prompted him to exit earlier.

"There was only one spot for me to go and that didn't work out," Mitic said in an interview. "I have absolutely no regrets. I love the union."

Mitic and Hargrove worked closely for more than two decades but they grew apart about two years ago over the issue of who would be the next leaders of the CAW, one of the country's biggest unions with more than 250,000 members.

"We had a disagreement on succession planning," Mitic said. "I told him things he didn't want to hear."

Hargrove, who led the CAW for 16 years, left earlier this month, about half a year before the union's mandatory retirement age of 65.

He had wanted to remain until next year but said Mitic suggested that other leaders and members thought an earlier departure would be better for the union.

In revealing his plan to leave early, Hargrove told the union's national executive board that no one "had a knife put in me deeper than that" after Mitic made the claim.

Despite their split, Hargrove praised Mitic for his abilities and hard work. "He's as good a firefighter as I've ever seen in going into any tough situation and finding solutions," Hargrove said.

Mitic, a high-school dropout, started as a welder at a Lear Corp. auto parts plant in Kitchener, Ont., in 1967. He became president of Local 1524 and eventually led the region's labour council before joining the national union's staff in 1981.

The union appointed Mitic as national director of organizing in 1986 and Hargrove selected him as an assistant in 1992.

Mitic ran unsuccessfully for the NDP in the 1981 Ontario election and served on the party's federal council. "I have not ruled out politics," he noted.

Mitic, married with three grown children, is a member of the executive committee of the Canadian Governor General Leadership Conferences where labour, business, government and academic leaders meet every four years.

Earlier this year, the Queen made Mitic a member of the Royal Victorian Order in recognition of his public service.

 

Friday, September 19, 2008

Key Ford exec quits company

Bryce G. Hoffman / The Detroit News

One of the key executives responsible for overseeing Ford Motor Co.'s global cost-cutting efforts has quit to become chief financial officer of an Ohio paper company.

David Prystash, a 24-year Ford veteran, submitted his resignation last week. He was the controller of Ford's global product development operations.
Prystash will be taking a job as CFO and senior vice president of NewPage Corp. of Miamisburg.

"He had an opportunity outside the company," said Ford spokeswoman Marcey Evans. "He's elected to leave the company."
His last day at Ford will be today, the company said.

Ford has been struggling to rein in costs as part of a massive restructuring effort aimed at returning the Dearborn automaker to profitability.

*******************

500 jobs to be cut at
Ford in Oakville

Lucrative incentives for early retirement may remove need for layoffs

Sep 11, 2008 04:30 AM
Tony Van Alphen
Business Reporter

Ford is cutting another 500 jobs at its Oakville assembly plant but wants to avoid layoffs by offering lucrative early retirement packages to employees.

The struggling automaker confirmed yesterday it would eliminate the jobs in the plant's paint and body shops, which were part of a proposed third shift that has fizzled because of a continuing decline in the key U.S. market.

Ford had planned a third shift earlier this year, delayed it in July and cancelled the idea last month.

As a result, the Canadian Auto Workers union has negotiated a deal with the company that will offer up to $90,000 to eligible senior employees, plus a $35,000 voucher for a new Ford model, to encourage them to retire.

If the retirement incentive does not attract enough interest to prevent layoffs, Ford will offer a special buyout of up to $100,000 for other workers, CAW officials said.

Ford stopped orientation for about 350 new workers in the final-assembly section of the plant in July. They lost their jobs, but the company kept 190 other new workers who had just transferred from Ford's engine operations in Windsor. Their jobs are now in jeopardy if not enough workers accept the incentives.

"This has been absolutely devastating for those people who sold their houses in Windsor and then bought or leased homes here," said Gary Beck, president of CAW Local 707. "Other workers here have made changes in their lives to work overnight on a third shift. Now they'll have to change again.

"This has been a public-relations nightmare for the company."

Production of crossover utility vehicles at the Oakville plant has slid because of falling U.S. consumer confidence as credit tightens, the housing market worsens and fuel prices soar.

Statistics from industry journal Ward's Automotive Reports reveal that output of the Ford Edge model at the Oakville plant has fallen almost 20 per cent to 95,821 in the first eight months of this year from the same 2007 period

But in the latest three months, from June to August, Edge production plunged more than 50 per cent to less than 20,000 vehicles. The plant is the sole source for the Edge, Ford Flex and Lincoln MKX crossover utility vehicles in the world.

Analysts say the Edge, which experienced a strong launch, should be in the prime period of its production cycle.

"If I were Ford, I would be disappointed with those numbers," added Richard Cooper, vice-president of J.D. Power and Associates in Canada, a leading consumer research firm. Output of the luxury MKX model has fallen 25 per cent to 25,313 in the first eight months of the year but almost 50 per cent in the June-August period. The Flex started production in the second quarter and it is unclear yet if it will generate a lot of sales.

Cooper noted the downturn in the U.S. market has hurt a lot other automakers.

Forecasters are predicting the North American market will plunge from about 16 million vehicles to 14.5 million or as low as 14 million this year.

"No one would have predicted that the market would be down so much," said Cooper.

Under the Ford offer, some 650 employees would be eligible for the early retirement plan. Production workers with 30 years' service, for example, would receive $75,000 and tradespeople $90,000 plus the vehicle vouchers. Employees who are 55 or older with 10 years would receive the same offer.

If the company implemented the buyout program, workers with five to eight years' service would receive $75,000, while employees with more seniority could get $100,000.

******************

CAW Unanimous for Lewenza

TORONTO - Canada's largest private sector union celebrated the end of an era Sept. 6, 2008 as its members said goodbye to longstanding president Buzz Hargrove and unanimously elected Ken Lewenza as his successor.

Listen

Sep 07, 2008 04:30 AM

Tony Van Alphen

Ken Lewenza, a fiery local union leader from Windsor, became the new president of the Canadian Auto Workers yesterday and immediately roasted the federal Conservative government.

Lewenza, who was unanimously elected by about 500 CAW delegates at a special convention in Toronto, blasted Prime Minister Stephen Harper for the country's beleaguered manufacturing sector and thousands of laid-off workers ignored for three years until last week.

"We've got to stop him in his tracks," Lewenza told the crowd at the Metro Toronto Convention Centre, referring to the federal election expected to be called today. "We can't be fooled by his deceit. Does anyone believe the real face of Stephen Harper is the one we see governing with a minority? The real face of Stephen Harper is the one from the Reform Party, the one from the right-wing National Citizens Coalition and the one that will dismantle our country and make it unrecognizable to us today."

If Harper wins a majority, Lewenza said it would threaten everything Canadians hold dear including public health care, social programs, the environment and the rights of workers.

He said it was hypocritical for the Tories to repeatedly refuse financial aid to struggling companies, claiming it is not in the business of picking corporate winners and losers, but then give money to them just before an election.

Lewenza said the CAW, the country's biggest private sector union with more than 250,000 members, continues to advocate a system of strategic voting.

That means in some ridings the CAW will recommend members vote for Liberals to keep Tories out if the NDP, the union's traditional political arm, has little chance of winning.

Lewenza, who ran Local 444 in Windsor for 14 years, replaces Buzz Hargrove, who led the national union for 16 years and became the most prominent labour leader in the country.

"I'm humbled to be his successor," said Lewenza, 54.

His acclamation follows internal criticism in the CAW that its election process for top leaders is no longer fair and open.

But Lewenza said the process works and "we're the most democratic organization in the world."

Hargrove, 64, also urged workers to become active in the election.

"The incredible challenges working people face today will only intensify should Stephen Harper win a majority government. We all must work to ensure that doesn't happen."

 

BUZZ RETIRES
Buzz Hargrove strikes out on his own

Buzz Hargrove

Labour's most familiar face – and unofficial voice – takes his leave

Sep 06, 2008 04:30 AM
Tony Van Alphen
Business Reporter

He started his career as a hotshot shop steward who flexed union muscle by using hand signals to regularly tip workers and stop a Chrysler assembly line in Windsor.

It will end today, more than four decades later, with a simple wave goodbye as national president of the Canadian Auto Workers at a convention centre here.

Passion, pragmatism and controversy have followed Basil "Buzz" Hargrove along the way from those initial production-line war zones to rough-and-tumble union halls, steamy hotel bargaining rooms and corridors of corporate power.

Hargrove, 64, evokes sharp opinions from labour watchers, other union leaders, company executives and workers about his record and labour legacy.

He was a high school dropout from a poor New Brunswick family. After jumping from job to job in Western Canada for a few years, he landed in Windsor, a tough labour city. The self-described "rambunctious rooster" fought with Chrysler managers all day, played poker and chased women all night.

But over time as a steward, staff representative, assistant to the national president and then leader, he turned into a skillful public speaker, debater and negotiator.

Hargrove, who divorced and remarried last year, has bargained countless multimillion-dollar deals for thousands of workers across the country. Sometimes he bluffed. Sometimes, he blinked.

"I love the union and I love bargaining," he said in an interview this week, reminiscing about round-the-clock, pressure-cooker negotiations and regular 18-hour work days.

"I'll miss challenging myself and others around me every day."

He has never been afraid to take risks and use innovative techniques to craft contracts and resolve workplace problems.

Hargrove took a leading public role in representing the interests of workers, curbing poverty, respecting the rights of minorities, fighting against sexual harassment and ending violence against women.

After winning the CAW's presidency in 1992, Hargrove quickly became the unofficial voice of labour in Canada and its most recognizable name and face.

"I can't think of any labour leader who has fought for equality, fairness and human rights as much as Mr. Hargrove inside the union and outside," said veteran labour watcher Pradeep Kumar, professor emeritus at the Queen's University school of policy studies. "It's a legacy that he should be extremely proud of."

Hargrove has also changed the union from an Ontario manufacturing-based union into a national labour powerhouse representing workers in everything from railways to fisheries, mining and airlines. Membership has jumped more than 50 per cent to 255,000.

On the opposite side, Hargrove has left some friends and foes seething. He bent union principles on concessions at some struggling companies to maintain jobs. He gave up the right to strike at Magna International to make organizing easier there.

Hargrove publicly criticized one of his own big locals for going on strike in a successful personal effort to end a walkout and save the de Havilland aircraft plant here.

Hargrove battled two of his own staff unions in strikes at CAW headquarters. He got into bitter spats with other unions and the NDP, labour's traditional political arm. The party eventually expelled him.

Activists cringed when he put a CAW jacket on the back of Liberal prime minister Paul Martin on the stage at a union convention.

Even Hargrove's exit caused trouble because of charges within the CAW that he orchestrated the election of his successor.

Leo Gerard, who rose from a Sudbury miner to the international presidency of the United Steelworkers of America in the U.S., said Hargrove has accomplished a lot for auto workers and the industry in keeping jobs and investment in Canada.

But Gerard added that Hargrove has not helped the union movement by leaving labour federations and bickering with the NDP.

"I wouldn't be honest if I didn't say I'm disappointed," he said. "Buzz has done a disservice in pulling away and withdrawing from other labour groups and the NDP. It's more difficult to build unity, strength and make progress for working people that way."

Anil Verma, an industrial relations professor at the University of Toronto, said Hargrove has shown a penchant for fighting for what he believes is the best interests of workers, regardless of it offending other unions or political allies.

For example, he riled the Canadian Labour Congress and fellow affiliates by welcoming to the CAW workers who did not want to remain in their old union.

"His argument was if workers feel they are under-represented, it's not their fault and the CAW will be there," said Verma. "He lost a lot of friends in the labour movement. But that's Buzz. He will go against the grain."

Hargrove and the CAW also angered the NDP and other unions because he felt strongly that strategic voting served workers' interests better. The CAW advocated voting for Liberal candidates in some ridings where the NDP had little chance of winning, in efforts to keep out right-leaning Tories and an anti-labour agenda.

NDP supporters described it as wrong-headed and argued the strategy made it difficult to build a political party supporting workers. One union responded by issuing buttons with the message "Buzz off."

Hargrove showed his pragmatism in forging the "Framework of Fairness" deal with auto-parts giant Magna International, a company that historically discouraged union representation. The CAW, which had achieved little success at Magna, agreed to give up the right to strike in exchange for no management opposition in organizing plants.

"It's risky and the jury is still out on that one," said Verma. "But there is historical evidence that employee associations who don't strike have represented workers effectively. Just because you don't have the right to strike, doesn't mean you can't survive as a union."

Other unions derided the move, calling it a sell-out of workers. But Magna chair Frank Stronach said it showed Hargrove is open to change in the best interests of workers and their companies.

"I have great respect for him," said Stronach on learning of Hargrove's departure. "Buzz wants to make sure the working class has a fair share of the wealth. He tried to be reasonable in always pursuing constructive solutions rather than getting into clashes with management."

John Kervin, who also teaches industrial relations at U of T, said Hargrove showed a lot of pragmatism as a union leader, and that has caused tensions with idealists internally and elsewhere in the labour movement.

But Sam Gindin, a former CAW economist and current professor at York University, said Hargrove's pragmatism in recent years has led to contract concessions and the loss of its militant edge and ability to fight concessions.

The CAW's existing election process and Hargrove's efforts to assure victory for his favourite candidate have also reduced democracy and a chance for the union to renew itself, Gindin said.

Meanwhile, industry analyst Dennis DesRosiers said Hargrove has bargained well for his members in the auto industry but their wages and benefits are no longer competitive. Hargrove counters that huge concessions by the United Auto Workers in the U.S. have still led to thousands of job losses and haven't helped workers.

Hargrove's bargaining prowess and his ability to wiggle out of almost hopeless situations have become legendary.

For example, in major bargaining at the Big Three automakers in 2002, CAW locals promised strikes if Ford didn't keep its Oakville truck plant open or Chrysler did not replace a closed Windsor operation.

The union did not reach either goal, but Hargrove and other negotiators deftly bargained other provisions to mitigate the impact, save jobs and dodge strikes.

In early Big Three bargaining this year, Hargrove negotiated what he called "offsets" at General Motors to gain worker support.

But when GM breached the contract and abruptly closed its Oshawa truck plant a few weeks later, the union described those same offsets as $300 million in concessions. The CAW used it to galvanize membership anger, boost public support and leverage for a lucrative package to reduce the impact of the closure on workers.

Charlotte Yates, dean of social sciences at McMaster University, said Hargrove is a complex union leader.

"He's a street fighter, yet a sophisticated strategist," she said. "It is one reason that he has been able to move the union in some directions that members and other leaders might not normally have been comfortable with."

Yates noted Hargrove has positioned himself as a champion of workers but, at the same time, ended up working closely with corporate heavyweights such as Stronach and Gerry Schwartz, chief executive officer of Onex Corp.

Peter Warrian, a senior research fellow at U of T's Munk Centre for International Studies, said the CAW has accomplished a lot for workers in the past 15 years under Hargrove because of the auto industry's wealth and the now-defunct Auto Pact, which assured strong investment here.

But the auto sector is now restructuring, just as the U.S. steel industry had to over the past two decades. It means unions will need to co-operate more to ensure survival, according to Warrian.

Hargrove agrees the CAW, the country's biggest private sector union, faces difficult conditions because of the downturn in manufacturing and loss of thousands of jobs by members.

The union can't organize members fast enough to make up for the loss of dues revenue from manufacturing workers, he said.

It will mean the CAW will likely become smaller, reduce spending on campaigns for social causes and need to look to other sectors to make bargaining breakthroughs.

"I can't think of a more difficult and challenging time in the history of our union because of what is happening in the auto and manufacturing sector," he said.

"It will be tough."

CAREER HIGHLIGHTS

1964: Gets job as cleaner at Chrysler’s Windsor car plant.

1965: Becomes shop steward of United Auto Workers Local 444.

1975: Union appoints him as a staff representative.

1978: Bob White picks him as key UAW assistant.

1984: Leads historic split with U.S.-based UAW and helps form the Canadian Auto Workers.

1992: Succeeds White as CAW president.

1996: Leads strike at GM that lasts 17 days.

2008: Named an officer of Order of Canada. Retires as CAW president.

*******************************************

Hargrove Planned
a one-man Walkout

Without right choice as secretary-treasurer, he wasn't willing to stay if elected CAW leader

Sep 06, 2008 04:30 AM
Tony Van Alphen
Toronto Star

Buzz Hargrove almost never became president of the Canadian Auto Workers union.

Hargrove revealed in an interview this week that he planned on resigning in 1991 and not running to replace union president Bob White the following year.

He based his decision on who White and retiring CAW secretary-treasurer Bob Nickerson initially planned to endorse to replace Nickerson.

Hargrove, who had been White's assistant for 13 years, said he despised that particular candidate's use of power and union finances.

Hargrove told White and Nickerson that if they endorsed the candidate and he won the second most powerful position in the CAW, it would prompt Buzz's immediate departure.

"I made it clear to them, I would be leaving," he told the Star.

Fearing the loss of Hargrove, White phoned a few days later and suggested Jim O'Neil, a senior staff representative, as an alternative candidate.

Hargrove agreed with the choice, but White warned him that it probably meant he would not get the presidency the next year since he and O'Neil both came from the same Windsor local.

"I indicated I was okay with that," Hargrove said.

"As a result, I stayed and ran the next year anyway."

Hargrove succeeded White, who became president of the Canadian Labour Congress. O'Neil also won the secretary-treasurer's job. He plans to retire next year.

Ken Lewenza, Hargrove's likely successor today, is from the same Local 444 in Windsor.


 

Windsor bailout no pre-vote ploy, Harper says

Pledges $80 million to restart Ford Essex engine plant that closed

Sep 04, 2008 04:30 AM

bruce campion-smith
Ottawa bureau chief

WINDSOR–Stephen Harper says his $80 million rescue package to help reopen a closed auto plant isn't pre-election pork, but left little doubt a campaign is coming.

After meeting with the three opposition leaders in recent days – and hearing all declare there was no common political ground for a fall agenda – Harper said yesterday that his mind was made up on calling an election.

"I have to say I was a little bit surprised in the case of (Liberal Leader Stéphane Dion). He provided no assurance of any kind about this Parliament continuing very long," Harper said.

"I would say that after meeting those leaders I've made my decision and I'll let the country know that decision in the next few days."

That makes it almost a certainty that Harper will seek the Governor General's consent to dissolve Parliament.

With economic woes – and Ontario's ailing manufacturing sector – likely to be front and centre in the campaign, Harper made a quick visit to Windsor, hit hard by auto sector job losses, to unveil the investment and defend the Tories' economic record.

In an event that had all the trappings of a campaign stop, Harper pledged federal cash crucial to restarting the Ford Essex engine plant, shook hands with union workers and touted his record over the Liberals' "risky" economic plan.

He conceded that Canada's auto sector, hit by plant closings, is facing a "critical" crossroads but said the challenges are not "insurmountable."

And he said the Tory record of tax cuts, balanced budgets and targeted investments will ensure the Canadian economy is in "pretty good shape" when the American economy recovers.

"Our goal is to keep the Canadian economy growing at a time of considerable slowness in the world economy and particularly in the American economy," Harper said.

"I think it's a crazy time for the country to take risks," he said, as he criticized the Liberals' carbon tax.

"That would be a pretty risky way to proceed with the running of this economy in my judgment but we'll have more time to talk about that, I suspect, in the not-too-distant future," he said.

Liberal MP and finance critic John McCallum said Harper's auto aid was too little, too late.

He said the Conservative government has since last year been ignoring calls for help from car makers on the grounds that the Tories don't believe in "Band-aid" solutions.

"Just at the last minute, after these people have suffered layoffs for months and just days before an election, he slaps on this Band-aid," he said.

But Harper rebuffed questions about the announcement being motivated by a looming election.

"This is not money that is being thrown around on the eve of an election. This is money that has been approved," he said.

Also yesterday, Quebec and Ottawa signed a $4 billion deal for infrastructure projects, including highway upgrades and renovations to sports and cultural institutions, The Canadian Press reports.

Federal Transport Minister Lawrence Cannon said during the announcement in Quebec City that the deal with Quebec has nothing to do with an impending election call.

In Windsor, the Ford Essex engine plant was idled last November, putting 900 employees out of work. But under the so-called "Renaissance Project" confirmed yesterday, the plant will be retooled as a flexible engine assembly plant, producing up to 215,000 engines a year and employing 501 people. As well, the federal government will help create a research and development centre that will help put Canada on the map in the development of fuel-efficient engine technologies.

Ford is investing $600 million to retool the plant for the new engine line. The provincial Liberal government has already pledged $17 million toward that effort.

The promise of federal funding for the project marks a surprise turnaround for Harper's Conservatives, who had rejected any financial assistance out of hand just months ago.

Indeed, Finance Minister Jim Flaherty condemned Queen's Park for its high business taxes and corporate handouts and made clear that the plant should not expect help from Ottawa.

But with an imminent election call – and calls mounting for Ottawa to do more to boost the province's flagging manufacturing sector – the Conservatives changed course and delivered on the aid package, in the form of a repayable contribution.

But Harper defended yesterday's investment, saying the government's focus is on long-term economic development.

"The last thing I want to be doing is standing around a year from now and saying that we put some taxpayers' money on the table into some plant that some company's cutting jobs in," he said.

 

Ford employees rush to buy cars
Chris Vander Doelen, Canwest News Service
Retired Ford of Canada worker Vince Gucciardo purchased a Ford Mustang GT/CS from Knapp Ford. His 300-hp convertible is red and will arrive soon from a dealership in Ottawa.

Gucciardo is one of hundreds of Ford of Canada retirees who had been waiting since February to take advantage of a new buyer incentive for former CAW Big Three workers.

The $2,600 incentive, a first for retirees under their new 2008-2011 labour agreement, had been scheduled to start with the new contract on Sept. 17.

Last week, Ford decided to start the incentive a little early, so its retirees and employees - nudged toward purchasing with this and other lucrative vouchers and incentives - have been pouring into area dealerships ever since.

"I came in last night and said, 'What have you got for me?'" the 62-year-old Gucciardo explained Wednesday. "When I saw the price I said 'That's it, let's buy one.' I was prepared to pay more for a used one."

The Windsor resident, retired four years ago, opted for a 300-horsepower Mustang California Special with a 4.6-litre engine. He helped launch the three-valve version as a machine repair tradesman at Ford of Canada's Annex assembly plant in Windsor, although the engine is now assembled in Romeo, Mich.

Area Ford dealers say they have been swamped with calls and visits from Ford employees and retirees rushing to buy new vehicles.

The different vehicle purchase incentives now in effect for Ford of Canada workers include: $2,000 incentives from the current 2005-2008 CAW labour agreement, which expires Sept. 16; $30,000 purchase vouchers, which were handed out last year as part of buyout packages for early retirements from Ford's Windsor plants; and $2,600 incentives negotiated by the CAW for the new 2008-2011 labour agreement, which now applies to retirees for the first time, and which members of the Ford family such as Gucciardo can now use earlier that the Sept. 17 start date originally stipulated.

"We're getting some action from that - we're getting quite a spike in business," said Ken Knapp of Knapp Ford in Essex.

The sales flurry is expected to last another few weeks.

While auto sales are down across most of North America and the Detroit-based auto industry continues to shrink, Ford retirees with company cash in hand have contributed to brisk sales at most Ford showrooms in the area.

"People are really excited about it," said Mark Vrecic, sales manager at Performance Ford in Windsor. "We sold about 65 cars last week, and that's very big for us."

Lisa Jones, sales manager for Meloche Ford in Amherstburg, said her dealership was "really busy" due to the vouchers and incentives. Many of the 600-plus people who received $30,000 vouchers when they retired over the past year did not use them right away because they didn't need a new vehicle yet, she said.

But now that an expiry date on the vouchers is looming, some of the recent Ford retirees have been rushing into dealers with panic in their eyes because they were unaware the vouchers had to be used in the next three weeks.

"And a lot of them didn't understand you can't order a vehicle" with the vouchers, Jones said. "You have to take what's on the lots. And you have to take delivery by the 16th."

Vrecic said none of the region's dealers know how many vouchers or incentives are still out there, yet to be used by recent retirees. Ford of Canada keeps that information confidential. But given that the average car purchase in Canada is $33,000, every 100 cars amounts to $3.3 million in car sales.

Neither Ford of Canada nor the CAW returned calls about the incentive sales surge.

The minor boom, in the midst of the industry's restructuring, is a bit of a bittersweet end to the summer sales season, the sales executives agreed - especially the sales from the vouchers, which are a one-time benefit never to be repeated for those former Ford employees.

But the bright side of the boom is the retirees' incentive of $2,600 - a benefit that will extend to all Canadian Big Three retirees starting next month, including those at Chrysler and General Motors.

"The bigger sales surge is going to be when the retirees get the $2,600," Vrecic said. "They've never gotten that before. Now we have a lot of people coming in who are already retired, looking for new cars and trucks."

Vrecic said he hadn't noticed any trend regarding which vehicles the Ford employees and retirees are buying. But Jones said the 2009 Ford F-150 has been coming up in conversation with a lot of wistful would-be buyers with $30,000 vouchers in their hands.

"A lot of them waited until the last minute because they were waiting for the 2009 F-150," Jones said. "But now it's been pushed back and it won't be available until November."

Ford delayed the introduction of the multibillion-dollar 2009 pickup truck launch to save money.

                              ***************************************

Hargrove spurns Liberal advance

Aug 29, 2008

Tony Van Alphen
Business Reporter

High-profile union chief Buzz Hargrove says he won't run for the Liberals in a looming federal election, despite overtures from party officials including Leader Stéphane Dion.

Hargrove, who is retiring as president of the Canadian Auto Workers union next month after 16 years, confirmed yesterday he has decided not to accept a Liberal invitation to run in one of three "winnable" Ontario ridings – including two in Toronto.

"I've been on the road, flying around the country and staying in hotels for 30 years," Hargrove said in an interview.

"I didn't want to spend months of my life in Ottawa while my wife was in Toronto."

Observers say a Hargrove candidacy would have provided a boost to the Liberal's election chances. He has been the most prominent labour leader in the country for more than a decade.

In July, Hargrove, 64, announced his surprise retirement as CAW president six months early. Dion called to congratulate him the next day.

Dion soon contacted him again after a news report suggested Hargrove would consider running for the Liberals.

"Stéphane said `we would love to have you as a candidate,' '' Hargrove recalled. "He suggested I talk to some of his people and Senator David Smith called two or three days later."

Smith, a former Toronto MP, is a major political operator in the Liberal party with expertise in arranging nominations.

"We discussed potential ridings," Hargrove said.

"At that point, I hadn't ruled anything out. But since then, I've spent a lot of time talking to my wife Denise and decided not to run. I've informed David."

He married Denise Hill, a veteran mediator for the Ontario Labour Ministry, last year after a lengthy courtship.

Hargrove would not disclose which ridings the Liberals offered him.

He also said Smith did not promise a cabinet posting if he won a seat and the Liberals gained power in an election that could be held in October.

"I didn't ask for anything either," he noted.

The NDP, which is organized labour's traditional political arm, expelled Hargrove as a party member in 2006 for advocating strategic voting. That involved supporting Liberal candidates to keep Tories from winning in some ridings where the NDP had no chance.

"I'm still a socialist without a home," Hargrove said. "But the Liberals are as socialist as the NDP now."

In 2002, he considered running for the federal NDP leadership but shelved the idea because of opposition internally in the party and from some other unions.

That opposition originated in 1993 when Hargrove and the CAW broke with the Ontario NDP government after it suspended bargaining rights and froze wages for public workers during a deep recession.

Hargrove acknowledged his decision to not run for the Liberals ends any political aspirations, but he will still be in the public eye.

A major publisher has approached him about working on a second book. Macfarlane Walter & Ross published his first book, Labour of Love, a decade ago.

He is considering an invitation to become a host or co-host of an issues program on the Business News Network, a television specialty channel.

Hargrove has also joined the Speakers' Spotlight agency, which will involve giving speeches to different groups.

                             ***************************************

Ford of Canada names its latest chief executive

David Mondragon

Marketing specialist from U.S. parent is fifth to hold job in four years

Aug 26, 2008 04:30 AM
Tony Van Alphen
Business Reporter

The big chair in the executive suite at sputtering Ford Motor Co. of Canada Ltd. has spun again.

Ford announced yesterday that David Mondragon, a veteran marketing executive for the company in the U.S., will become chief executive officer and president here and settle in the hot seat at Canadian headquarters in Oakville next Monday.

Mondragon is the fifth man to hold the top Ford job in Canada in less than four years. Ford's market share has slipped for several years to 12.7 per cent this summer.

Ford has dropped from second to fourth place in the Canadian market behind Chrysler, Toyota and industry leader General Motors.

But Mondragon, who could not be reached for comment about Ford's challenges, said in a statement the company will soon be selling more models that Canadians want.

"It's an exciting time to join Ford of Canada as we accelerate plans to introduce new fuel-efficient vehicles, especially small cars and crossovers, which are exactly what Canadian consumers are asking for," Mondragon said.

The 47-year-old replaces Barry Engle who revealed last week that he is leaving Ford of Canada to become chief executive officer of New Holland Agricultural Equipment SpA. Engle held the Ford job for less than eight months.

Mondragon, who has worked at Ford for 23 years, is currently the general manager of sales and marketing for the company's southwest region, its biggest U.S. division.

He started at Ford in a junior administrative position at its Edison, N.J., assembly plant, moving into management jobs in marketing, contests, incentives and training.

Mondragon has directed national incentive programs and led the strategy for more than 80 auto shows across the U.S.

"David has a proven track record of connecting with customers, energizing employees and partnering with our dealers to help drive sales," said Dave Schoch, executive director of Ford Motor Co. for Canada and South America.

Mondragon, who is married with three children, attended California State University and completed a master's degree in business administration at Northeastern University in Boston.

********************

The high cost of low wages

Society and economy benefit when all jobs provide employees with a living wage

Aug 22, 2008
John Cartwright

Here's a trick question: Why should billion dollar corporations be allowed to pay poverty wages in Canada?

Not long ago the answer would have been fairly easy – they shouldn't. But in the last 20 years, the dominant economic model has created both a massive concentration of capital at the top and a growing number of poverty level jobs at the bottom.

Even as the economy is stalling and thousands are losing their jobs through plant closures, big oil is announcing record profits. The banks are doing very well, thank you, while payday loan operations spring up in every poor neighbourhood. In all sectors, companies are sourcing temp agencies instead of offering stable full-time jobs.

Three years ago, the Labour Council released a study showing that more than 1 million workers in Greater Toronto earned less than $29,800 a year.

That was news to some (how can you put a roof over your head for less than 30 grand?) but reality to many others (if only I could earn as much as that in a year!).

Since then, a number of other reports have shown who is impacted by low incomes. Whether it is on a neighbourhood basis as outlined by the Three Cities report, or looking at racialized communities through the Colour of Poverty campaign, the results are disturbing. But they are not surprising for those of us who are on the front lines with low-wage workers.

The continent-wide Hotel Workers Rising campaign to raise standards in the hospitality sector is led by immigrants and workers of colour. Their story is easy to understand – they work for global hospitality companies yet there are still hotels that pay housekeepers less than $15 per hour for cleaning 17 rooms a day. In places without a union, that figure drops in some cases to less than $11 per hour. How can anyone raise a family on those kinds of wages?

The same union is organizing food service workers employed by global companies like Aramark, Compass and Sodexo. Recently a group of Aramark workers at Seneca College were forced to strike for a first contract just to bring the lower classifications over the $10 mark.

The story is the same for cleaning contractors, where the Justice for Janitors campaign is slowly raising wages above $10 or $11 an hour in the face of massive employer resistance.

These kinds of stories are repeated time and again in Canada's largest urban centre.

Hospital workers being displaced by contractors paying just above minimum wage; home-care delivery being taken over by companies that classify everyone as "independent contractors" to avoid paying good wages, holiday or sick time. The list goes on. The historic BCE buyout was proceeded by massive outsourcing of operator and information work, and Enbridge has done the same thing.

What makes headlines are the layoffs in manufacturing.

Standing with the workers at Progressive Moulded Products when the company shut its doors was a gut-wrenching experience for anyone who cares about the future of work in this region. The faces were every colour in humankind, the majority from South Asia, China and the Caribbean. These people produced auto parts for the Big Three, but had never unionized.

Earning from $14 to 17 per hour, they were hardly at the top of the food chain. For days, they tried to block the machinery being taken away until they got their severance pay, but to no avail. The courts ignored their rights under law but issued injunctions within hours to corporate creditors.

The just-in-time economic model is failing many Canadians.

But fortunately, these aren't the only stories to tell. Most of us do find that our knowledge and skill is rewarded.

Toronto has the most productive construction workforce in North America, a result of the contribution of immigrants combined with a strong commitment to training and apprenticeship.

The largest manufacturing plant in the city is Bombardier, where thousands of skilled employees design and produce the DASH aircraft.

In classrooms, health-care and government facilities across the GTA, highly qualified staff deliver strong public services.

We also have the country's largest concentration of financial services, sciences and professions that provide high salaries.

But the point is that someone will always be cleaning the offices, preparing food and minding the kids and the seniors. These jobs should pay a living wage as well. So should retail, the second largest sector by numbers, although a large portion is part-time.

There is a growing gap between those with decent wages and the working poor. In the private sector, the difference between average and median wages has increased by $1.37 per hour in the last decade. That translates into tens of thousands falling behind, while those at the very top prosper.

Can something be done to secure good jobs for all?

The answer is yes. We only need to look back a few years to see policies in both the public and private sectors that favoured secure, stable employment over the low-wage alternative.

From procurement of local goods and services, to fair labour laws, to investment in social infrastructure and green industry, there are many opportunities to shape a healthy economy with good jobs as its key feature. Some will be different jobs, of course, as the imperative of sustainability transforms our society.

Deliberately choosing a good jobs strategy will require a rethinking of the directions we have been taking in recent years.

Whether there is the political will to make those choices is another matter, but it is the real issue that needs to be debated.

Otherwise, the trick question we started with will get even trickier in years to come.

John Cartwright is president of the Toronto & York Region Labour Council.

 

2008 New Vehicle Purchase
Plan Effective Now

AUTOMOTIVE DISCOUNT PROGRAM EFFECTIVE AUGUST 19, 2008

• Eligible emplovees receive a $2,600 discount from the hourly employee New Vehicle Purchase Plan ("A -plan") price on eligible vehicles.

• Eligible retirees receive a $2,600 discount from the hourly retiree New Vehicle Purchase Plan ("Z -plan") price on eligible vehicles.

• Eligible vehicles are new Ford and Lincoln vehicles assembled in North America that are included in A/Z-plan.

• Applicable to ONE (1) purchase or lease made between August 19th , 2008 and September 14th, 2011,  (vehicles must be registered and delivered between August 19th, 2008 and September 14th, 2011 to be eligible; vehicles factory ordered by September 14th, 2011 are also eligible)

• The $2,600 discount is not combinable with the current $2,000 Purchase Discount  program announced in 2005 or the CAW $35,000 retiree car voucher program, but  may be combinable with other dealer incentives, (see your dealer for details)

• Capitalized vehicles are not eligible for this discount
 
Who Can Participate?

• Eligible employees are employees who belong to one of the above bargaining units (or their surviving spouses) who qualify for healthcare benefits, and who have at  least one (1) year of seniority at the time of the purchase or lease

• Eligible retirees are retirees who belong to one of the above bargaining units (or their surviving spouses) who are receiving a normal, early (regular or special), or disability  retirement benefit at the time of the purchase or lease

• The vehicle must be purchased by the eligible employee, retiree (or their surviving  spouse) and registered in the name of the eligible person only

How Do I Participate?

• PIN numbers for A/Z-Plan Purchases and the $2,600 Automotive Discount Program  must be obtained by contacting A/Z Plan Program Headquarters (on or after August 19, 2008) at: 1-800-828-7870

• PIN numbers generated through the A/Z Plan websites will not be eligible for the  $2,600 Automotive Discount Program.

Questions?

• If you have any questions contact (905) 845-2511 extension 1113.
H. R. Communications
August 19th 2008

 

The Engle has flown -
Ford of Canada CEO is leaving Ford
Barry Engle

As Quick as the Engle had landed he has flown the coup.
We have to wonder if he knows something we don't!

The following announcement was made by Barry Engle, President and CEO, Ford of Canada, Tuesday August 19, 2008

It's with mixed emotions today that I share with you my plans to leave the Ford Motor Company. I have accepted an offer to be President and CEO of New Holland Agricultural Equipment S.p.A., a unit of CNH Global N.V., based in New Holland, Pennsylvania.

After serving in a variety of roles for Ford in the United States, Mexico, Japan, Brazil and Canada, this new role leading a global player in the agricultural equipment industry is an opportunity to return home to Pennsylvania.

Leading Ford of Canada has been one of the best experiences of my career and it's very difficult to leave a team that is so committed to working together effectively, to delivering excellence and to building future success. It has been particularly rewarding working with you, Ford of Canada's dealers. I greatly appreciate your partnership, passion and drive to connect consumers with our great new products.  It's the dealers who make the Ford brand a strong presence in communities across Canada and I want to thank you for your many contributions.

With your help, I sincerely believe that the company will not only survive today's challenging market conditions, but thrive with its strong focus on the customer and plans to accelerate the introduction of new fuel-efficient vehicles, especially small cars and crossovers. 

While I, my wife Shannon, and our six children are looking forward to settling in an area surrounded by our extended family, at the same time, I will miss my friends and colleagues at Ford. I plan to be in the office for the rest of the month and I hope to get a chance to speak with more of you personally. It has been a pleasure working with all of you.  

Sincerely,
Barry Engle

***********************

Lincoln crossover to join luxury line

Saturday, August 16, 2008

Bryce G. Hoffman / The Detroit News

Ford Motor Co. confirmed Friday that it will build a new, full-size Lincoln crossover based on the MKT concept it showed at the Detroit auto show last January.

"The Lincoln MKT reinforces our commitment to further expand America's fastest-growing luxury brand, providing an all-new vehicle to the showroom that's been crafted and honed for a new kind of customer," Ford Americas President Mark Fields said. "The MKT will offer the comfort of a luxury sedan, the spaciousness and flexibility of a crossover and the performance of a sports sedan, courtesy of its EcoBoost engine."

Fields made the announcement at the Pebble Beach Concours d'Elegance in California.

As The Detroit News first reported in March, the new three-row luxury crossover will be built on the same platform as the Ford Flex, which launched this summer.

In addition to a normally-aspirated 3.7-liter V-6, it will be offered with an EcoBoost 3.5-liter V-6 engine that will deliver an estimated 340 horsepower and 340 lb.-ft. of torque.

It will be manufactured at Oakville Assembly Plant in Ontario, Canada.

***********************

Ford Fiesta begins
production in Germany

Aug 14, 2008 07:33 AM

The Associated Press

DEARBORN, Mich. – Ford Motor Co. said Thursday it has begun production of its new subcompact Fiesta at a plant in Germany.

The vehicle is the first product to come out of Ford's new global development process, which aims to produce global models that are tailored to regional tastes but have the same underpinnings. It's slated to go on sale in stages between now and 2010, starting in Europe.

The Cologne Stamping and Assembly plant is the first Ford assembly facility to build the new car, with production at Ford's Valencia assembly plant in Spain set begin in January.

Asian production is scheduled to begin later this year in China and Thailand, Ford said.

Ford's Cuautitlan assembly plant in Mexico, which previously made F-series trucks, is being retooled to build hatchback and sedan models of the Fiesta for the North American market beginning in 2010.

The Fiesta is one of six new models Ford plans to bring to North America from Europe in the coming years, as part of efforts to cut costs and boost its North American car lineup.

Last month, Ford announced plans to retool two U.S. truck factories in Michigan and Kentucky to make global vehicles off the European Focus platform.

The auto maker said it expects to manufacture 148,000 Fiestas in the Cologne facility this year. When at full capacity, the plant is expected to produce 1,900 Fiesta and Fusion vehicle per day, Ford said.

Since the Fiesta was first launched in 1976, Ford said it has sold more than 12 million of the cars

**********************

Drawback to Detroit's
'zero 72' auto loans

Aug 13, 2008 04:30 AM


Now that Chrysler and General Motors have dropped their lease incentives, will other automakers follow suit?

And what does this mean for customers?

The two large U.S. manufacturers have been losing money on their leased vehicles. Others have too, judging by writedowns announced this month by Ford, Toyota, Nissan and Honda.

They were luring customers with low lease interest rates – from zero to 3.9 per cent – and high residual values for vehicles when the leases ended.

Then, the U.S. economy slumped. Gasoline prices soared. Consumers stopped buying gas guzzlers. And the credit crisis made it harder to get financing.

"In Canada, leases are still available but we're not going to subsidize leasing any more," says Stew Low, a General Motors of Canada spokesperson. "Customers will pay market rates."

Say goodbye to low monthly lease payments. Say hello to "zero 72" – a buzzword for no-interest loans to be repaid over six years.

"A zero 72 loan puts the payment at the same point as a lease payment or just slightly below it," says Low.

Leased vehicles were half of GM's annual sales in Canada. Six months ago, it started targeting small car buyers to see if they would switch from leasing to borrowing if offered zero 72 loans.

"It's huge," says Low about the demand for such loans. "Canada is an affordability marketplace."

But leasing has other advantages to some customers beyond small payments, according to Alexander Law and Susan Winlaw, authors of Car Advice for Women (and Smart Men).

You can get out of a lease after three years and into something new with a warranty, says Law, a former writer for the Star's Wheels section.

"Many people don't want a car that's older than three years and don't like the notion of dealing with service centres or selling or trading a second-hand car. They know it creates an opportunity for them to lose money.

"Along with the boredom factor that comes with having the same vehicle too long, the vehicle you lease in three years will almost certainly be safer, more fuel-efficient and deliver much better value for the dollar."

GM and Chrysler helped create their own problems, says Jim Matthews, president of Leasebusters, a Toronto firm that helps people transfer contracts to others and avoid penalties.

"They knew their pricing was aggressively high, but they didn't know they would be hammered that badly," Matthews says.

"They're losing $5,000 to $15,000 on cars they sell at auction after the lease is completed. The losses are huge."

These two automakers and others who may follow their lead – are trying to maintain their market shares with cheap loans. But this may not work, in his view.

"The big problem with financing," says Matthews, "is what if you drive 25,000 kilometres a year? You have just finished paying six years later and your car has 150,000 kilometres on it and it's not worth anything.

"You have negative equity. You're upside down. The only thing to do with your car is to keep it."

These automakers are shifting the risk associated with resale values – a risk they used to bear – to consumers.

"No walking away at the end of three years and leaving GM with a car worth thousands less than they imagined," Law says.

Leasing has disadvantages – such as mileage limits and wear-and-tear penalties – but it does lower your resale risk.

If that's important to you, shop around among the dealers still offering subsidized leases. Who knows how long they will last?

*******************************************

 

Oil prices just one factor in this mess

Aug 11, 2008 04:30 AM

David Olive
Business Columnist

Don't count on lower crude prices for an economic upturn.

The recent reversal in the steady climb in crude oil prices will be less of a tonic for the slumping economies of North America and Europe than one would hope for.

For starters, pump-price shock by now is deeply embedded in the consumer psyche, even after the drop in crude to $115.20 (U.S.) by the end of last week , from a record high of $147.27 just three weeks ago.

With most consumers believing the dip is temporary – and there have been plenty of short-lived declines in crude's long arc to the stratosphere – motorists will not soon be rekindling their love affair with large cars and trucks and SUVs, the unpopularity of which has cost thousands of Ontario auto workers their jobs.

In any event, it isn't soaring oil prices that have crimped economic growth. It's the bursting of the U.S. housing bubble and the resulting global credit crunch. There's scarcely a major bank in the world that hasn't taken a beating on faulty U.S. subprime loans.

Last week, even mighty HSBC PLC, which prides itself on global diversity, reported a 29 per cent drop in first-half profits due to its inventory of U.S. junk mortgages. U.S. regional and super-regional banks are in much worse shape, along with giant money-centre lenders such as Citigroup Inc., Wachovia Corp. and Bank of America Corp.

The resulting cutback in lending while banks shore up their reserves has stifled corporate expansion and job creation. After four consecutive months of net job loss, the U.S. unemployment rate has climbed to 5.7 per cent – not too far shy of the jobless rate that cost George H.W. Bush his job in 1992.

Meanwhile, there has been no encore to the robust consumer spending that ensured a soft landing in the previous U.S. economic downturn of 2001-02. Housing again is the culprit.

When the bubble burst, house prices plunged 30 per cent to 50 per cent in the hardest-hit regions, which happen to be among America's largest markets – including California, Florida, Michigan and other Midwestern states also suffering from industrial job losses.

It bears repeating that the estimated $8 trillion loss in residential real estate value, and resulting loss of home-equity loans as a means of financing car, appliance and other big-ticket purchases is the real brake on a U.S. economic recovery in the near term.

The Western economies, with the U.S. at the epicentre of the slowdown, are in something of a box. Central bankers, having reverted to inflation-fighting mode in the midst of a 17-year high in food inflation and crude-oil prices still double their level of two years ago, are no longer in a mood to cut interest rates to stimulate spending. And on the fiscal side, a U.S. government that recently projected a $482 billion deficit in the current budget year – U.S. president George W. Bush's sixth triple-digit annual deficit in seven years in office – is severely constrained in its ability to jump-start the economy with more and bigger economic stimulus packages like the modestly effective one this spring.

The most hopeful prognosis is for energy and commodity prices to continue sliding in tandem with the decline in GDP growth, and for the next U.S. president to boost all-important consumer spending with significant tax cuts for the working and middle classes at the expense of tax increases on the most affluent, which would revive short-term prospects for Canadian and European exporters reliant on the U.S. market. That won't happen if John McCain, now essentially tied with Barack Obama in the polls, takes office next January, since McCain's plan is to further increase tax relief for the wealthy, the population segment whose spending has the least impact on GDP growth.

***************************************

FORD OF CANADA
ANNOUNCES
BEST-OF-THE-YEAR
PURCHASE OFFERS


OAKVILLE, Ontario, August 8, 2008 - Ford Motor Company of Canada, Limited today announced further purchase financing enhancements to its best prices of the year while maintaining its current competitive lease offers.
Ford Family Pricing, which has been in effect since July 1, 2008, offers Ford of Canada's best prices of the year. Today's announcement reflects additional purchase incentives for consumers including:

  • 0 per cent 60-month purchase annualized percentage rate on many 2008 Ford models;
  • added cash incentives of $500 to $2,000 on most 2008 and 2009 Ford and Lincoln models -- for customers terminating Red Carpet Leases and financing their new purchase or purchasing with cash;
  • a further added cash incentive of $1,500 on the purchase of any Ford crossover utility vehicle (Ford Edge, Ford Taurus X or Ford Flex).

"Canadian consumers deserve great value and choice about how they pay for a new vehicle. That's why we're maintaining our competitive lease offers and providing additional incentives on the purchase of most new 2008 and 2009 Ford and Lincoln vehicles during our Ford Family Pricing promotion," said Barry Engle, president and CEO, Ford of Canada.

The enhanced incentives are effective August 9, 2008 and will make these Ford of Canada's best and most competitive offers of the year.

***************************************************

GM Implements Salaried benefit cuts and co-pays to Retirees

The following notice was sent to all General
Motors Canada
salaried retirees August 9, 2008:


ATTENTION SALARIED RETIREES AND SURVIVING SPOUSES:

GM has been taking steps to adapt our business to rapidly changing market conditions, marked by the weak U.S. economy, record high fuel prices, shifts in consumer vehicle preferences in Canada and the U.S., and the lowest U.S. industry sales volumes in well over a decade.  

The following changes, combined with previously announced salaried headcount reductions and other related savings, will result in an estimated reduction in cash costs of more than 20 percent for the U.S. and Canada, or $1.5 billion in 2009.  

Please review the important information provided below about your benefits in retirement.

It is difficult to implement these changes considering the many contributions each of you have made on behalf of our company.  Unfortunately, the times require them.  Your understanding and continued support are genuinely appreciated.

If you have any general questions about these changes you can submit them by e-mail to benefits.questions@gm.com.


Requirement for Monthly Health Care Contribution


Effective January 1, 2009, a monthly contribution ($20 single; $40 employee & spouse or employee and child(ren); $70 family) will be paid by all salaried employees and retirees up to age 65 to help in offsetting increasing health care costs.  

Effective January 1, 2009, employees and retirees on or after age 65 will be required to make a monthly contribution ($15 single; $30 employee & spouse or employee & child(ren); $45 family).  

The amount of the monthly contribution required will be reviewed on an annual basis.

Effective January 1, 2009, all retirees and surviving spouses will be automatically enrolled in the major medical plan known as the Comprehensive Medical Expense Insurance Program (CMEIP).  The associated contribution for this coverage is incorporated in the monthly contribution outlined above.  

Information regarding the establishment of the monthly health care contribution payment process will be mailed to your home address in the early fall.  Please follow the instructions provided in order to ensure no interruption in your health care coverages.  


Health Care Coverages for Those Permanently Residing in the U.S.

The current practice of providing comparable to OHIP hospital/medical coverage  (e.g. services performed by a physician in a hospital) for employees, retirees and surviving spouses permanently residing in the United States will be discontinued for any employee, retiree or surviving spouse who moves to the United States on or after October 1, 2009.  

Employees, retirees and surviving spouses resident in the United States prior to October 1, 2009 will continue to be eligible for such coverages as per the current practice.

This change does not impact other coverages (e.g. dental, vision, hearing).  

This change also does not impact coverages available for those with a primary residence in Canada and a secondary residence in the U.S.   If you have the practice of contacting the GM Canada Benefits Centre with an address change for your vacation time in the U.S. – be sure to instruct them that it is an “alternate” address change versus a “permanent” address change.  This will ensure that you remain eligible for all coverages.

**************************

GM pension plans healthy

Aug 08, 2008 04:30 AM

Last weekend's article concerning General Motors pension plans bordered much closer to fear mongering than reality.

The reporters interviewed GM executives and CAW President Buzz Hargrove, who all expressed confidence in GM and the health of its defined benefit pension plans in Canada. Yet the Star's sensationalist article and headlines centred on comments from a single concerned plan member.

The facts are straighforward. GM Canada's defined benefit pension plans are funded to required levels and can be expected to meet the retirement needs of their members. We contribute over $300 million in cash to our hourly and salaried funds annually.

GM has more than sufficient cash on hand to manage through the current North American auto industry response to increased fuel prices, the U.S. housing downturn and the resulting market shift from trucks to cars and crossovers.

And while GM continues to grow profitably and lead in auto sales in China, Russia, South America and other expanding world auto markets, our North American transformation, while certainly challenging, remains on track.

David Paterson, Vice President, Corporate and Environmental Affairs

General Motors of Canada

*************************

Ford launching blind-spot mirror

Aug 06, 2008 11:29 AM


DEARBORN–Ford Motor Co. said Wednesday it will introduce its new blind-spot mirror this fall on the 2009 Ford Edge crossover.

The automaker had planned to bring the mirror to market next year but moved up the date after getting so much positive feedback, said Kelly Kohlstrand, a member of Ford's advanced product marketing and technology planning team.

Ford also is in a race with General Motors Corp. to bring the technology to market. Blind-spot mirrors will be a standard feature on the 2009 Chevrolet Traverse crossover, which will start production in September, according to GM spokesman Terry Rhadigan.

Kohlstrand said the mirror will be a standard feature on the Edge and will be added to other vehicles in 2009.

On both the Edge and the Traverse, small mirrors that give drivers a view of the "blind spot" alongside the vehicle sit flush in the outer corner of the side mirrors.

Kohlstrand wouldn't say how much the feature will cost Ford, but he said it's less than the retail cost of the small convex blind-spot mirrors that many drivers attach to their vehicles.

Ford said its blind-spot mirror will weather the elements better than aftermarket offerings, and it also is specifically designed for each car or truck model to provide an optimized field of view. The factory-installed mirror also meets a federal standard that requires original-equipment driver's side mirrors to be flat.

************************************

FORD FLEX HITS SAFETY PINNACLE WITH 5-STAR RATINGS
Ford Flex

  • Flex earns U.S. government's top 5-star crash ratings for all four front- and side-impact tests - adding to Ford's leading number of 5-star vehicles
  • The daringly designed and fuel-efficient seven-passenger crossover continues to draw praise and customer interest.
    Flex 5 Star Safelt Rating Flex, which went on sale this summer, has a full array of standard safety equipment
       

DEARBORN, Mich., Aug. 5, 2008 - The 2009 Ford Flex has earned five-star frontal- and side-impact crashworthiness ratings, the highest possible scores, in the National Highway Traffic Safety Administration (NHTSA) tests.  

The results for Ford's newest full-size crossover are better than the Toyota Highlander's and include class-leading four-star rollover ratings for both the front-wheel drive and all-wheel drive versions.  

"The 5-star ratings for the Flex are evidence of Ford's overall safety commitment.   In fact, we have produced more 5-star-rated vehicles than any other automaker," said Susan Cischke, Ford's senior vice president of Sustainability, Environment and Safety Engineering.  "The Flex offers it all:  a head-turning design, top safety ratings, unsurpassed highway fuel efficiency in its segment, power, spaciousness, comfort and great features."

Flex safety standard

Flex, which went on sale this summer, has a full array of standard safety equipment.
This includes dual front air bags, headliner mounted side curtain air bags, four-wheel anti-lock brakes, Ford-exclusive AdvanceTrac® with RSC® (Roll Stability Control™) and tire pressure monitoring system.

Flex gets some of its core strength from the use of lightweight aluminum-coated boron steel - one of the strongest weld-able materials - in the body structure.  The use of high-strength steel in the B-pillars is only part of the Flex's robust safety profile.  Ford engineers also located the side door intrusion beams to help manage and absorb energy during side impact crashes.

"Flex safety is built on a solid foundation - the platform of the 5-star rated Ford Taurus and Taurus X," said Gary Boes, Flex chief engineer.

How the Crash Ratings Work

NHTSA's frontal collision ratings are determined by placing crash-test dummies in the driver's seat and front-passenger seat and securing them with the vehicle's safety belts.  Vehicles are then crashed into a fixed barrier at 35 mph, which is equivalent to a head-on collision between two similar vehicles that are moving at 35 mph.  The 5-star rating attained by Flex indicates a 10 percent or less chance of serious injury to a belted occupant in the front seat.

Side-impact crash testing represents an intersection-type collision with a 3,015 pound barrier moving at 38.5 mph into the Flex, with crash test dummies buckled into the driver and rear passenger seats. Flex's five-star rating, the highest possible, indicates a 5 percent or less chance of serious injury.

"Safety is a top purchase consideration, second only to fuel efficiency, so Flex's top safety ratings and highway fuel economy are a winning combination," said Catherine Pearce, Flex marketing manager.

Even More Technology Works in Customers' Favour

Flex also can help drivers avoid problems on the road. The new SIRIUS® Travel Link™ feature, praised for helping motorists find the cheapest gas, also can help route them around congested, potentially dangerous conditions using the vehicle's navigation system with real-time traffic information, available in select markets.  
SYNC®, Ford's hands-free connectivity system for Bluetooth-enabled phones and digital music players, helps drivers keep their eyes on the road and hands on the wheel to reduce distractions.

*********************

Judge rules suit over
Ford Explorer can go forward

Family says automaker, in 1999 settlement talks related to rollover, kept evidence under wraps.

Margaret Cronin Fisk and Laurence Viele Davidson / Bloomberg News

Ford Motor Co., the second-largest U.S. automaker, must defend a lawsuit claiming the company fraudulently induced a family to settle a claim over a death in an Explorer rollover accident, a federal court said. James L. Haffey was killed in 1997 when the driver lost control of the Explorer after a Firestone Inc. tire broke apart.

His family sued Ford and Firestone's parent, Bridgestone Corp., claiming defects in the vehicle and tire. In 1999, the Haffeys settled with Ford for $500,000 and with Firestone for an undisclosed amount, said Tab Turner, an attorney for the family.

In 2001, after reports linked Explorer rollovers to Firestone tire failures, the family filed a new claim. It argued Ford withheld evidence to settle for less than the case was worth.

A federal judge in Mississippi dismissed the new suit in 2006. A U.S. appeals court in New Orleans reinstated it July 31, finding the family could sue Ford for deceit.

"Ford's problem with the Explorer definitely isn't going to end," said Sean Kane of Safety Research & Strategies Inc., a safety advocacy group in Rehoboth, Mass. Some lawyers may reopen cases already settled, Kane said. "We continue to see new cases filed against Ford over uncaptured tires that weren't picked up" during multiple recalls, he said.

The Mississippi judge who dismissed the lawsuit concluded that "the plaintiffs were required but had failed to rescind the settlement agreement and return the proceeds they had received under it," the federal appeals court said.

"It is clear from the plaintiffs' amended complaint in this case that they seek to affirm the settlement agreement and maintain an action in damages for deceit."

'Back to court'

Ford doesn't expect to appeal the ruling and will likely ask the trial court again to dismiss the case, said company spokeswoman Kristen Kinley.
"We will go back to court and prove, once again, that this claim has absolutely no merit," Kinley said in an e-mail.

Haffey's family will seek an additional $4.5 million in actual damages, the value of the case had the family received evidence of alleged design problems that it sought in the original lawsuit, Turner said today in a phone interview.

Haffey's wife, Barbara, who was driving the Explorer when it crashed, and his three children also will seek unspecified punitive damages, he said.

The reputation of the Explorer, the top-selling sport utility vehicle at the time, was hurt by a U.S. investigation into at least 271 highway deaths involving tread separations by Firestone tires. Ford and Firestone settled hundreds of lawsuits over rollovers related to tire failures.

Tires recalled

Bridgestone recalled 6.5 million tires designed for the Explorer. Ford replaced another 10.6 million Firestone tires in 2001, citing safety concerns.
The 2001 lawsuit claims Ford was aware of design flaws and problems with the Firestone tires on the Explorer, and didn't disclose this information as required before trial.

"This is typical for these guys," Turner said.
"It is a clear example of the fraud perpetrated by these companies over a long period of time."

The Explorer was passed in sales in 2007 by Honda Motor Co.'s CR-V as the top-selling SUV in the U.S., 219,160 to 137,817.

Explorer wasn't even the top-selling SUV at Ford in 2007. That distinction fell to the smaller Escape, which had U.S. sales of 165,596 vehicles last year.
Ford sold more than 400,000 Explorers annually as recently as 2002.

Explorer sales slid 36 percent this year through July, to 55,339. Ford sold 102,486 Escapes during the same period, a 2.1 percent decline, while Honda sold 122,230 CR-Vs, a 2.2 percent decrease from the same period last year.

************************************

 

             Car buyers sue Ford over
                 limited edition vehicle


NEW YORK, Aug 4 (Reuters) - Car buyers sued Ford Motor Co on Monday complaining that a limited edition of a modified Ford Mustang was not so limited after all.

The class action lawsuit on behalf of a New York man and other buyers of the 2007 Roush Stage 3 BlackJack vehicles claimed they paid a premium price of nearly $59,000 last year because Ford advertised that only 100 would be made.

The lawsuit, filed in U.S. District Court in Manhattan, accused Ford and Roush Performance Products Inc of manufacturing at least 100 more of the vehicles in 2008.
Representatives of Ford were not immediately available to comment, a company spokeswoman said.

"The vehicles purchased by the plaintiff and the other class members were not as unique or rare as the defendants had stated them to be," the complaint said. "Their value from scarcity and as collectors' items were and are dramatically less than the buyers had been led to believe their value would be."

Ford manufactured a limited run of a modified version of the Ford Mustang, made especially for conversion by Roush into the Stage 3 BlackJack, the complaint said.

Drew Conner of Bardonia, N.Y., and at least 100 other people are members of the class seeking a jury trial and more than $12 million in damages

********************

GM pension faces huge shortfall

Actuaries say workers' plan in Canada would
be in serious trouble should car maker fail

GM retiree Karl Zimmerman at his Oakwood, Ont., home Aug. 1, 2008. If GM goes bankrupt, his pension could be cut in half.

Aug 02, 2008 04:30 AM
James Daw
Tony Van Alphen
Business Reporters

As General Motors Corp. struggles with its massive financial problems, concern and anxiety are rippling through the ranks of company pensioners and senior employees in Canada.

Despite assurances from GM and the CAW that their pension plan is safe, many fear monthly payouts would be slashed dramatically if the auto giant's drastic moves to cut costs and reinvent itself fail.

"My concern is that, if GM goes into Chapter 11 bankruptcy protection in the U.S. or they go bankrupt altogether and out of Canada ... my pension is going to be cut nearly in half," said Karl Zimmerman, a 73-year-old retiree and stroke survivor.

Plant workers facing layoffs in Oshawa expressed similar sentiments at a union membership meeting this week, and Canadian Auto Workers president Buzz Hargrove concedes his calls and messages suggest pension fears are on the rise.

According to documents available only to plan members and regulatory officials, actuaries estimate GM's pension plan for 43,717 hourly rated employees, retirees and survivors in Canada would be short 43.5 per cent of the money needed to pay all pension promises if GM failed, based on estimates as of November of 2006.

If GM could make no further contributions, the deficiency would be $4.9 billion, or the equivalent of about $112,000 per plan member. This so-called solvency or windup shortfall was about $1 billion more than in 2004 and five times the shortfall estimated as of 2000. This compares with a 9.3 per cent shortfall at Chrysler Canada as of May last year.

GM Corp.'s financial situation deteriorated further yesterday. It reported a second-quarter loss of $15.5 billion (U.S.), the third biggest in its 100-year history, because of plunging sales south of the border and the declining value of truck leases. The company does not publicly release results for its Canadian operations.

GM has posted $69.8 billion in losses since 2004 and is trying to raise as much as $17 billion in cash as reserves fall.

But Hargrove and GM executives insist pension fears are unwarranted. A worst-case scenario that would trigger pension reductions is "so remote a possibility it's not worth speculating on," said Hargrove.

David Paterson, vice-president of corporate affairs for GM Canada, agrees: "No, (pensioners should not be concerned) he said. We are confident about the future of the business and the cash situation .... We are going to be here for another 100 years."

Yet some pensioners are concerned because they know, if the company and union are wrong, they would be more vulnerable to substantial reductions than pensioners of other car makers.

GM's pension plans in the U.S. have a stronger funding than plans for its foreign operations, including Canada. The company took steps in 2003 to eliminate a $19 billion shortfall by selling a subsidiary and raising $18.5 billion by selling bonds to outside investors. GM has reported to shareholders the plans had 22 per cent more assets than benefit obligations at the end of 2007, while non-U.S. plans were 44 per cent short of funds, based on accounting rules that differ somewhat from actuarial reports.

Chrysler, Ford Canada and all other sponsors of defined-benefit pensions in Ontario – except GM – are required by pension law to eliminate solvency deficiencies within five years. GM is the only remaining company eligible to take advantage of a special exemption inserted into legislation during the deep recession of 1992, government officials confirm.

The condition of the GM pension plan could also have deteriorated since 2006, said Zimmerman, a resident of Oakwood, about 50 kilometres north of Oshawa, home to the company's last remaining vehicle assembly operation in Canada.

The next actuarial report is to be released in September. It will reveal whether the plan has suffered from its heavy exposure to foreign bond and stock markets. But the report will not incorporate the impact of recent layoff announcements, which will put further stress on the plan.

Zimmerman has been among a small group of disgruntled workers and pensioners who were uncomfortable about Ontario letting GM ignore the more stringent pension funding rules on the grounds it was too big to fail – and that its investments in factories here were too important to jeopardize.

He has seen the value of benefits under Ontario's Pension Benefits Guarantee Fund dwindle relative to his cost of living. Meanwhile, the government has asked a pension reform commission to make recommendations about the guarantee fund's future.

A failure by GM would drain the guarantee fund unless the government lent it money. The cost of a GM failure to the fund could be as high as $2.5 billion (Canadian), one actuary estimates.

The province has had to bail out the guarantee fund in the past. In 2003 it provided a $330 million, interest-free loan repayable over 30 years. "It seems to me (the GM shortfall) is far beyond anything the government would want to cover," said actuary Paul Duxbury of Cambridge.

GM is required to set aside enough funds to pay pensions as long as it continues to operate here. It had enough money in 2001 and 2002 to take a contribution holiday.

But, by last year, fund actuaries were estimating GM would have to put in an extra $1.2 billion over the next 15 years after the company contributed $254 million in 2006.

The $4.9 billion shortfall would only be relevant if GM was forced out of business.

Hargrove wrote to GM Canada's vice-president of labour relations in 2006 after GM moved to bolster the pension fund for U.S. workers. "We need to jointly consider how best to improve that security through assuring appropriate financing of (CAW members') pensions," he wrote.

This week, he said the union won no major commitment, but the executive assured him GM is not worried about surviving, or the state of the pension plan here.

He said his union's leadership is confident GM will not need to file for bankruptcy protection here. He insists GM's manufacturing and sales operations are profitable, although Paterson said "we are not making money in Canada now."

"I think it's inevitable GM will file for Chapter 11 (bankruptcy protection) in the U.S., but that doesn't mean that all the GM plants will close," said Hargrove.

"It simply means they are operated by a trustee and GM will start bargaining with everyone, the union and banks and bondholders; but the operations will continue. They don't cut off pensions. (They may very well) negotiate with the UAW in the U.S. to (change the pension plan from a defined benefit) but we would never agree to that in Canada."

When the former NDP government under Bob Rae exempted GM from funding its solvency or windup deficiency, its contributions to Ontario's Pension Benefits Guarantee Fund were to increase to 2.5 per cent of the solvency deficiency, or to a maximum of $5 million per year.

If not for the caps, GM would have to pay the guaranteed fund nearly $81 million a year, according to actuary Duxbury.

The guarantee fund is intended to cover any shortfall for the first $1,000 of a monthly pension, excluding increases granted in the three years before a company fails. If the province continued to stand behind that guarantee, it would have to top up most of the average GM retiree's pension, which was $15,724 in 2006. But recent retirees from GM are drawing much larger pensions.

So, if GM were to fail the portion of any pension greater than $12,000 a year would be cut by the 43.5 per cent, based on the calculations done last year. If the province ended its pension guarantees, a retiree's entire pension would be reduced by that much.

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Magna deal spooked Lewenza

Union leader likely to replace Hargrove at CAW backed pact despite misgivings, transcripts reveal

Aug 01, 2008 04:30 AM
Tony Van Alphen
Business Reporter

The fiery Windsor labour leader who will probably replace Buzz Hargrove soon as president of the Canadian Auto Workers had serious misgivings about a controversial deal to organize employees at Magna International, union transcripts reveal.

Ken Lewenza, president of Local 444, told the CAW's national executive board recently that members would never have voted to allow Magna employees into the union under the arrangement, according to transcripts of top-level meetings obtained by the Toronto Star.

"Nobody in this room, I don't give a shit what you say, in your heart of hearts, agrees in its entirety on the Magna deal that caused us a great deal of stress and pressure within the local unions, within the staff, within the leadership of our union," added Lewenza, who eventually supported the deal publicly in a show of union solidarity.

The transcripts are from tense executive board and staff meetings last month where members endorsed candidates for the two top jobs in the country's largest private-sector union.

They include emotional debate about the CAW's election process, allegations of pressure to endorse specific candidates, concerns that political campaigning could tear the union apart and even a plea from retired president Bob White to stop the infighting.

They also reveal the ambitions of some union officials – and Hargrove's feelings when a candidate told him he should retire with a year still left in his mandate.

Lewenza called the Magna deal, which gave up fundamental labour rights, a "gut-wrenching decision" that was still in the union's best interests.

The CAW and Aurora-based Magna, a non-union bastion for decades, last year reached the "Framework of Fairness" deal whereby the union gained easier access to organizing more than 40 company plants in exchange for giving up the right to strike.

Critics called the deal a "sell-out" of union principles and a "dues grab," but delegates at a national CAW meeting overwhelmingly approved it.

Despite his reservations, Lewenza voted with other executive board members last year to proceed with the arrangement because they said it was critical to efforts to increase "density" and wield more bargaining clout in the struggling auto parts sector.

Lewenza, who will probably replace Hargrove at a special convention next month, could not be reached for comment yesterday, but insiders confirmed he didn't like the arrangement and expressed those views before supporting it.

In explaining the need to get behind CAW decisions despite personal feelings, Lewenza told the board he initially "passionately opposed" the CAW's decision to provide non-interest loans, to a maximum of $5 million, to the fledgling Canadian Construction Workers Union.

A controversial labour organizer and former Toronto political power broker is running the construction group after his international union ousted him in an internal battle at a local here.

The CAW meeting transcripts also reveal Chris Buckley, president of the big Oshawa local, considered running for Hargrove's job. Buckley told the board he planned on playing a bigger role in the union and may run next time.

Hargrove expressed disappointment and frustration that some candidates criticized the election process when they never complained before, and were now jockeying for position several months before his mandatory retirement age of 65 next year.

Hargrove, who has led the union for 16 years, added that Hemi Mitic, a presidential contender, told him activists were wondering why he was "hanging around."

"Boy, I've never had a knife put in me deeper than that one because nobody (else) has ever said that to me," Hargrove said.

"If one person says that you ought to get out, I'm getting out, and that's what I'm doing."

CAW staff had complained that senior union officials had intimidated them to support Hargrove's selections for the top jobs or they'd be branded as disloyal.

Other contenders felt they didn't get a chance to make their case for endorsements.

"You know, you can't inspire leadership to feel more optimistic about the future with a process that feels fixed or with a campaign that is dirty," said Carol Phillips, an assistant to Hargrove who is still running for the No. 2 union post of secretary treasurer.

But Bob White, who led the CAW from its inception in 1985 until 1992, warned the board that the union is facing tough times and doesn't need bickering over unfair allegations that its election processes are undemocratic.

"The last thing we need is a pissing contest between some staff members who want to get elected and the national executive board of the union," White said.

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Legal insurance touted
as way to improve access


Could help middle class, poor get justice in flawed system: Professor

July 31, 2008 04:30 AM

Tracey Tyler
LEGAL AFFAIRS REPORTER

 

When his new house accidentally caught fire, William Kernick, who works at Brampton's Chrysler plant, didn't have to worry about finding or paying for a lawyer. He turned to the Canadian Auto Workers Legal Services Plan.

Kernick relied on his union's insurance program to launch a lawsuit against his cable TV company, whose installer had apparently hit an electrical wire, igniting flames.

"If I had to pay a lawyer, it probably would not have been feasible," Kernick said yesterday in the plan's Brampton office, where three lawyers handle everything from family law cases to disputes over wills, their services entirely or partly covered by the employer-funded plan.

Kernick is surprised similar programs aren't more widely available. "If you can have a plan where you can buy coverage for your pet for medical care, why isn't there a plan you can buy like this?"

The reality is legal insurance is rare in Canada. But it's a concept the Law Society of Upper Canada and Legal Aid Ontario should explore, Michael Trebilcock, a University of Toronto law professor, said in a report for the provincial government last week on the legal aid system.

The system has "a serious political economy problem," said Trebilcock. Working poor, lower middle-income and middle-class Ontarians largely underwrite legal aid but don't benefit from it – and have limited access to the justice system generally, Trebilcock said.

Meanwhile, the Canadian Bar Association is hoping to move forward today with a lawsuit it hopes will lead to more funding for legal aid in civil and family law cases.

The Supreme Court of Canada is set to rule on whether it will hear the association's test case against the federal and British Columbia governments. The lawyers' organization claims legal aid systems are so inadequately funded that governments are breaching unwritten constitutional principles that guarantee equal access to justice.

In an interview, Trebilcock said while per capita spending on health care increased 33 per cent in Ontario between 1996 and 2006 and education spending went up 20 per cent, legal aid expenditures dropped by nearly 10 per cent.

But since the middle class doesn't identify with the system, it hasn't caused much of a stir.

The CAW plan is "a promising direction in which to move," he said. Operating as a non-profit trust, the plan pays the entire cost of simpler matters such as real estate transactions and uncontested divorces, and between two and 30 hours of a lawyer's time for cases that are not fully subsidized.

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Workers jilted by Ford look for help

No compensation plan for those hired before third-shift jobs scrapped


Jul 29, 2008 04:30 AM
Rob Ferguson
Queen's Park Bureau

Brenda Austin, a single mother of two, was supposed to start work at the Ford factory in Oakville yesterday.

Instead, the Welland woman drove straight past into Toronto, seeking help from the government after the troubled automaker abruptly scrapped plans for a third assembly line shift and revoked job offers to 350 people last week.

"We are jobless with no benefits and no money and we still have bills and rent and kids and food like everybody else," Austin told a news conference, admitting she "cried the entire day" she got the word from Ford.

"I was borderline hysterical ... my kids, every day, it's like, `Mom, did you find a job yet?'"

The 35-year-old is one of many who quit their old jobs after accepting the Ford offers two weeks ago, looking forward to better pay, better benefits and better lives.

Then came last week's phone calls from Ford that "pulled the rug out from under their feet," said NDP trade critic Paul Miller, calling for better protections for workers.

"It's not fair and it's morally wrong," added the MPP for Hamilton East-Stoney Creek, insisting Ford should treat workers better after getting $100 million from the Ontario government to improve the Oakville plant.

"They're playing Russian roulette with these peoples' lives."

Ford says it has no plans to compensate Austin and the others left in jobless limbo, and defended the third-shift cancellation as a "responsible decision" given the company's financial position as high gas prices eat into sales.

"We recognize it affects the lives of hundreds," said Ford spokesperson Kerry Stoakley. "It is a regrettable situation."

The government is taking a hands-off approach in this case, saying it has programs to help laid-off workers retrain.

"If the government had some kind of leverage with the private sector to make sure they hire, boy, we would have been using it by now," said Economic Development and Trade Minister Sandra Pupatello.

She noted Ford did pledge to find jobs for 160 workers who transferred to work on the third Oakville shift after being laid off at its engine operations in Windsor.

The ministry of labour said the Employment Standards Act does not cover the people because they had not started work – the same reason they are not covered by a Canadian Auto Workers contract.

That leaves the would-be Ford workers with the option of hiring a lawyer and going to court.

"They have a right to compensation," said veteran employment lawyer Howard Levitt of Lang Michener LLC, who advises filing suit for anticipatory breach of contract.

Court awards in such cases can range up to six months' salary "depending on what they gave up" in their previous jobs, Levitt added.

For now, Austin and others in her situation are still in shock and not sure of their next moves, although the single mom was told that the waiting period for unemployment insurance would be waived.

Phil Maddalana, who worked at a St. Catharines auto-parts plant with Austin, had quit his job there just a day before Ford gave him the bad news – with a message left on his answering machine at home.

"I immediately called my old employer back, it being less than 24 hours, and he said that my position was no longer available at my factory," said the 44-year-old father of one, whose wife doesn't work because of heart and back problems.

"The emotional roller coaster I've been on for about a week is taking its toll. I'm very moody," added Maddalana, his voice cracking.

"It's taking its toll on my family. I'm a little short-tempered. Having issues with sleep. I don't know where my next paycheque is going to come from ....

"I just don't know what's going to happen."

Ben Stanley also got the news on his answering machine.

"I thought it was one of my friends playing a joke on me," Stanley, a father of one whose wife is eight months pregnant, said of the message that left him incredulous.

"Ford was wooing me for two months."

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GM offers cars, cash
as retirement incentives
GM

July 29, 2008

General Motors is offering one of the most lucrative and unique early retirement incentives for older employees in Canadian industrial history in efforts to offset the impact of next year's closing of its Oshawa truck plant, union officials say.

The Canadian Auto Workers told workers at membership meetings yesterday the union has negotiated a package of incentives that would allow employees in Oshawa to leave GM with as little as 26 years of service and receive the equivalent of almost full wages and benefits when they retire in four years.

CAW Local 222 also revealed that the neighbouring flexible manufacturing plant will increase the number of models from two to four cars during the next five years.

Under the agreement that resolved a major union grievance over the plant shuttering, production workers and trades people with 26 years of service could receive lump sum payments of $50,000 and $60,000 respectively plus 65 per cent of their wages until retirement. They will also get a $35,000 voucher for a new car.

Production and trades people with 29 years of service would get $80,000 and $96,000 respectively for the last year before they retire plus 65 per cent of their wages and the car voucher.

"It is unique and unprecedented," said senior CAW official Peter Kennedy. "In all my years in the union I have never seen anything like this."

Production employees who are already eligible to retire with 30 years of service can get an incentive of $100,000, while trades people would qualify for $120,000 plus the car vouchers.

The company is also offering to buy out younger production and trades workers with less than three years of service for $37,500 and $45,000 respectively, with gradual increases to $100,000 and $120,000 for employees with more than eight years. They would also get the car vouchers.

Union officials said almost 2,100 senior Oshawa workers could qualify for the prominent "leave to retirement program" while more than 1,500 other employees are already eligible for full pensions.

Local 222 leaders said they're hopeful the package will mitigate the need for layoffs in Oshawa because of the truck plant closing and extensive bumping by employees into the car operation, which would adversely affect workers there.

"I am sure you will agree we have made the very best of a very terrible situation," Local 222 president Chris Buckley told more than 3,000 workers at one meeting yesterday at the General Motors Centre.

Detroit-based GM Corp. announced in June it would close the award-winning Oshawa truck plant and eliminate more than 2,000 jobs in the fall of 2009 because soaring fuel prices and the subprime loan crisis in the U.S. had caused a sudden collapse in pickup sales. The company is also closing three other North American truck operations.

The decision sparked a furor in Oshawa because the union had negotiated a new contract only two weeks earlier that contained concessions in exchange for extensive product commitments.

Local 222 filed a grievance against GM for breaching the contract by not consulting the union for alternatives before the closure decision.

Workers also blockaded GM's Canadian headquarters in southeast Oshawa for 12 days in protest before the two sides started talks to resolve the grievance. They reached agreement last week but did not disclose details until yesterday's membership meetings.

"As a union we can't force General Motors to produce vehicles they can't sell," Buckley said. "No arbitrator or judge ... can force GM to do that either. But as a union, we did stick to our principles that GM owes us work or wages. Fighting back does make a difference."

David Paterson, GM's vice-president of corporate and environmental affairs, said in a statement the grievance resolution represents "fair supports" for workers and a significant transformation of the Oshawa site from pickups to cars.

"This sets a direction in Oshawa far better suited to today's fast changing auto marketplace and high gasoline prices," he noted.

The union said GM will continue building the popular Impala mid-size model for another year beyond 2012 and assemble two more front-wheel-drive models in fourth quarter of 2010 and the first quarter of 2013. The flexible manufacturing plant is currently building prototypes of the Camaro sports car for full production later this year.

Industry sources say GM plans to assemble a Cadillac in 2010 and a model off the Epsilon platform, possibly a version of the strong-selling, mid-size Malibu.

However. the sputtering truck plant will close a few months earlier in July of next year instead of the fall. It will remain operating on one shift because of the steep drop in demand for pickups. Union officials also confirmed the union won't pursue a complaint for millions of dollars in damages for alleged contract breaches. Buckley also confirmed GM had ditched its legal action for $1.5 million in alleged damages relating to the blockade.

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Chrysler to quit leasing business

Falling resale values of trucks,
SUVs make financing option risky

July 26, 2008

Chrysler Financial will get out of the leasing business beginning Aug. 1, as the automaker shifts its incentive dollars toward vehicle purchases, the company announced Friday, signaling intensifying financial pressure on the automaker.

The decision to cut leasing costs suggests the Auburn Hills automaker is strapped for cash and its financial arm is having more difficulty acquiring credit, analysts said.
"I see this as indicative of some financial difficulty ... banks may not be willing to lend Chrysler money on the same favorable terms as in the past," said Aaron Bragman, automotive research analyst at Global Insight Inc. "It's very risky to leave the leasing business up to a third party. Some customers will go to competitors and they will lose volume."

Automakers are having an increasingly difficult time selling vehicles coming off leases, particularly SUVs. That pushes down their trade-in, or residual, values, which means automakers lose money when they try to resell the used vehicles at auction.
Across town on Thursday, Ford Motor Co.'s credit arm took a $2.1 billion charge because of the drop in the residual value of leased vehicles. Privately held Chrysler LLC would not divulge its numbers, but analysts say it could be just as high.

To help customers transition away from leases, Chrysler will boost incentives on purchases and tout ownership advantages, said Jim Press, Chrysler vice chairman and president.

Chrysler dealers will be able to offer leases, but must do so through independent banks and not the automaker's financial arm. Leasing accounts for about 20 percent of all Chrysler vehicles sold, but in certain markets, including Detroit, that percentage is much higher.

"In today's environment, the advantages of leases have really disappeared," Press said. For customers, purchasing a vehicle now results in lower monthly payments -- if financed over five or six years -- than leasing, he said.

Chrysler is extending its 0 percent financing for 72 months on its Dodge Ram pickup and will offer the same deal on its large SUVs, including Dodge Durango and Jeep Grand Cherokee, through the end of August.

Dealers say they will feel pain

Thomas Gilman, executive vice chairman of Chrysler Financial, conceded it has become more difficult for the lender to access lease financing. He said major lenders charge a premium for such funding because of the risk associated with residual values.

Chrysler Financial is working to renew $30 billion of short-term, car-loan-backed debt. The automaker and Chrysler Financial are operated separately under the holding company Chrysler Holding LLC.

Without backing from its lending arm, the automaker's Chrysler, Jeep and Dodge dealerships will find it more difficult to offer leases to customers. "It will hurt my business," said Alan Helfman of River Oaks Chrysler Jeep in Houston. "When a customer leases from you, you know they are coming back to you in two or three years." Helfman estimated his business could fall by 10 percent.

At Southfield Chrysler Jeep, leasing accounts for 95 percent of the business, sales manager Mike Sinishtaj said. He said he expects other banks will offer leasers similar interest rates as Chrysler Financial. "Some deals will be better, some will be worse," he said. "You just have to roll with the punches." Though Chrysler is pushing incentives, dealers fear buyers will return less quickly for new purchases than leasers.
Chrysler, however, said the typical buyer returns for a new vehicle after 39 months -- three months longer than the average lease holder.

But that pattern may not hold true if Chrysler extends financing terms to 60 or 72 months to keep monthly payments low, said Dan Ballasy, dealer consultant and president of Ballasy Learning Systems.

"For customers who used leases to get into a little nicer vehicle, they are going to find themselves owing more money than their vehicle is worth after three or four years," he said. "This could have a devastating impact on high-lease dealers."

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Auto import sales soaring

Study shows share reaching one-quarter of market this year

Jul 26, 2008 04:30 AM
Tony Van Alphen
Business Reporter

Auto imports in Canada and the United States have climbed to their highest levels in two decades, providing union leaders with more ammunition for government intervention.

Canadian and U.S. sales of vehicles from other countries peaked in 1987 and then fell for about 10 years to less than 12 per cent.

Such sales have risen steadily in the past decade to more than 25 per cent of the market so far this year, according to DesRosiers Automotive Consultants.

The trend comes despite a lot more output by the same producers here. The change supports arguments by the Canadian Auto Workers union and some companies that imports are flooding the continent while their home countries put up trade barriers to curb sales of North American-made vehicles.

The union, which represents workers at the three struggling North American-based automakers in Canada, said the increasing number of imports is causing "industrial destruction."

"The surge of imports from offshore is the dominant factor behind the non-stop restructuring announcements we've been hearing from every automaker and almost every parts maker for the last three years," said CAW economist Jim Stanford. He estimated the Canadian industry would have been able to save about 20,000 jobs in the assembly and parts sectors if the offshore market share had stayed at 1997 levels.

The union has called for government intervention to press for fair access to foreign markets and force offshore companies to build more plants here to reflect sales.

In an analysis of the statistics, DesRosiers president Dennis DesRosiers said offshore imports peaked at 4.4 million vehicles, or 27.2 per cent of the market, in 1987, during a cyclical industry downturn in North America.

"We were in a cyclical downturn and this high level of offshore penetration decimated our production of vehicles, leading to significant cutbacks and plant closings at the manufacturing level and a real crisis was upon the industry," he added.

But the number of imports gradually fell to 1.8 million vehicles or 11.2 per cent of the North American market by 1996 as offshore-based automakers jacked up output here, DesRosiers' statistics indicated.

The trend changed again in 1997. Imports started climbing to 4.1 million vehicles last year, or 23.4 per cent. Imports will surpass 4 million this year and hold about 25.5 per cent of the market, DesRosiers predicted. "This is one of the reasons that the cyclical downturn in the market is hurting the sector so much," he said.

"Not only are consumers buying fewer vehicles" he added, "but about a million more of the vehicles that consumers are buying (annually) are being sourced outside North America."

But DesRosiers said the growing popularity of offshore autos may lead to a new round of assembly plants in North America since it would be more profitable to build them here because of high volumes.

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Ford thinking smaller

Stock plunges more than 15% as automaker's
second-quarter loss hits a record $8.7 billion U.S.

A Ford Explorer and Lincoln Navigator are displayed in front of Ford's Michigan Truck Plant in Wayne, Mich. (May 23, 2008)

Jul 25, 2008 04:30 AM
DEE ANN DURBIN
TOM KRISHER
Associated Press

DEARBORN, Mich.–Ford Motor Co. posted the worst quarterly performance in its history yesterday, losing $8.67 billion (U.S.) in the second quarter.

The company said it will retool two more North American truck and sport utility vehicle plants to build small, fuel-efficient vehicles, and announced plans to bring six new small vehicles to North America from Europe by the end of 2012.

A Ford spokesperson said there are no plans to cut or change auto and engine production in Canada.

The company's net loss includes $8.03 billion worth of writeoffs because the sharp decline in U.S. truck and SUV sales has reduced the value of Ford's North American truck plants and Ford Motor Credit Co.'s lease portfolio. Even excluding those items, Ford lost 62 cents per share, worse than Wall Street expected.

Twelve analysts surveyed by Thomson Financial, on average, expected a 27 cent loss per share.

Including the writedowns, Ford lost $3.88 per share in the April-June quarter, compared with net profit of $750 million, or 31 cents per share, in the same quarter a year ago.

The second-quarter loss surpassed Ford's previous record quarterly loss of $6.7 billion in the first quarter of 1992.

Second-quarter revenue was $38.6 billion, down $5.6 billion from the year-ago period. Analysts expected $34.6 billion.

Ford has been successful selling cars in Europe and the company is banking on the new European models to boost sales and revenue as it deals with a market shift from trucks to cars brought on by high gasoline prices.

The company said it has sufficient liquidity to weather the latest downturn in the U.S. auto market without additional borrowing. Ford borrowed $23.4 billion in 2006 to fund its North American turnaround.

"We are pleased that we went to the capital markets at the right time," Ford CEO Alan Mulally said in a conference call with investors and media. "We have the scale, the expertise and the financing to execute our plan.''

Wall Street wasn't impressed. Ford shares dropped 92 cents, or 15.3 per cent, to close at $5.11.

The company plans to retool the Michigan Truck plant in suburban Detroit, shifting its products from large SUVs to make global vehicles off the European Focus platform by 2010.

"The second half will continue to be challenging, but we have absolutely the right plan to respond to the changing business environment and begin to grow again for the long term," Mulally said.

Ford said it does not expect a U.S. economic recovery to start until early 2010.

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CAW close to `unique'
deal over Oshawa

Union, GM negotiating on plant shutdown plan

Jul 24, 2008 04:30 AM
Tony Van Alphen
Business Reporter

The Canadian Auto Workers union says it is close to reaching a "unique" resolution with General Motors in a bitter dispute over the pending shutdown of the company's Oshawa truck plant.

Peter Kennedy, a senior CAW official responsible for GM, revealed yesterday that company and union negotiators are working on a settlement that is different from other agreements relating to plant shutdowns.

"There are some outstanding issues that still need to be cemented but we're getting close," Kennedy added in an interview. "I'm confident we'll be able to complete something very shortly."

CAW Local 222 filed a grievance early last month over the plant closing that triggered a high-profile blockade of the company's Canadian headquarters in Oshawa and threats of more disruptions.

GM, the country's biggest automaker, submitted a proposal in late June and the two sides have been quietly meeting in recent weeks in efforts to resolve the grievance.

Kennedy said the talks have gone beyond early retirement incentives and monetary sweeteners for workers to quit – common tools to reduce or eliminate layoffs when an auto plant closes.

"There's more at stake here," he said. "We're looking at doing something unique. We want to take it a step further given the circumstances of how this came about."

Kennedy would not disclose any details of the "unique" provisions until workers see them at membership meetings, possibly during the next few weeks.

"It would be different than what we've done in the past. I think people will be happy with this result."

Kennedy, the assistant to CAW's national secretary-treasurer Jim O'Neil, noted that in addition to a "soft landing" for workers so there are no involuntary layoffs, the union wants "good commitments" for models at the Oshawa site.

A spokesperson for GM of Canada Ltd. could not be reached for comment on the status of talks. Earlier, the company said it considered the discussions "private."

GM shocked the union in early June by announcing it would close the award-winning truck plant and cut more than 2,000 jobs during the second half of next year because soaring gasoline prices had led to a collapse in pickup sales in North America.

But that came only two weeks after the CAW and GM had agreed to a three-year contract where the union accepted millions of dollars in concessions in exchange for product commitments at the Oshawa complex, including a new generation of pickups.

The contract also contained a provision that called on GM to consult with the union for alternatives if the company considered a closure.

The union filed a grievance a few days later, claiming GM broke the contract.

Local union officials have also talked of other legal options, including a major complaint to the Ontario Labour Relations Board.

GM won a court order to lift a 12-day blockade at the company's headquarters in southeast Oshawa last month but a judge criticized the automaker for its "deceit-like behaviour" and "almost immediate breach" of the contract.

************************************

Ford puts Oakville plans on hold

Automaker's sudden reversal on third shift leaves
hundreds of freshly recruited workers without jobs


Jul 23, 2008 04:30 AM

Tony Van Alphen

Business Reporter

Ford has delayed the addition of a third shift and hundreds of jobs at its Oakville assembly plant indefinitely because of an abrupt downturn in sales of crossover vehicles.

A senior spokesperson for Ford Motor of Canada Ltd. confirmed yesterday that the automaker halted the gradual launch of a third shift this week because of sliding sales of the Edge and Lincoln MKX crossover utility vehicles in the U.S. and Canadian markets.

"The Oakville assembly complex is delaying the introduction of the third shift indefinitely to better align production with unprecedented shifts in market conditions," said Lauren More, Ford's vice-president of communications.

The company has also cut back Saturday overtime production for its two shifts at the plant because of slowing sales.

Ford's move comes only three months after the automaker announced plans for the extra shift and more than 500 new jobs in Oakville. Ford informed about 350 new workers this week not to report for orientation for the third shift over the next month even though the company had just recently recruited them.

"It has to be absolutely gut-wrenching for some of those people who left other jobs to join Ford and now have this happen," said Bob Chernecki, a senior official for the Canadian Auto Workers union. "What do they and their families do now?"

The company started orientation this week for another 160 workers who transferred from the company's engine operations in Windsor after being laid off there. They will remain and fill positions in Oakville that become vacant through attrition.

"We're very thankful that Ford will proceed with the transfer and is absorbing us into the Oakville plant," said Catherine Faubert, who moved with her husband and family from Windsor.

In response to the big shift in consumer preferences, industry sources say parent Ford Motor Co. will soon announce plans to import more subcompacts and compacts to the U.S. market from overseas and revamp operations in North America to produce smaller cars.

In Oakville, More said the chances of proceeding with a third shift in the short term are not good. The company also produces the Flex crossover model there. "We expect the economic environment in the U.S. in the second half of this year to remain severe," she said.

Ford said in April that it would add a third shift in Oakville because the Edge and MKX models had gained strong traction in the U.S. and Canadian markets after debuting in 2006.

But the gradual move by consumers to smaller, more fuel-efficient models in the U.S. over the past year turned into a stampede in May and June as gasoline prices soared to record highs.

It triggered a collapse in sales of large pickup trucks and sport utility vehicles and also pulled down business for bigger models in the popular crossover segment.

In the key U.S. market, where Ford expected Edge business to continue growing, sales slipped 4.6 per cent to 32,693 during the second quarter from the same period last year, with signs of continuing deterioration. Edge sales plunged almost 20 per cent to 9,993 in June from the same month last year.

In Canada, Edge sales have risen 14 per cent to 3,853 in the past three months but are slowing down. Sales in June rose 2 per cent to 1,348.

Chernecki, assistant to CAW president Buzz Hargrove, said he isn't optimistic that Ford will implement the third shift in Oakville for at least several months in view of the continuing upheaval in the North American auto industry.

"This is a reflection of rising fuel prices and an unprecedented flood of imports into Canada and the U.S.," he added.

"The Harper government has to get off their position of ignoring the industry and start taking an active role to protect it before there is any further damage."

*****************************************

Civic leads Canadian sales

The 2008 Honda Civic sedan.

Honda model's sales pulling away from Ford's F-Series pickup at halfway mark as consumers veer to smaller, more fuel-efficient vehicles

Jul 22, 2008 04:30 AM
Tony Van Alphen
Business Reporte
r

A car will likely beat a truck as the country's best-selling vehicle in 2008 for the first time in 15 years as consumers turn sharply to smaller, more fuel-efficient autos.

Honda's Civic compact is pulling away from Ford's F-Series pickup in sales at the halfway point of the year, according to figures from DesRosiers Automotive Consultants.

Industry watchers say record fuel prices are driving consumers to compact and subcompact cars and away from gas-guzzling trucks, minivans and sport-utility vehicles.

"The theme in the market today clearly is, if it is small, it sells ... if not, it doesn't," analyst Dennis DesRosiers said.

Sales of the Civic, which has built a reputation for durability, fuel efficiency and overall value, shot up 24 per cent to 43,029 in the January-June period this year from the same six months in 2007. Meanwhile, volumes for the venerable Ford F-Series pickups have skidded 6 per cent to 36,555 in the same periods. A Ford spokesperson noted the F-Series truck has been Canada's most popular vehicle for the past five years and strong demand remains.

"While we do see consumers' appetites shifting as fuel prices become a more significant factor in vehicle decision-making, many Canadians still do want and need a pickup truck in their work and their daily lives," said Gina Gehlert, communications manager for Ford Motor Co. of Canada Ltd.

However, analysts said it will be tough for the F-Series to close a gap of more than 6,400 vehicles with the Civic in six months because of growing public perceptions that fuel prices will continue rising or remain at record highs.

The Civic, which has topped annual car sales for the past decade, and other small models have benefited significantly from the price increases.

The Chevrolet Cavalier in 1993 was the last time a car led the overall market. Sales of the General Motors compact hit 43,762 that year – just slightly ahead of what the Civic has attracted in only the first six months of 2008.

The F-Series and the Dodge Caravan minivan have dominated the position of best-selling vehicle during the past 15 years.

The Ford truck topped the auto market from 1994-99, while the Caravan held first place from 2000-2002.

In late 2005, the Civic almost overtook the F-Series for the overall vehicle title but Ford prevailed and held the lead in 2006 and last year. The six-month figures from DesRosiers' firm show four of the five best-selling vehicles in Canada are compacts or subcompacts. They are: the Civic, Mazda3 and Toyota's Corolla and Yaris.

The surging Yaris subcompact even outsold the Caravan, which fell to sixth place from third overall. Volumes for the Caravan, Chrysler's flagship model, plunged more than 25 per cent in the first half.

Business for GM's Sierra and Silverado pickups has tumbled 26.3 per cent and 24.8 per cent, respectively, in the first six months from the corresponding 2007 period.

That has prompted GM to slash production and jobs at truck assembly operations in North America, including its Oshawa plant. The plant exports most of its output to the U.S. market, where sales have slid dramatically.

In Canada, sales in the large pickup truck segment fell 12 per cent in the first six months. Deliveries of large sport-utility vehicles dropped almost 15 per cent

The downward trend in big trucks and SUVs has accelerated in recent months.

For example, sales of large pickups fell 28 per cent in June from the same month last year, while business for big SUVs fell 35.7 per cent in the same period.

The decline came as gasoline prices broke through the $1.30 a litre mark in Canada, about 35 per cent higher than a year earlier.

The gas spike has also sparked a big rise in other segments. Sales of subcompacts and compacts have climbed 28.6 per cent and 10.5 per cent, respectively, in the first six months from the corresponding 2007 period.

In addition to the Civic, sales of the Corolla soared 37.4 per cent; volumes for the Yaris climbed 13.4 per cent. Deliveries for the Chevrolet Cobalt improved 6 per cent and first-half business for the Hyundai Accent rose 106 per cent.

****************************

 

Ford to retool US plants
for European cars


CHICAGO, July 19 (Reuters) - U.S. car maker Ford Motor Co is drawing up plans to retool American plants to make small, fuel-efficient passenger cars that it mainly makes and sells in Europe, the Wall Street Journal reported on Saturday.

The paper said Ford has looked at bringing over European models, including the mid-size Mondeo, in response to high fuel costs that have hit sales of larger, fuel-hungry trucks and sport utility vehicles.

Citing people familiar with the matter, the WSJ said portions of this move could be announced on Thursday when the Dearborn, Michigan-based company reports second-quarter results.

In June, Ford announced it would slash output this year by eliminating shifts, slowing assembly lines and idling truck plants. The car maker said further details on its revised restructuring plan would be provided when it released its second-quarter results.

In an e-mail response to a request for comment on the WSJ report, Ford spokesman Mark Truby said the company would not release details of its plans before Thursday.
"We won't comment on speculation on what we may or may not announce in advance," he said.

*******************

Salaried employees next to go at GM

Analyst says bankruptcy 'not impossible' if sales continue to deteriorate

Jul 16, 2008 04:30 AM
Tony Wong
Rob Ferguson
Star Reporters

Hundreds of General Motors Canada head office staff may be laid off over the next several months as part of a massive restructuring effort to get the automotive giant back to profitability. The company said yesterday it plans to reduce salaried worker costs by 20 per cent, further slash truck production and eliminate its quarterly dividend.

In an address to employees in Detroit, chief executive Rick Wagoner said the auto-maker would also offer buyout and early retirement packages and freeze base pay for salaried employees through 2009.

The goal to save $15 billion (U.S.) in costs worldwide by the end of 2009 will impact on Canada, said spokesperson Stew Low. "We think in the end there will be some reductions in administrative staff, however, they will be reasonably small in comparison to our other actions," said Low. "The numbers could be in the hundreds or even less. We don't have a figure yet, but the initial thinking is that this may be modest."

Workers in areas such as finance, purchasing, corporate affairs and marketing will be affected in the latest restructuring round, he says.

Ontario's economic development and trade minister said she was "relieved" to hear the province will escape serious damage in GM's latest plans to make fewer pickup trucks and restructure operations.

Although the automaker is doubling planned cuts in pickup truck production to 300,000 vehicles, there will be "no acceleration" of the closing of its Oshawa truck plant in mid-2009, said Sandra Pupatello from a trade trip in England.

In Cornwall, Premier Dalton McGuinty said he hopes GM "comes to a landing sooner rather than later" because every lost auto assembly job means another seven lost in the parts sector.

He said the auto industry is in a challenging time but is here to stay, with North Americans buying 15 million new vehicles annually. "The issue is do we want to stay in the game or not?" he told The Canadian Press. "People are going to keep buying cars, they're just going to buy different cars. They're looking for more fuel-efficient cars, more environmentally friendly cars."

GM's latest cuts – which further hurt Ontario's auto sector by reducing demand for parts made here – show a need for urgent government action to shore up a slumping economy, said opposition parties.

Progressive Conservative Leader John Tory called for a summer economic statement from Finance Minister Dwight Duncan with new measures such as cuts in taxes and red tape to help businesses.

GM vice-president David Paterson said no date has yet been set for the pickup truck plant closing next year pending further talks with the Canadian Auto Workers union.

He confirmed there will be no new production cuts in Canada despite yesterday's announcement, although "relatively minor" layoffs are expected for perhaps 100 or 200 of the 2,500 salaried staff here.

Those numbers will depend on how much can be found in "operational savings" in areas like marketing and advertising.

GM Canada may not get hit as hard this time as it has been "ahead of the curve" in announcing cuts, including the closing of a Windsor transmission plant in 2010 and a truck plant in 2009, says Low.

The Windsor closing affects 1,200 workers, Oshawa's 2,600.

The announced closing of the Oshawa truck plant, just two weeks after a collective agreement with the Canadian Auto Workers said it would keep the plant open until 2011, was controversial.

"It seems like every week we have a new restructuring plan," says CAW economist Jim Stanford. "The issue remains that you can't dig your way out of a hole by constantly cutting back, downsizing and closing plants."

Stanford says the announcement means a harder fight for the union to keep the Oshawa plant open.

"As far as we are concerned that contract is still binding.

"We're still negotiating with GM and they are contractually obliged to continue operations there," says Stanford.

GM said yesterday it expects a significant second quarter loss because of declining market conditions.

Since Wagoner became chief executive in June 2000, GM has cut its U.S. salaried workforce to 32,000 from 44,000.

GM shares are down 87 per cent during Wagoner's tenure and the stock has been the worst performer within the Dow Jones industrial average during the last 12 months.

"At first blush, these would be positive steps for liquidity, but we would view them as absolute necessities given the current market conditions," says Gregg Lemos Stein, a credit analyst at Standard & Poor's.

Merrill Lynch analysts said GM needs to raise about $15 billion and bankruptcy is "not impossible" if deteriorating sales continue."The restructuring is setting up General Motors to be a leaner, more profitable company as we work through this soft U.S. market," said Low.

"We are taking the hard medicine and the deep cuts now and putting a plan in place to prepare if the market worsens."

With files from The Star's wire services
*******************************************************

Bankruptcy would be risky
business for any automaker

Automakers risk scaring off customers,
many analysts say

Christine Tierney, Eric Morath and Bryce G. Hoffman / The Detroit News

Detroit's automakers have entered a new and darker chapter in their history, with bankruptcy suddenly looming as a possibility because of the severity of the auto market downturn.

General Motors Corp., Ford Motor Co. and privately held Chrysler LLC are going through cash at a faster rate than they generate it, and investors worry that one or more of the companies could run short, perhaps before the end of next year.
But most debt analysts say that unlike auto parts suppliers, which have used bankruptcy as a tool to reorganize their businesses, automakers are unlikely to consider filing for bankruptcy before exhausting every other option.
"It's clear that the risks and challenges are much greater than the benefits of filing," said Gregg Lemos Stein at the debt-rating agency Standard & Poor's.
The biggest risk would be the publicity surrounding a bankruptcy filing that might scare off car buyers.

"If you've heard that an auto manufacturer has gone bankrupt, would you buy a brand new car for which you would need parts and servicing for three to five years?" asked Tony Clary, industry manager for automotive at Euler Hermes, a credit insurer that is part of Germany's Allianz insurance group.

"If a supplier files for bankruptcy, the general public wouldn't even know that. So it doesn't have the same implication." For an automaker, however, bankruptcy "would be very much a last resort, and something that would only be considered when there's absolutely no alternative available," Clary said.

Normally, the purpose of filing for bankruptcy -- corporations usually file under Chapter 11 of the U.S. bankruptcy code to keep the business running -- is to obtain some relief by reducing debt payments and to step up the pace of change at the company.

"Dana Corp. was able to accomplish things in bankruptcy that took an extended strike to accomplish at American Axle, which wasn't in bankruptcy," said Lemos Stein at S&P.

But it's not clear that a bankruptcy filing would make it easier for managers to get better deals from the United Auto Workers than they have, or to break out of agreements with dealers that are governed by state law.

Delphi is one example

Bankruptcy should be the option of last resort for the automakers, said James Mallak, an auto restructuring expert with Alvarez & Marsal in Detroit. "Once you get in there, look at Delphi (Corp.), there is no guarantee that you'll get out," said Mallak, who was chief financial officer at Tower Automotive during that supplier's bankruptcy. Delphi, the former GM subsidiary based in Troy, has had a long and fractious bankruptcy.

"That's especially true in today's financing market. They can do restructuring with the plants and with the labor contract outside of bankruptcy," Mallak said.
Changes in bankruptcy laws also would make it harder for automakers to control the outcome under a Chapter 11 filing, said Mark Oline, managing director of the credit service Fitch Ratings.

"I don't think bankruptcy would really be a strategic tool for any of them, given the changes in the bankruptcy laws," Oline said. "Management has lost a lot of control over a bankruptcy. The new laws make it a very, very complex process."
But all the speculation is unlikely to go away, given today's economic environment in which banks are unwilling to lend, investors are feeling skittish and consumers are putting off nonessential spending.

This year, U.S. auto sales are likely to sink to their lowest level in more than a decade. Brokerage house Merrill Lynch estimates next year could be even worse, with sales sliding to 14 million cars and trucks, putting the industry's recovery efforts at risk.

GM swats speculation

In less than a year, GM has gone from being the U.S. automaker furthest along the recovery track to the subject of bankruptcy concerns. Its stock tumbled last week to the lowest level in more than 50 years after a Merrill Lynch research note said bankruptcy was no longer out of the question.
A report issued by analyst Shelly Lombard at Gimme Credit puts the likelihood for bankruptcy at GM at 25 percent.

Chairman and CEO Rick Wagoner moved to quell the bankruptcy speculation Thursday, telling reporters during a trip to Texas that GM had "no thoughts whatsoever" of filing for bankruptcy.

In April, GM said it had adequate liquidity through 2008, with $24 billion in cash at the end of the first quarter and access to a further $7 billion of credit.
Most analysts say they don't believe GM will run out of money this year. But at the rate the automaker is burning cash -- estimated at billion to $1.5 billion a month -- they say it may need to raise as $1 much $10 billion during the next 12 months to allay concerns about its cash position.

This is a poor borrowing climate, but JPMorgan analyst Himanshu Patel says GM's profitable overseas operations could be pledged for between $8 billion and $11 billion in secured bank loans.

GM also could ask the United Auto Workers if it could delay its 2010 contribution to the voluntary employees' beneficiary association, a GM-funded, UAW-managed health care trust.

"We believe GM will pursue every option to avoid filing Chapter 11, since a bankruptcy would probably scare away car buyers, delaying a turnaround," Gimme Credit's Lombard wrote in a report.

Loans leave Ford with cash

For Ford, bankruptcy would spell the end of the Ford family's control of the company founded by Henry Ford in 1903.

Henry Ford's descendants control the company through their exclusive ownership of super-voting Class B shares. Those shares represent only 3.3 percent of the company's stock but wield 40 percent of the voting power and all but guarantee the family control, regardless of how many shares Kirk Kerkorian or any other investor amasses.

But all shares would be equally obliterated by a bankruptcy, and it is unlikely any judge would allow a reorganized Ford to reissue special shares to the family.
Compounding matters is the fact that Ford has mortgaged all of its U.S. assets -- including the Blue Oval itself -- to finance its restructuring. If it defaults on those loans, there will be little left of the Dearborn automaker.

For these reasons, analysts agree that Ford would never willingly file for bankruptcy protection. And at least for now, they say, Ford has enough cash on hand to make it through to 2010, when the full benefits of its new contract with the UAW are realized.
Ford has $40.6 billion in cash and available credit, and it has brands, such as Sweden's Volvo Cars, that it can sell if the situation grows more desperate.

"With its cash on hand and other resources, Ford is in the best position of any of the Detroit automakers," said Oline at Fitch Ratings. But, he added, "They will take a look at all non-core assets and any opportunities to improve their liquidity."

Chrysler's outlook worsens

Owned by Cerberus Capital Management L.P., Chrysler is the most likely of Detroit's automakers to tap the bankruptcy option, several analysts say.
The privately held Auburn Hills automaker, sold last year by Daimler AG, is the most vulnerable to a downturn in the U.S. market and consumers' percent shift away from trucks to more fuel-efficient cars. Last month, 75 of the vehicles Chrysler sold were trucks or SUVs.

Unlike its cross-town rivals, Chrysler has limited foreign operations to compensate for losses at home. North America accounts for 94 percent of global sales. Of the American automakers, Chrysler faces the highest liquidity risk, JPMorgan's Patel wrote in a report to investors this month.

Chrysler's "capital raising options seem limited to us given a lack of high-value unencumbered assets, and its owners are probably not highly motivated to inject new equity," he wrote. Without public shareholders, Cerberus could move Chrysler quickly into bankruptcy, said Steven Davidoff, a corporate law professor at Wayne State University who studies Cerberus. If GM or Ford were to file, its stockholders equity would most likely be wiped out. Cerberus, however, could put up a financing package and maintain control of the company, if that's what it sought to do.

"The biggest difference is as a private company they can make decisions quickly," he said. "In bankruptcy they could renegotiate or terminate contracts with the UAW, dealers and suppliers."

On the downside, entering bankruptcy could make it even more difficult to obtain financing, and Cerberus would have less control of the automaker and more public scrutiny, Davidoff said. A filing, however, would not affect Cerberus' other investments.

For now, the bankruptcy speculation is just talk, but with the market forecast to deteriorate next year, it's talk that won't soon go away.

****************************************

Democracy: Too Important
to Leave to the Members?

Sam Gindin

Earlier this summer, it looked like the Canadian Auto Workers (CAW) union was about to experience something truly unusual in its history – a contested campaign for national president. The last contest for the union's top Canadian officer was in 1960, a quarter of a century before the formation of the CAW and a year when Tommy Douglas was Premier of Saskatchewan and John F. Kennedy was running for President of the United States.

A transition in leadership was coming: CAW President Buzz Hargrove would turn 65, the agreed mandatory retirement age for union staff and officials, in March 2009. His handpicked successor was Ken Lewenza who, like Hargrove, came out of Chrysler's Windsor Assembly Plant. The succession also included anointing Peter Kennedy, the current Assistant to Secretary-Treasurer Jim O'Neil, to move up when O'Neil retired in August 2009. As Hargrove contemplated exactly when and how he would announce the timing of his retirement, two very credible candidates, both assistants to Hargrove, had declared their intent to run: Hemi Mitic against Lewenza and Carol Phillips against Kennedy.

The possibility of a break with tradition and an actual election did not come out of nowhere. During relatively good times, the absence of contested elections was commented on, but passively accepted. Now, with crises piling up in one sector in manufacturing after another in Canada (the state of the auto industry being the most publicized), a good number of CAW activists were increasingly frustrated and restless. It was in that context that rumors of an election began to circulate and the contesting candidates surfaced.

This was an opportunity that the union leadership should have jumped at. After years of growing demoralization inside the union, an election could have been a catalyst for union renewal, opening a space for membership participation in the crucial questions facing the union, and developing the candidates' own thinking. How could the union's dismal record in organizing new members be reversed? What changes in union priorities would an organizational drive imply and what commitments from the locals did it demand? The union's formal policy against concessions was contradicted by the reality on the ground. What was needed to return the union to its slogan that 'fighting back makes a difference'? International solidarity between unions is often discussed, but what could it concretely mean? The environment had emerged as a central issue that would transform everything about how we produce and live. Where did the candidates stand on the insecurities and opportunities this implies? The regional and sectoral composition of the CAW's membership base is today radically different than when the CAW was formed, but the union's structures have remained the same. What do the candidates have to say about how to take advantage of this potential, and what do the locals themselves want to put on the agenda in terms of structural change?

It was an opportunity as well to raise the issue of the CAW's relative separation from the rest of the labour movement (notably its continued absence from Ontario Federation of Labour), at the same time that the CAW drifted closer to the corporate and political elite (symbolized by the joint dinner with Canada's business and political elites in the middle of a CAW Bargaining Convention). Who are the union's friends and who are its enemies? Where do the candidates stand on union support for the Liberals? Can the union really expect to address the crisis in manufacturing jobs, the restructuring of private services, the commercialization of social services, or reverse free trade without rebuilding ties to the rest of the Canadian working class and mobilizing working class communities beyond its own?

A contested election might have reminded people why unions remain so important and brought more members into the active life of the union. That opportunity, in terms of the contest for the CAW presidency, was thrown aside. The union leadership seemed more concerned with ensuring executive control over the presidential succession and especially determined not to open debates it could not control and risk commitments that might hold future leaders accountable. In a phrase that may come to define his legacy, Hargrove expressed his impatience with an open electoral contest for the leadership of one of Canada's largest and most storied working class organizations in these terms: “We're not a political party, we're a union” (Globe and Mail, July 7, 2008).

Managing the Transition

Hargrove quickly moved to prevent such an open contest by calling a meeting of the National Executive Board (NEB) and of the appointed staff for July 8th to “put this thing to bed.” The NEB's endorsement of Hargrove's choices could be taken for granted. Though formally elected by union delegates, the NEB had never, a few secondary issues aside, demonstrated any collective autonomy from the CAW President. Nor did anyone expect this might change now.

The staff, however, was another matter. The majority of the CAW staff are experienced and skilled former elected local officials, with a history as activists and leaders in their own right. Though they cannot vote in any official union body, they have traditionally had the right freely to cast votes within the union's ‘administration caucus,’ a political body that ensures that all who attend it will support the administration at union convention, but which meets before conventions to decide what resolutions and candidates for office the administration will endorse.[1] The caucus system came out of the early right-left splits in the union in the 1940s. Such an organized opposition within the CAW had disappeared, but the administration caucus has continued as a form of control over what takes place at union conventions. Even as the CAW broke away from the UAW and its culture, it retained the essentials of the UAW's leadership-controlled caucus system.

Mitic's intention was to run within the caucus, which would have allowed staff members to vote for him there. He was thus intending to use one aspect of caucus tradition to challenge another, i.e. to open the possibility of a free caucus choice among the candidates (who all came from previous leadership team, even if Hargrove had pre-selected his favourites). But Hargrove brought the staff together not for a collective discussion among people with a wealth of experience as local leaders and activists, but as his employees. It was not their opinions he was interested in, but getting the staff in line well before they joined local activists possibly to challenge his candidate at the pre-Convention caucus meeting.

Because a rebellion was brewing, with the staff reflecting the wider dissension in the union, Hargrove was pushed into a further tactical step. On the morning of the scheduled meetings, the CAW President suddenly announced that he would retire by mid-September and a convention to choose his successor would be held before then. Virtually no union meetings are scheduled during the summer. Since workers would be at home or on vacation for much of July and August, any campaigning was essentially foreclosed.

Hargrove argued that the hurried timing was to avoid the ‘divisiveness’ of a ten-month campaign. Leaving aside that democracy functions because of differences, no explanation was given for why a shorter but more sensible period (such as one running to late-October) was also excluded. To some it looked as if the timing was not so much about union solidarity as with guaranteeing the victory of his candidate (the longer Hargrove stayed, the more of a liability he seemed to be to Lewenza's candidacy), and limiting any debate over the union's direction. Democracy was apparently too important to leave to the members.

The morning of the NEB meeting, Hargrove met with key board members from Quebec whose position was critical and who had pledged their support to Mitic. Coming out of that meeting they surprisingly switched their support to Lewenza. That loss was amplified because it potentially weakened the resolve of others both at the Board and on staff. Moreover, Hargrove presented Mitic with a catch-22: if he participated in the Board decision, he would have to abide by their vote (which was a foregone conclusion); if he refused, he would be understood to have left the administration caucus. Since Mitic was committed to running within the caucus and because he saw his support unraveling, he stepped down and joined NEB member Earle McCurdy from Newfoundland in calling for a review of ‘the process.’

Hargrove had won. At the staff meeting that followed, Hargrove made it clear that the staff, which could not vote at the convention itself, had a vote in the administration caucus – but only in line with what the NEB (i.e. the President) recommended. This meant not only that the approximately 150 staff had no say in the choice of CAW President, but that local delegates who participated in the caucus effectively faced an out-going President with multiple votes in his pocket. Though he had laid down the law that the staff had no right to vote independently, and though there was, in any case, no longer any alternative candidate for President, Hargrove insisted on a show of hands to endorse the NEB's recommendation. The point of the vote was, of course, purely formal and symbolic: it merely allowed it to be claimed that a consensus had been reached, so that those who didn't know what was really going on might think all this indicated the depth of the union's democratic process.

Carol Phillips remains in the race for Secretary-Treasurer in August 2009, having declared that she will run outside the administration caucus. Phillips is a talented, progressive and respected candidate and though the demographic changes in the CAW might suggest that a woman should be supported for one of the top two positions, Phillips is running on her merits and not as an 'affirmative action' candidate. The CAW structures guarantee that this will be an uphill battle. The new President will have some ten months to establish his authority and consolidate support for his caucus running mate, Kennedy. The staff will only be allowed to work for Kennedy. And though the Convention vote will be by secret ballot, a good many delegates will be hesitant to leave the administration caucus even if they want to support Phillips, and having participated in the caucus they are likely to abide by caucus discipline. A critical test for her candidacy – one posed by the early defeat of Mitic – will therefore be whether any locals rebel against this.

Union Democracy

The question of union democracy involves more than voting for leaders: it is about empowering the members to collectively effect change. It's therefore about both process and the kind of union that is being built. That is why the depth of union democracy and the degree of struggle often seem so closely linked.

When unions are fighting the status quo, a degree of democracy is virtually inevitable because it is essential. At those moments, workers receive information and analysis that counters what they get elsewhere. Educationals come alive. Workers develop their ability to articulate their cause and strategize. The capacity to organize in the workplace and community is deepened. The confidence that emerges from active participation spills over into other dimensions of workers' lives and sometimes raises larger questions about democracy in society. These can be powerful and revealing: if we're a democracy, why do corporations and financiers have so much power over our lives?

In contrast, when unions are only adapting to the status quo, democracy suffers because, from the leadership's perspective, democracy may represent a problem rather than an asset. If the leadership is arguing for concessions, it is repeating the arguments of the corporations, not giving workers an independent perspective. If bargaining is reduced to making deals with companies, the members become a nuisance. Educationals on past struggles become counterproductive. Collective Agreements are rushed through without a real chance for consideration. Workers who vote against concessions are told to vote again ‘until they get it right.’ Actions that go against union principles cannot be justified, so they must simply be rammed through without reasoned debate. In this context, prospects of an election raising questions about how the union functions, as well as leadership accountability, are seen as a threat, not an opportunity.

As convoluted as the events around the CAW 'almost-election' were, it did highlight what has long been true but shrugged off: there is something broken in the union's internal democratic process. It is telling that, a day after the NEB and staff meetings and before the administration caucus had met, never mind before the Convention itself, Ken Lewenza was already referred to as the new CAW President, thus foregoing even the formality of union democracy.

The much-needed debate inside the CAW should not be limited to how to fix the administration caucus. The problems go much deeper and involve issues central to all unions. What unions face today is rooted in the way North American unions organized themselves in much better economic times than for workers than the present. Not having understood that period to be an interlude, a break before the pressures of capitalism renewed attacks on the working class, unions did not prepare for what lay ahead. Workers are now suffering for that lack of understanding and preparation. While corporations have become more radical and aggressive, the labour movement has become more cautious and defensive. The most important question for the labour movement is to come to grips with those past failures and the need to become as radical as the other side. If we don't develop a vision that fundamentally questions the anti-social logic of capitalism, and build the collective capacities that can challenge corporate power, things won't just stay the same: they are likely get worse.

The real issue of Lewenza's leadership is not, as some commentators have emphasized, his relative lack of experience outside auto and southern Ontario. This may be a concern, but Lewenza is bright and energetic enough to learn how to move from being a local auto president to leading the largest private sector union in the country. Rather, the issue is whether Lewenza, as the candidate for continuity in the CAW leadership, will address the accumulated set of problems and challenges that the union confronts. To do so, the union will need to make adjustments in its current strategies and structures, and address internal democracy to mobilize the input of its staff, elected local leaders, and activists.

It would be a tragedy for all of Canadian labour if, in the face of the intimidating challenges confronting the CAW, the next CAW President circled the wagons, silenced dissenters, and just continued on without reassessing the union's direction and current limits. Any creative leadership has to allow for innovations, and encourage departures from past practices. Whether this happens will not, of course, depend on Lewenza alone. Democracy always has to be fought for and local leaders and activists have a responsibility – now, perhaps more than at any time in recent CAW memory – to insist that they and their members have an impact on the outcome.

Sam Gindin is the Packer Visiting Professor in Social Justice at York University.

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Ford to cut jobs abroad
as U.S. sales fall 14%

Jul 15, 2008 04:30 AM

Ford Motor Co., the third- largest automaker, said it will cut some salaried jobs in its international operations as it trims in North America due to declining U.S. sales.

The reductions outside North America will include job cuts in Asia, said spokesperson Marcey Evans. The international trims will be "on a smaller scale" than the 15 per cent cut in salaried costs that Ford is implementing in North America by Aug. 1, she said, declining to provide further details.

Ford is cutting jobs after it retreated in May from a target of returning to profitability by 2009.

The Dearborn, Mich.-based company lost $15.3 billion (U.S.) in the past two years, mostly because of deficits in North America. Ford's U.S. sales fell 14 per cent in this year's first half, compared with an industrywide decline of 10 per cent.

The company began dismissing salaried employees in North America last month.

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Breaking up GM will be hard to do
GM is shutting down production at its Oshawa truck plant.

Company that once provided half of all the vehicles in
North America finds itself in perilous state

Jul 13, 2008 04:30 AM
David Olive
Business Columnist

As recently as 1980, when General Motors Corp. commanded about half of the North American market, it was unthinkable that the century-old company might someday face the prospect of bankruptcy. Yet it's the complacency that came with GM's sustained market dominance through most of the 20th century that accounts for the automaker's perilous condition today.

Last Monday, the Wall Street Journal shook up the auto world with a front-page report on GM's woes, and the radical steps the firm is contemplating to ensure its survival.

Little in the report was new. Wall Street long ago factored into GM's share price its litany of woes: The billions of dollars in losses GM has accumulated in recent years, and the continuing losses so far this year; the firm's effective negative net value in balance-sheet terms; GM's steady loss in market share, to a lowly 23 per cent or so; the desperate cash position of a firm that burns through some $3 billion (U.S.) each quarter and must raise at least $10 billion in a hostile stock market to make it through to 2010. And looming cuts in GM's white-collar workforce, after the company threw tens of thousands of workers on the street with plant closures including four announced last month alone, in Oshawa, the U.S. and Mexico.

That's why GM stock is trading at about $10, a 54-year low. And why its shareholder value is a pitiful $5.73 billion, which makes what was the world's biggest automaker less valuable than the larger video-game makers.

For investors in GM bonds and stock, the big shocker last week was a Merrill Lynch analyst's report asserting the possibility of a GM bankruptcy could no longer be dismissed. GM critics have long argued that the firm is on a glide path to insolvency and a bankruptcy-court administered breakup.

The Journal shocker, more internal to the industry, was that GM insiders were talking to the paper along nearly the same lines. The GM officials in the Journal piece were quoted anonymously, but for the first time were going outside the company to admit that the idea of selling or killing most of GM's eight brands was at least "on the table." Which means some of the global industry's most venerable brands – conspicuously Buick and Pontiac, and the younger Saturn – could soon join Oldsmobile, closed down by GM a few years ago with few tears shed even if the legacy of Ransom Olds was Olds' status as the world's oldest auto brand.

The Journal article was a crack in the united front at GM, which has maintained it resolutely stands behind all of its flagship brands. It scared suppliers like Magna International Inc. of Aurora, Ont., the auto supplier whose largest single customer is Detroit, with GM ranking among its top five clients. More worried still were the thousands of GM dealers across the continent, many of them the largest businesses in the small towns in which they're located, which suddenly learned they might have nothing to sell.

Thus GM's top North American sales executive quickly fired off a memo this week to the dealers assuring them the Journal piece had no substance. And CEO Rick Wagoner himself informed GM employees the firm was not skating toward insolvency.

But the media reports and Wall Street's assessment come closer to the truth. Some realities are difficult to hide. North American auto sales are down 10 per cent so far this year. GM's are down 16 per cent. And GM sales of the only vehicles it makes money from – large trucks and sport utilities – are down 25 per cent.

GM has little credibility with Wall Street, having failed with a succession of promised turnarounds over the past decade and a half. "Wait until next year" has been its executive-suite refrain for too long. Wagoner's current fix-it plan was advertised as the mother of all turnaround efforts in GM history. And now even GM insiders are conceding it's too little, too late. Wagoner himself might not survive GM's board meeting early next month.

In fairness to Wagoner, he has cut labour costs as rapidly as possible over the past year. The veteran new-model guru he recruited, Bob Lutz, has come through with vehicles that actually have curb appeal, a novelty for GM since the mid-1980s. Lutz has even arrested the decades-long decline of Cadillac, long ago given up for dead against rivals Lexus, Mercedes-Benz and BMW. (Although, to be sure, Cadillac and its Detroit rival, Ford Motor Co.'s Lincoln brand, remain also-rans in the luxury sweeps.)

And Wagoner's unstinting investments in new-product development, despite a dwindling GM cash position, has yielded at least one potential industry game-changer, the all-electric Chevrolet Volt, due in showrooms in 2010.

For all the "halo" effect of Toyota's Prius, which has cast an eco-friendly glow over the entire company (even though Toyota makes its share of gas-guzzling large cars, trucks and SUVs), Prius remains a niche product even after several years on the market. Its anticipated 2008 sales are a mere 100,000 vehicles. And the Prius is a hybrid, using both electric power and conventional gasoline.

Not only is the Volt's all-electric technology revolutionary – the biggest industry advance since automatic transmission and perhaps even the perfection of the internal-combustion engine in Germany in the 19th century – but GM alone has the sprawling dealer network to make the Volt readily available to curious tire-kickers.

Wagoner's dilemma is that he launched his deep cost-cutting far too late. That also applies to the breakthrough deal he forged last year with the United Auto Workers to shift the enormous burden of employee health-care costs to a new trust to be administered by the UAW with a one-time mega-contribution from GM.

Wagoner has been especially late in addressing GM's notoriously bloated white-collar workforce, whose natural bureaucratic tendencies are to block innovation. And he has been slow to remove even those top executives culpable in GM's biggest blunders.

GM should have foreseen the spectacular increase in pump prices, one could very persuasively argue. But the entire industry was blindsided by the 70 per cent jump in crude prices between last fall and this spring, as were the airlines and government forecasters worldwide. GM's problem, shared with Ford Motor Co. and Chrysler LLC, is that its product mix is skewed to the large trucks and SUVs that North Americans are no longer buying – especially in the aftermath of a collapsed U.S. housing bubble that has erased an estimated $8 trillion (U.S.) in residential real estate value and accounts for the current 16-year low in consumer confidence.

Today's weak economy follows several years of robust total North American vehicle sales, so motorists are less inclined to trade in their relatively new vehicles. Meanwhile, on the horizon potential buyers see the Volt and other innovative products and are postponing new-vehicle purchases until they can check out the ultra-fuel-efficient vehicles on offer in 2010-2011.

Wagoner has been a staunch defender of an eight-division GM, but ultimately it's not his decision to make. It's the call of an increasingly restless GM board that has a fiduciary duty, if nothing else, to curb the cash burn and preserve as much of GM's value as possible on behalf of shareholders. Wagoner's credibility is undermined by his failed attempt to revive Saturn with a slew of costly new models that are showroom dust-collectors.

The hard reality for Wagoner is that he has had his kick at the can, having run GM since early this decade.

There's a precedent for sacking CEOs set by Robert Stempel's ouster by the GM board in the early 1990s. And there's a promising replacement on deck in Frederick "Fritz" Henderson, the former GM chief financial officer recently promoted to president and head of auto operations, a post he took over from Wagoner.

Henderson turned around GM's troubled European and Asian operations, now regarded as among the few crown jewels GM can use as collateral in its urgent recapitalization effort. No sooner had Henderson stepped into his new job than GM hung a for-sale sign on Hummer, a brand which, like Saab, commands a negligible North American market share of 0.2 per cent.

It's difficult to see a future for GM except after being stripped down to Chevrolet, which accounts for well more than half of GM's total business, and a reviving Cadillac that could serve the same purpose that Lexus and Infinity do for Toyota and Nissan Motor Co., respectively.

It probably will take a wrenching bankruptcy to achieve that transformation, since buyers for most of GM's assets are non-existent. Buick and Pontiac long ago lost their value as brands. And foreigners have twice been burned purchasing North American automaking assets – Renault SA with its acquisition of an ailing American Motors Corp., RIP; and the more recent Daimler-Benz AG disaster over nine years in trying to fix Chrysler, which served only to cut parent Daimler-Benz's market value in half.

To pull itself back from the brink, GM needs to wholly commit itself to the costly task of replicating the Volt and becoming the undisputed leader in the small, fuel-efficient vehicles of a 21st-century market. It is a market in which vehicle sales will fall to a permanently lower level as climate change, energy security and urban traffic congestion compel more and more motorists to forsake their vehicles – or their current extensive use of them – in favour of cycling to jobs closer to home and making more use of public transit.

There is no silver bullet for GM and its Detroit rivals, which soon will face still more competition from cheap Chinese and Indian "microcars." (Likely price: $5,000 to $7,000)

One sure measure of an enterprise's worth is the answer to the question: if it didn't exist, would you launch this business today? The answer in GM's case is that the world would function perfectly well without it.

You could not have said that when GM was providing half the automobiles in North America. But today GM lacks not only direction but also a raison d'être, which in all probability will be determined by a bankruptcy-court judge.

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HOW GM COMPARES IN MARKET SHARE — THEN AND NOW

Of General Motors Corp.'s eight divisions, only two, Cadillac and Chevrolet, are considered untouchable by GM's management.

At next month's board meeting, the automaker's six remaining brands are all under review for sale or closing.

Here's how GM products stack up in market share from 2000 to 2008:

Chevrolet
2000: 15 per cent
2008: 12.9 per cent

GMC
2000: 2.9 per cent
2008: 2.5 per cent

Pontiac
2000: 3.5 per cent
2008: 2.1 per cent

Saturn
2000: 1.6 per cent
2008: 1.4 per cent

Cadillac
2000: 1.1 per cent
2008: 1.2 per cent

Buick
2000: 2.3 per cent
2008: 1.0 per cent

Hummer
2000: 0.0 per cent
2008: 0.2 per cent

Saab
2000: 0.2 per cent
2008: 0.2 per cent

Note: 2008 figures are year to date.

Sources: Ward's Auto, Autodata Corp.

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GM shares hit new low

Bankruptcy worries haunt once-mighty auto giant
Jul 10, 2008 01:29 PM
The Associated Press

NEW YORK – Shares of General Motors Corp. slid to another record low today, as speculation about the financial stability of the U.S.-based automakers and a possible bankruptcy filing at GM continued to swirl.

In early afternoon trading, GM shares fell 69 cents, or 6.68 percent, to $9.64, after tumbling to $9.42, passing Monday's more than five decade low by 50 cents.

Today's low marked the Detroit-based automaker's lowest share price since July 2, 1954, when its stock dropped to $9.15, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes.

Carl-Peter Forster, president of GM Europe, called rumors that the automaker is near bankruptcy "baseless" in an interview with Spiegel Online, the Web site of the German news magazine Der Spiegel.

But Forster acknowledged in the interview, released today, that the automaker must restructure its U.S. businesses in the next 18 months.

The executive also said that while GM is discussing the sale of its Hummer brand, reports about other brands being up for sale are pure speculation.

GM's shares have taken a heavy beating this year as soaring gas prices have driven U.S. consumers away from its sport utility vehicles and pickup trucks in favor of more fuel efficient cars and crossovers.

Since the beginning of the year, GM shares have fallen nearly 60 percent. In the last 12 months, GM shares have lost about 72 percent of their value.

Shares of Ford Motor Co. also tumbled today, falling 17 cents, or 3.4 percent, to $4.78 in midday trading, after falling as low as $4.61 earlier. The Dearborn, Mich.-based company's shares dropped to a multi-decade low of $4.30 on July 3.

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Hargrove leaves Early
CAW boss will retire by September, endorses Windsor's Lewenza

CAW president Buzz Hargrove, with Windsor local boss and heir-apparent Ken Lewenza beside him yesterday, announces he’ll retire by Sept. 15.


Jul 09, 2008 04:30 AM
Tony Van Alphen
Business Reporter

Buzz Hargrove says he will retire early as the president of the Canadian Auto Workers and Ken Lewenza, the fiery leader of the union's big Windsor local, is set to jump into the driver's seat.

Hargrove, who has led the country's biggest private sector union since 1992, surprised CAW leaders yesterday by revealing he will leave no later than Sept. 15 instead of next year at the mandatory retirement age of 65.

The announcement came on the same day that Hargrove, the CAW's other senior officers, executive board, directors and staff overwhelmingly endorsed Lewenza, president of Local 444 in Windsor, at meetings to fill the $150,700 a year hot seat.

"He has enormous energy," Hargrove told reporters as Lewenza sat beside him. "I think everyone works hard for the union but no one works harder than Kenny."

Hargrove assistants Hemi Mitic and Tom Collins, who indicated earlier they would run regardless of the outcome of the endorsements, instead pulled out of the race at the same meetings.

"The support I thought I had didn't materialize," said Mitic.

The endorsements and withdrawal of the other two candidates will make it extremely difficult for anyone else in the 250,000-member union to mount a challenge against Lewenza at a special convention within the next two months.

Hargrove, who had planned on retiring next March or August, said campaigning had started for his post and the other top union job of secretary-treasurer during the last month.

Hargrove, who had initially planned to stay until next spring or even summer, said he didn't want the increasing political activity to divide the CAW and abruptly called the endorsement meetings two weeks ago that would lead to a convention later in the year

"I didn't want this to drag on," he said about the rush to a convention date, which has not yet been set.

Hargrove revealed he made the decision to retire early in the last few days but has no personal plans to pursue political office or any other ventures.

"I haven't been asked; I have no plans to run and I'm a socialist without a home," said Hargrove, who lost his membership with the NDP after advocating strategic voting for Liberals in some federal ridings a few years ago.

At meetings, the officers, board and staff also endorsed Peter Kennedy to replace Jim O'Neil as secretary-treasurer when he retires next August. Kennedy is O'Neil's assistant. However, Carol Phillips, another Hargrove assistant, says she'll contest that job next year.

Lewenza, 53, described yesterday's endorsement decisions as "gut wrenching" and he didn't accept them lightly.

"I take them with great pride," he added. " But I'm no Buzz Hargrove. He has been an incredible leader and one I hope to follow in the same path in terms of the energy, the leadership, the ability to bring people together. He's done it all."

Yesterday's moves follow charges by union staff representatives that senior leaders were pressuring and threatening them and the executive board to support the "team" of Lewenza and Kennedy.

They also said the handling of the union's current system of electing leaders was undemocratic.

But Hargrove rejected those allegations and said no members, including the other candidates, have raised the issue until now.

Sam Gindin, a former CAW economist and critic of Hargrove in recent years, said the abrupt decision eliminates the chance for a strong debate and campaign to pick a successor. "This just doesn't show much respect for the membership and the democratic process," Gindin said.

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CAW's Hargrove to step down amid                   industry crisis

By Cameron French

TORONTO, July 8 (Reuters) - After 16 years of fighting to hold the line on jobs and wages as head of the Canadian Auto Workers union, Basil "Buzz" Hargrove will step down in the midst of a deepening crisis engulfing the North American motor vehicle industry.

Hargrove, who has led the CAW -- Canada's biggest private-sector union -- since 1992, said on Tuesday he will retire after a vote is held to elect his successor. The vote will be held by Sept. 15 at the latest.

Many had thought Hargrove would remain in his job until next March, when he will reach the mandatory retirement age of 65. Hargrove told a news conference he is stepping down early to avoid a lengthy leadership campaign that could divide the union, which is already under threat from plant closures and a deteriorating relationship with key employer General Motors .
Last month, GM said it would close its Oshawa, Ontario, truck plant, with the loss of as many as 2,600 jobs.

That announcement came fast on the heels of contract talks that many had considered a coup for Hargrove and the union. He had managed to complete contract agreements with the "big three" U.S. automakers months ahead of schedule and with fewer wage concessions than many had expected.

The union said it was double-crossed by GM on the Oshawa plant, but the company said it was forced to close the plant early because of a severe shift in the market for pick-up trucks and SUVs.

Hargrove said his final task as CAW head would be to try to resolve the dispute with GM.
"If there's any regret at all, it will be if we can't find a solution to the GM Oshawa thing before I leave. I will feel bad about that," he said.
GM, meanwhile, has only seen its problems deepen over the past few weeks, as falling demand for its large trucks and SUVs has prompted the automaker to announce more production cuts and promise more cost-cutting.

USING THE MEDIA
Through his career, Hargrove has been no stranger to public battles. The union leader was rarely shy about fighting his battles in the news media, frequently calling new conferences to lambaste a contract offer that wouldn't meet the CAW's position on wages or benefits.
"I think Buzz thinks his legacy is going to be that he has maintained and he has achieved for his workers extremely good wage rate and benefits, which he has," said Anthony Faria, an analyst at the Auto Research Centre at the University of Windsor.

"But that has resulted in Canada being very likely the highest automotive labor cost country in the world."
In addition to high labor costs, the Canadian industry suffers from a currency that has risen 60 percent against the U.S. dollar over the past six years, raising the cost of cars built in Canada.
Hargrove has had to deal with plant closures, layoffs, and worries that production lines for large-size sedans and trucks may also shut down.

U.S. auto sales plunged last month to a 15-year low as gasoline prices climbed to record highs, a deep housing crisis showed few signs of ending and consumer confidence continued to flag.
The CAW represents more than 250,000 workers across several industry groups, including about 60,000 in the auto sector, which is dominated by plants owned by General Motors, Ford Motor Co. , and Chrysler LLC.

HIGH SCHOOL DROPOUT
Born in Bath, New Brunswick, in 1944, Hargrove dropped out of high school and worked on the assembly line at Chrysler's operations in Windsor, Ontario, just across the river from Detroit.

He joined the union's staff in 1975, at a time when the union was the Canadian arm of the U.S.-based United Auto Workers.
In 1978, Hargrove became assistant to director Bob White, and played a big role in the union's break from the UAW in 1985.
Hargrove was also a prominent voice in Canadian political circles. In 2002, he considered running for the leadership of the left-leaning New Democratic Party, but decided to stay with the CAW.

In 2006, Hargrove urged union members to vote for the more centrist Liberals as they had the best chance of defeating the right-leaning Conservatives. The move prompted the NDP to suspend his membership.

His departure comes as Canada's minority government girds for an election expected over the next year.

Asked if he would consider running for office, he said he had no plans to do so.

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Hemi for CAW President
CAW National Executive Board and Staff

Hemi

Greetings:

I write today seeking your support as a candidate in the Administration Caucus for President of CAW. I feel my experience, broad-based knowledge and understanding of the Union give me the tools necessary to lead us through the tough struggles ahead.

In January 2007, I met with Brother Hargrove indicating my interest and on Saturday June 21, 2008 I advised him of my intentions. On Tuesday June 24th, I met with Brother Lewenza and he advised me he had also made a decision to run for President. He has since then sent out correspondence confirming his intention and soliciting support.

On Wednesday June 25th, Brother Hargrove called a special meeting of the NEB and Staff for July 8th to endorse the future leadership team. This process is a bit awkward since there are no declared vacancies and a meeting of the Administration Caucus has not yet been scheduled.

I believe we must build consensus through wide consultation with the leadership from all regions and sectors of the Union. I also believe the passing of the torch should be a celebration of our accomplishments and a renewal of our vision as we chart a course for the future.

Disappointing statements have been made that my decision is an act of disloyalty but I assure you that I have been a loyal caucus member since I joined the union and I will respect the decision of the caucus.

I want to thank-you for your encouragement and look forward to sharing a positive working relationship with you.

Hemi

(Check out Hemi's Wesite)

New Leadership Selection

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CAW staffers say they were 'bullied'

Jul 07, 2008 04:30 AM
Tony Van Alphen
Business Reporter

Staff of the Canadian Auto Workers have revolted against the union's election process, saying they are "being bullied, threatened or coerced" by the current administration into supporting top leadership candidates.

In another sign of growing internal unrest in Canada's biggest private sector union, George Botic, head of a group of CAW staff representatives, says in a letter to colleagues that his group has received many complaints about pressure tactics to vote for specific candidates or "face grave consequences."

Botic, who was unavailable for further comment, did not elaborate on the consequences in the letter but union insiders say some representatives fear for their careers if they do not support two candidates to replace retiring president Buzz Hargrove and secretary treasurer Jim O'Neil.

"The complaints range from staff being bullied, threatened or coerced into making a decision on support of administration candidates," Botic said in the July 5 letter obtained by the Toronto Star.

Botic wrote that his separate union of about 150 representatives has "serious concerns" about the CAW's election process. For example, senior leaders told them last December they must vote for nominees – that the national executive board endorsed – at their own staff representatives meeting later and at a subsequent convention.

In his letter, Botic said, staff representatives must have the right to vote for the candidates of their choice at a convention and not be under leadership pressure to support anyone.

"If we abstain, it will be viewed as not supporting or being disloyal to the administration," Botic added. "This is fundamentally wrong."

Hargrove denied Botic's charges that top union leaders are arm twisting staff representatives.

"The letter was dishonest, filled with inaccuracies and totally untrue," he said. "I phoned George to tell him how upset and disappointed I was."

Hargrove added he has received emails from other staff reps at the December meeting who challenged Botic's version of events.

Two weeks ago, Hargrove abruptly called for separate executive board and staff meetings tomorrow to "discuss and endorse the future leadership team of our union."

Hargrove, who expects to retire next year, said he moved for the early endorsements for the two most powerful positions because members had started campaigning and that could divide the union.

Hargrove said he has not revealed his endorsements. However sources say he will favour Ken Lewenza, the fiery leader of Local 444 in Windsor, for president and Peter Kennedy, an assistant to O'Neil, for the secretary-treasurer's position of the 250,000-member union.

Endorsements at the board and staff levels give any candidate a significant edge in running for the leadership at a convention. But the union has not announced a convention date or when Hargrove and O'Neil would vacate their positions.

Hargrove assistants Hemi Mitic and Carol Phillips have indicated they will seek the president and secretary positions respectively. They have publicly opposed the union's handling of the process and plan to run regardless of any endorsement decisions this week.

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GM faces possible bankruptcy

Merrill report says GM bankruptcy possible if the U.S. auto market continues to tumble

Southfield, Mich.–General Motors Corp., battered by the slowest U.S. sales market in 15 years, faces the possibility of bankruptcy and may need to raise as much as $15 billion (U.S.), a Merrill Lynch & Co. analyst said.

The "dramatic drop-off" in sales probably will continue through 2009, forcing GM to find additional funding, analyst John Murphy, who cut the Detroit-based automaker's shares to "underperform" from "buy," said in a report.

"Bankruptcy is not impossible if the market continues to deteriorate," the report said.

GM, which hasn't earned a yearly profit since 2004, fell $1.77, or 15.06 per cent, to close at $9.98 in New York trading, the shares' lowest close since Sept. 13, 1954.

Ford Motor Co. shares yesterday fell 35 cents, or 7.4 per cent to close at $4.36, passing a multi-decade low of $4.41 set the day before.

On Tuesday, GM shares surged as much as 12 per cent. The automaker reported an 18.2 per cent drop in sales from a year ago, but it retained its traditional U.S. sales lead over Toyota Motor Corp., which posted a 21.4 per cent decline.

Analysts, who had expected a steeper drop, said GM's sales outpaced those of most other automakers because of late-month incentives and double-digit jumps in demand for some small- and mid-sized cars.

Deutsche Bank's Rod Lache said that while previous incentive programs have resulted in temporary boosts to GM's market share, they have generally been followed by drops in later months.

June was a dismal month for the industry, which posted a 18.3 percent sales drop, according to Autodata Corp. Only Honda, the lineup of which is tilted toward smaller and more fuel-efficient cars, managed to report a sales increase for June – slightly above 1 per cent.

The automakers' shares have taken a beating in recent weeks, hurt by rising oil prices and a weak U.S. economy, along with a shift in consumer demand away from gas guzzling light trucks and toward smaller, more fuel-efficient cars and crossovers.

GM shares have declined 72 per cent in the past 12 months, the biggest drop among the 30 companies in the Dow Jones Industrial Average.

Murphy's assessment follows GM's report Monday that its June U.S. auto sales fell 18 per cent, as rising gasoline prices dampened demand for pickups and sport-utility vehicles.

Merrill's figure on how much the largest U.S. automaker may have to raise is more than estimates last month of as much as $8 billion by Bank of America Corp. and $10 billion by JPMorgan Chase & Co.

Merrill also cut its price estimate for the shares by 75 per cent to $7.

"The recent extreme deterioration in volume and mix is driving much higher cash burn and eroding GM's cash position," Murphy said. "We believe $15 billion is necessary because there is downside risk to our current estimates and a greater cushion is essential."

Any capital GM raises has the potential to dilute equity if it's done through convertible offering or the issuance of additional equity, both possibilities analysts have raised.

The automaker said, however, that it has "sufficient liquidity and financial flexibility to meet its 2008 funding requirements."

GM spokeswoman Renee Rashid-Merem said the company may consider "reducing structural costs, selling non-core assets, and re-timing or eliminating other capital spending" if the market continues to deteriorate.

GM had $24 billion in cash and marketable securities and access to about $7 billion in undrawn U.S. loans on March 31, at least $6 billion more than it initially figured it would need for a U.S. decline, chief financial officer Ray Young said on May 13. The automaker said Monday that it plans to cut North American production this quarter 12 per cent to about 900,000 vehicles.

Automakers book sales when a car or truck is built, so lost output reduces revenue.

Strikes at GM's largest axle supplier and two of its own plants trimmed production in the region 27 per cent last quarter.

The annualized U.S. sales rate for June fell to 13.6 million cars and light trucks, the lowest since 1993. Automakers, including GM, said dealers didn't have enough fuel-efficient cars on their lots to meet customer demand.

GM is adding 50,000 cars and so-called crossover sport-utility vehicles, which combine car and light-truck features, to its 2008 production plans.

The average U.S. price of gasoline rose to a record $4.09 a gallon this week, according to auto group AAA.

GM's June decline was narrower than the 28 per cent for Ford Motor Co. and 21 per cent for Toyota Motor Corp.

Even with Toyota's drop, Asia-based automakers outsold GM, Ford and Chrysler LLC for the second straight month.

The U.S. automakers rely more on sales of pickups, SUVs and vans.

Murphy lowered his estimates for this year's U.S. industry sales to 14.3 million vehicles from 14.8 million, and to 14 million from 15.3 million vehicles for 2009.

The annual industry average this decade has been 16.8 million.

GM also said yesterday that its sales growth in China slowed in the first half as competition intensified with Toyota and Volkswagen AG.

The U.S. company boosted sales in China 14 per cent in the period, compared with 19 per cent a year earlier, Joseph Liu, vice-president for GM China, said in an interview. GM is the biggest overseas automaker in that country.

Credit option contracts on the Chicago Board Options Exchange that would pay out if GM or Ford default before September 2012, meanwhile, ticked higher.

The contracts point to a roughly 73 per cent default risk for GM and a 69 per cent one for Ford.

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CAW candidate slams
Hargrove Succession plan

Jul 04, 2008 04:30 AM

Tony Van Alphen
Business Reporter

A candidate for one of the two top leadership posts with the Canadian Auto Workers says she's received high-level pressure to support a so-called "team" that doesn't include her.

Carol Phillips, who wants to become the CAW's next national secretary-treasurer, confirmed yesterday that some assistants to retiring president Buzz Hargrove have told her who to endorse during the push for early decisions on the two most powerful positions in Canada's biggest private-sector union.

"I was expected to endorse the team before we've had any discussion or debate in the union," said Phillips, a long-time assistant to Hargrove and his predecessor Bob White.

"If you don't, you're portrayed as someone who doesn't play the game and is disloyal. This isn't any way to run a union."

Phillips revealed members of the union's national executive board also received instructions on who to support. She wouldn't identify the senior assistants and other officials who exerted pressure.

Phillips, a special adviser to former Ontario premier Bob Rae for two years in the early '90s, is the first senior CAW official to publicly criticize Hargrove's call for "special caucus" meetings next Tuesday to "discuss and endorse the future leadership team of our union."

Her remarks underline internal criticism of the CAW's system of electing its leaders and the way Hargrove has handled the process. They also reveal the possibility of hotly contested races to replace Hargrove and national secretary- treasurer Jim O'Neil.

Hargrove, who has led the union for 16 years and is the most recognizable name in Canada's labour movement, expressed concern the races could divide the influential union. The CAW represents some 250,0000 workers in sectors ranging from auto and airlines to railways, mining and fisheries.

"I want to avoid any splits," Hargrove said. "Our focus should be on helping our members, not on politics."

Hargrove and O'Neil have not announced when they'll retire next year and the union hasn't set a date for a convention to elect successors. Hargrove turns 65 next year; the union's constitution calls for mandatory retirement at that age.

Endorsements from the union's three top officers, 12-member executive board and a group of 150 staff representatives are critical for any candidates contesting the top jobs.

Sources say Hargrove and O'Neil will recommend the board endorse Ken Lewenza, the fiery leader of CAW Local 444 in Windsor, for the president's job and Peter Kennedy for secretary-treasurer. Kennedy is currently an assistant to O'Neil.

Hemi Mitic, another long-time Hargrove assistant, has indicated he'll run for the president's job regardless of an endorsement. He is also critical of Hargrove's handling of the succession process.

Phillips, 54, said in a note to union staff that she was surprised at the "rushed caucus" meetings to endorse "the team."

"In the many conversations that I've had since then, I know we were all equally surprised at the calls we received telling us who we were expected to endorse even before any discussion took place. Some have been pressured to commit.

"This is not a democratic enough process worthy of our great union."

Phillips said in the interview that under the "caucus" system, union members participate through a show of hands in support of particular candidates, which "locks them in" before a secret ballot vote.

A show of hands is also not democratic or fair because of possible peer pressure, she noted.

"It puts people in a difficult position," Phillips added. "I call this process a hangover from our UAW (United Auto Workers) roots. Anyone who doesn't get an endorsement is an opposition candidate and left in a defensive position."

In response to Phillips' criticism, Hargrove said he doesn't have much respect for someone who worked under the caucus system for many years and now complains about it when running for office.

"If she were to get the endorsements on Tuesday, she would be supportive of the process," he said.

But Phillips said she won't be pursuing endorsements on Tuesday, and will instead seek election at the convention in a secret ballot vote.

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Hard act to follow

Buzz Hargrove's coming retirement from the CAW sparks showdown over successor

Buzz Hargrove

Jul 02, 2008 04:30 AM
Tony Van Alphen
Business Reporter

The Canadian Auto Workers union is heading for a showdown over who will replace president Buzz Hargrove.

Hargrove has called early meetings of the CAW's national executive board, top administrators and senior staff for next Tuesday to debate and endorse who will lead the union after he retires within the next year.

In memos to the union's executive board, department heads, area directors and about 150 staff representatives, Hargrove called two special meetings ``to discuss and endorse the future leadership team of our union.''

Sources say Hargrove will ask the board and the other groups to endorse Ken Lewenza, president of CAW Local 444 in Windsor, as the next head of the country's biggest private-sector union.

However Hemi Mitic, a veteran assistant of Hargrove, confirmed yesterday he will make a bid for support from the same groups at two separate meetings.

Insiders say an endorsement from the board and staff would be a huge boost toward winning at a national convention of more than 800 delegates. No one has won the top job in the union's history without first securing the high-level endorsements.

However, Mitic said even if he doesn't get the key endorsements, he will run for the $150,700-a-year job of leading about 250,000 workers in industries ranging from autos and airlines to railways, mining and fishing.

Hargrove, who has led the CAW for 16 years, turns 65 next March, the union's mandatory retirement age.

Politicians and corporate executives are closely watching the unfolding race to lead the union, which has significant influence in the lives of millions of workers and the economy.

Hargrove's call for next week's meetings surprised many union officials who expected him to wait until later in the year or early 2009 before triggering the endorsement process. It also underlines the political intrigue engulfing the hierarchy of the union in recent months about who would replace Hargrove, organized labour's most-familiar voice for more than a decade.

``There has been a lot of arm twisting going on in the last month or so,'' said one source familiar with the union's politics.

``The leaders prefer to call it `encouragement.'''

Hargrove said in an interview yesterday that candidates and their supporters had started actively campaigning ahead of the endorsement process.

``People have started to campaign so I figured it would be better to get our leadership together and make a decision on who we would endorse,'' he said.

Lewenza, a prominent figure among Windsor's movers and shakers, would not publicly confirm his intentions Monday.

But the 53-year-old, who is also chair of the union's master bargaining committee at Chrysler, sent a brief note to other members in that group last week soliciting their support.

``I have decided after a great deal of deliberation to seek the support of the administration of the national union in succeeding Buzz Hargrove,'' he wrote to members of the bargaining committee.

``I would appreciate your support and I am hopeful that we can have a smooth transition of leadership that will put the interests of our members first and foremost.''

Mitic, the union's former national director of organizing and an assistant to Hargrove since 1992, said he informed him of his intention within the last two weeks.

``I feel my experience, broad-based knowledge and understanding of all sectors of the union give me the tools necessary to lead us through the tough struggles ahead,'' said Mitic, who has supporters across the country.

Mitic, 57, has clashed with Hargrove privately during the past year and said the succession process has become ``a bit awkward'' because the president and secretary treasurer have not announced their retirement dates. Also, there is no date for a convention yet, he said.

Union sources say Jerry Dias, a former president of the CAW local at De Havilland Aircraft who became another assistant to Hargrove last year, would be a potential candidate for the top job. But Dias, 49, will now likely wait until Hargrove's successor retires, according to the sources.

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Ken Lewenza throws his hat in the Ring in a bid to Succeed Buzz Hargrove as President of the CAW

Ken Lewenza, president of CAW Local 444, has officially notified the Chrysler Master Bargaining Committee that after a great deal of deliberation he'll be seeking the support of the administration of The National Union in succeeding Buzz Hargrove.

It is being said that Ken has probably already received the support of Hargrove and now has to lobby the CAW Top brass before the election that will be held at the Constitutional Convention In Quebec City August 2009.

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The Death of the
Administration Caucus?

The move by Bro. Hargrove to hand pick his successor is not without precedent in the CAW, UAW or in many other Unions. In most cases a succession plan is put in place long before the departing leader steps down. The successor is usually someone who has worked closely with the outgoing leader over the years and shares many of the same ideas and views and has demonstrated a competency for leadership.

While critics may argue that in a truly democratic organization the outgoing leader should have no more right to choose who follows him (I use “him” because in the CAW/UAW there has never been a “her” president or candidate). In an ideologically pure world uncontaminated by politics, egos or personal ambition such a concept might bear fruit. In the CAW and predecessor UAW there is a history and culture of strong and sometimes forceful personalities in the office of President. There has also always been a cultural or organizational acceptance of the outgoing President selecting his successor.  One of the most difficult tasks any leader faces is managing the ambitions of those who wish to succeed him.

 When leadership transition happens smoothly there is little dissension and even less opposition. When it is managed poorly or in a heavy handed or capricious manner it has the potential to damage both the incoming leader and the organization.

The election of our top officers is made by the free and democratic will of the Constitutional Delegates at the Constitutional Convention that will be held in August 2009 in Quebec City. Historically part of that process has involved what in both the UAW and the CAW is known as the Administration Caucus. Over the years the Administrative Caucus has elected the overwhelming number of Officers and NEB members. The President of the Union is the Chair of the Caucus and most often proposes to the National Executive Board who he supports for any vacancies, either on the NEB, CLC, or Officers of the National Union prior to the Administrative Caucus meeting. The NEB has almost uniformly accepted the proposals of the President.

So while this process has all the appearances of what some in our Union cynically refer to as “guided democracy” it has always provided potential candidates for office the choice of either coming to Administration Caucus and putting their name forward and abiding by the decision of the Caucus or alternatively, not coming to Caucus and being nominated and running from the floor of the Constitutional Convention.

While this system is far from perfect it has been an integral part of the history and culture of our Union. Where this system started coming off the track was two years ago when long time activist Bro. Willie Lambert decided to make an unprecedented challenge Bro. Hargrove for the Presidency of the Union. To watch the reaction of some of the National Union administration and staff, you would have thought that war had been declared on Placer Court. Instead of waiting for Administrative Caucus to take place prior to the Constitutional Convention and unanimously endorse the candidacy and Presidency of Brother Hargrove they called regional meetings across the country and instructed the Local Unions to put their workplace leadership and Local Officers out on lost time to hear from Brother Hargrove and hold a binding vote to endorse his candidacy for re-election. Next they went to the various Councils of CAW Council (IPS, Health Care, Skilled Trades, GM, Ford and Daimler Chrysler) and held binding votes to affirm support for the candidacy of Brother Hargrove. Finally, the machine rolled into the Administrative Caucus in Vancouver and unanimously endorsed Bro. Hargrove.

At the IPS Council I was the only delegate out of the nearly 150 in the room who voted against endorsing Bro. Hargrove and Bro. O’Neil (who ran unopposed). The reason I voted against the recommendation was not that I didn’t support Bro. Hargrove but that I felt the issue of candidacies and endorsements are more appropriately handled at the Administrative Caucus. The mistake I made was not getting to a mike prior to the vote and challenging the validity of the vote. In the weekend that followed I had many delegates approach me and congratulate me for my vote. I had to explain repeatedly that it was not about supporting Bro. Hargrove but about respecting the process. I asked a number of delegates and Staff at the time what would happen in three years if there were two highly credible candidates stepping forward for the Presidency. Would this same process of locking the various Councils and regional groups into supporting the presidentially anointed one happen again? Why do we have an Administration Caucus? Would both candidates be offered the opportunity to address the different Councils of our Union? And if not, why not?

To be clear I am not endorsing either candidate for President of our Union. For me this is about respecting the right of both candidates to campaign up to the time the Administration Caucus is held. Brother Hargrove and the NEB can make their preferences known and I respect that those preferences will carry some weight for the candidate fortunate enough to garner their support. However, if we are to continue talking the talk of being a democratic Union we have to start walking the walk. To this end I am proposing the following:

1)      The vote to endorse the candidacy of any candidate be conducted by secret ballot at the NEB and Staff meeting.
2)      The vote of the NEB or Staff shall not be binding to the extent that prevents either candidate from campaigning up to and including the Administration Caucus held prior to the Constitutional Convention.
3)      There will be no repercussions to any member of Staff for their support or non support of either candidate.
4)      If any Council of the Union endorses either candidate such vote will not be binding on any delegate of that Council / or in the alternative if a vote of any Council is considered binding both candidates will have an equal opportunity to make a presentation to said Council.

While these proposals may not go far enough for some in our Union who share legitimate concerns about Union democracy they are in my opinion a progressive step that will foster genuine support of the rank and file and reflect positively on both Brother Hargrove and our great Union.

In Solidarity

Jim Reid

(The writer is the 1st Vice President of Local 27. The views expressed to not necessarily reflect the position or opinions of Local 27 or its Executive Board)

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Ford's Volvo lays off 1,200 workers

Jun 28, 2008 07:55 AM

MALIN RISING
The Associated Press

STOCKHOLM–Ford-owned Volvo said Wednesday it had given layoff notices to 1,200 workers in Sweden following a $151 million first-quarter loss on declining U.S. sales.

The company said it has started negotiations with unions representing staff in Goteborg and Olofstrom in the west and southern parts of Sweden.

Volvo will also cancel contracts with around 500 consultants and plans to reduce its overseas work force by 300 people.

The company said the layoffs are part of a program to cut costs by around 4 billion kronor ($662 million).

"We must tackle the difficult market conditions, most of all in the U.S. market," Volvo Cars Chief Executive Fredrik Arp said.

The company said the weak U.S. dollar and rising raw material prices have weighed on results for a long time, but that the situation has deteriorated further with the continued decline in the U.S. market and weaker market conditions in Europe.

U.S.-based Ford Motor Co. bought Volvo Cars in 1999.

Ford's stock price has slid in recent weeks amid record-high gasoline prices, a sluggish economy and the announcement that it no longer expects to return to profitability by 2009.

The top deputy of prominent Ford shareholder Kirk Kerkorian, former Chrysler Chief Financial Officer Jerry York, recently suggested Ford should sell its Mercury and Volvo brands.

However, while the company has earlier sold its Aston Martin, Land Rover and Jaguar brands, it has said it plans to keep Volvo and work on making the unit more profitable.

Ford is also trying to cut costs amid a dismal environment. The company's sales fell 16 per cent in May.

Faced with a continuing plunge in pickup truck and sport utility vehicle sales, Ford Motor Co. said Friday it would delay production of its new F-150 pickup truck and announced other factory cuts.

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CAW mulls life after truck plant

Jun 27, 2008 04:30 AM

Tony Van Alphen
Business Reporter

The Canadian Auto Workers union, which still wants General Motors to keep the Oshawa truck plant open, has started talks with the company about helping employees cope financially with its closing.

GM officials presented a proposal yesterday to soften the blow of the plant's closing in the third quarter of next year and the union said it would consider the contents during the next few weeks.

"We talked about an incentive program that will help with the downsizing of the Oshawa operation over the next four or five years," CAW president Buzz Hargrove told reporters.

The company also talked about new product programs for the nearby flexible manufacturing plant but made no commitments.

The downsizing of the Oshawa complex, which GM once considered "the jewel" of its worldwide operations, could cut employment from about 9,000 a few years ago to about 3,000 by the end of 2009.

However, the employment level could experience a net increase of a few hundred more jobs from that point as the company adds more models to its new flexible manufacturing operation and phases out the No.1 car plant. It has already closed its No.2 car plant.

Last year, GM operated three assembly plants in Oshawa on eight shifts. In addition to the pending truck plant closure, GM is gradually consolidating the two car plants into the one flex plant.

Hargrove and other union officials would not disclose any details of the company's proposal. A senior GM official also would not comment.

"We consider the meeting private," said Stew Low, director of communications for General Motors of Canada Ltd.

Earlier this month, parent GM Corp. announced it would close the Oshawa truck plant and three other assembly operations in North America.

Union leaders had indicated they would fight the closing and blockaded the company's headquarters in Oshawa for 12 days in a high-profile protest. They vowed further "job action" but there have been no moves since the blockade.

"Are we accepting it?" Hargrove said. "You know, eventually someone keeps hitting you with a sledgehammer, you're going to wake up. Right now, we don't have a truck and we don't have the plant."

Later, he said the union still isn't resigning itself to a closing.

"Have we given up? No."

Union leaders said GM also informed them "on a confidential basis" about more possible product programs at the flex plant but the company didn't identify any names or starting dates for production.

GM will begin building the Chevrolet Camaro sports car late this year but the flex operation needs other models with much more volume to realize efficiencies and profits.

Sources say GM will build a Cadillac model and possibly another version of the popular Malibu mid-size sedan.

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How Canada can win
the fight to keep auto jobs

Planning to keep auto jobs in Canada has to involve the foreign and domestically owned companies in the auto sector, the CAW and all three levels of government, writes James Laxer.

Hard mileage targets and government help to
hit them would spark creation of a green fleet

Jun 24, 2008 04:30 AM
James Laxer

The struggle of workers at General Motors to maintain jobs in Oshawa is a matter of direct concern to every Canadian who doesn't want this country to be pushed back into its historic role as a hewer of wood and a drawer of water.

Many people appear to have concluded wrongly that General Motors had no real choice in announcing it will shut down its plant in Oshawa because it produces pickup trucks whose sales are plunging as gasoline prices skyrocket.

It's obvious that we are living through a period in which a vast shift in the kinds of vehicles we will use is underway. The question is where will these vehicles be manufactured – what new vehicles could be built in the Oshawa plant, among others – and will Canadian workers get a decent share of the jobs to manufacture them?

Canadians have been fighting to create and keep jobs in this vital sector for the past hundred years. The production of automobiles in Canada has gone through four phases. A fifth one is now underway, a phase with vital implications for the future of manufacturing in this country.

During the first phase, Canadian carriage makers such as Sam McLaughlin in Oshawa produced automobiles for the Canadian market. By 1904, McLaughlin had figured out that he couldn't compete with Detroit in the production of auto engines and he began importing Buick engines to be installed in his vehicles. In 1915, he made the same arrangement with Chevrolet.

Phase two came at the end of World War I when McLaughlin sold his two companies to General Motors and General Motors of Canada came into being. With Ford and Chrysler also operating subsidiaries on this side of the border, Canada entered the golden age of branch plant auto production during the 1920s. On the eve of the Great Depression, plants in Canada were producing more than 250,000 cars a year, with more than 100,000 of them being exported, mainly to other countries in the British Empire.

Then came the collapse of the industry during the Great Depression, the shift to the production of military vehicles during World War II and the emergence of the industry in a toughly competitive environment in the 1950s and 1960s.

Phase three began with the signing of the Canada-U.S. Auto Pact in 1965. Under the Auto Pact, auto plants in Canada and the United States could ship their vehicles and parts produced for new vehicles across the border duty free. To compensate for the fact that the Big Three auto manufacturers were U.S.-owned, safeguards were included in the pact to guarantee production of cars and trucks in Canada. As the market for cars and trucks grew in Canada, this had to be matched in the case of cars with at least 60 per cent additional production, and in the case of trucks 50 per cent.

Under the Auto Pact, Canada's export of autos to the U.S. soared. Problems lay ahead, however. The Canada-U.S. Free Trade Agreement, followed by NAFTA and by rulings of the World Trade Organization, killed the Canadian production guarantees that existed under the Auto Pact.

What kept Canada's auto industry healthy in the fourth phase during the 1990s and the early years of this decade were the low value of the Canadian dollar, medicare and cheap oil. The low dollar against the U.S. greenback and the fact that medicare spared auto makers from having to pay out vast sums in health plans to workers as was the case in the U.S. made Canada a very profitable place to manufacture autos.

Now that the Canadian dollar and gasoline prices have soared, two of the three supports are gone as we enter the fifth phase in the history of the auto industry in this country.

The critical question is where new investments will go to manufacture more fuel-efficient cars and trucks, as well as hybrid, hydrogen-powered and electric vehicles, and vehicles with lower carbon emissions.

It's the old Canadian story with a 21st century set of problems. How do Canadians persuade a largely foreign-owned industry that does most of its research and development and product innovation outside Canada to give us a fair share of the jobs? In the past we've used British Empire preferences, safeguards under the Auto Pact, and a cheap dollar to stay in the business.

Now we are going to have to do some serious planning. We won't be able to rely on foreign-owned companies that do their product development elsewhere to dole out assembly jobs to us. We need to produce environmentally friendly, fuel-efficient vehicles in a context in which cities are being transformed by the rising price of energy. That planning has to involve the foreign and domestically owned companies in the auto sector, the CAW and all three levels of government.

The way ahead needs to be through a combination of carrots and sticks. In conjunction with the provinces, Canada should establish hard targets to dramatically improve the gas mileage of the vehicle fleet in Canada. Included in the targets should be the required shift of growing percentages of the fleet to hybrid cars and trucks and zero emission vehicles (ZEVs). ZEVs include electric and hydrogen-powered vehicles. (As an energy carrier, not an energy source, hydrogen relies ultimately on other forms of power generation that also need to be environmentally friendly.) For decades, California has established its own rules on these issues so there's no reason under NAFTA that Canada can't.

In partnership with the auto assemblers and auto parts companies, governments should be prepared to pump large amounts of capital into the launch of this new vehicle fleet and into the production of the machinery used to manufacture it. This would be in return for commitments that research and development will be done in this country and that the production jobs will be located here for the long term.

Without such a leap, we will go the way of the dodo.

The market simplicities of the Harper government and its man on the ground in Oshawa, Finance Minister Jim Flaherty, just won't work.

James Laxer is a professor of political science at York University in Toronto.

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Auto jobs plunge to 14-year low

126,073 employed in sector, StatsCan reports

Jun 21, 2008 04:30 AM
Tony Van Alphen
Business Reporter

Employment in Canada's auto industry has sunk to its lowest level in 14 years.

Statistics Canada figures show the number of jobs in auto assembly and parts manufacturing at the end of the first quarter dropped 7 per cent, or more than 9,000 jobs, to 126,073 from the same period last year. That's the lowest level since 1994 when industry employment bottomed out at less than 125,000 after the last recession.

"They are ugly," said industry watcher Dennis DesRosiers who analyzed the StatsCan numbers. Employment in the auto industry – a key indicator of the economy's health – peaked at 158,302 in the spring of 2001 and has declined steadily every year since.

The impact of the current decline is actually much deeper because thousands of other jobs rely on the auto industry, which is concentrated in southern Ontario.

Employment in the parts industry tumbled almost 6,000 jobs to 81,676 by the end of the first quarter in March because of a persistently strong Canadian dollar, the downturn in the U.S. economy, stiff offshore competition and the decline of business from the Big Three North American-based automakers – General Motors, Ford and Chrysler.

Numerous suppliers have closed their doors or shrunk operations in the Toronto region in recent years.

DesRosiers, president of Richmond Hill-based DesRosiers Automotive Consultants, said he believes employment in the parts sector will fall below 80,000.

"But I suspect the worst is over," he added.

The parts sector reached its highest employment in early 2001 when job levels hit 102,665.

Officials for the Automotive Parts Manufacturers' Association, say they expect more job losses for a few more months before the sector starts a slow recovery.

In the assembly sector, employment fell by more than 3,000 jobs to 44,397 by the end of the quarter but DesRosiers also said it should bounce back later this year with additional output at Ford in Oakville and the opening of a new Toyota plant in Woodstock. The loss of another shift at GM's Oshawa truck plant in September will offset some of that increase.

The Canadian Auto Workers union has described the decline in industry employment as "a crisis."

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Ford delays launch of
F-150, cutting output

Jun 21, 2008 04:30 AM

DETROIT–Ford Motor Co. will delay introducing its new F-150 pickup truck by two months and further cut production because of the declining market for pickups and sport utilities, the automaker says.

Ford also said yesterday that 2008 automotive financial results this year will be worse than in 2007, when the company posted an overall net loss of $2.7 billion (U.S.).

The company said it expects industrywide United States sales this year to drop to a range of 14.7 million to 15.2 million units. Ford previously had predicted 15 million to 15.4 million units.

Meanwhile, JPMorgan analyst Himanshu Patel stated in a note to investors yesterday that falling residual values for leased pickups and SUVs are hitting General Motors Corp. and Ford Motor Co. hard. They will lose a combined $1.6 billion during the next 18 months, he predicted.

Ford said the current trends mean it will cut third-quarter production by another 50,000 vehicles. Ford now plans to produce 475,000 vehicles, 25 per cent fewer than in the third quarter of last year. Fourth-quarter production will drop 8 per cent to 14 per cent compared with the same quarter last year.

The company said earlier, however, it is adding 500 jobs in a third shift at the Oakville assembly complex, which produces the Ford Edge crossover vehicle; the Lincoln MKX, a premium-price version of the Edge; and the Ford Flex, a new, boxy crossover.

Associated Press

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Union: GM to work on
hybrid pickups in Oshawa

Assembly to start this fall at plant automaker plans to close next year

Jun 21, 2008 04:30 AM
Tony Van Alphen
Business Reporter

General Motors has reversed its decision not to build any hybrid pickups in Oshawa and will start assembling them this fall, despite plans to close its truck plant there next year, union leaders say.

Keith Osborne, chair of Canadian Auto Workers Local 222 at GM's Oshawa complex, said yesterday that adding hybrids at the truck plant represents some hope the move will lead to keeping it open.

"It's positive because if hybrid truck sales take off, it would make us more attractive to building trucks in Oshawa," said Osborne after a meeting with local GM management.

"It is a little encouraging but they still haven't changed their plans to close it," added Greg Moffatt, union chair at the truck plant.

A GM spokesperson could not be reached to confirm the change and the reasons for it.

GM announced in early June that it would close four assembly operations in North America, including the Oshawa truck plant, because soaring gasoline prices were driving consumers from truck and sport utility vehicles to smaller, more fuel-efficient cars.

The Oshawa closing would affect more than 2,000 GM workers next year and thousands of other employees who supply parts and services to the plant. GM has not yet revealed a shutdown date but the union believes it will be in the third quarter.

Union officials also said GM told them the company would not build the hybrid versions of the Chevrolet Silverado and GMC Sierra crew cab models in Oshawa but would move production to an operation in Mexico.

The closing decision has caused an uproar among workers because they ratified a contract a few weeks earlier that contained significant concessions in exchange for long-term production commitments.

GM said it didn't breach the contract because the commitments depend on market demand.

The CAW argued that the market didn't shift between the contract signing and the company's announcement.

The CAW also said GM didn't consult with the union for alternative solutions before the decision, as required under the contract's terms.

Furthermore, the CAW added it would be impossible for GM to determine demand for hybrids because they wouldn't be on the market until late this year.

Osborne and Moffatt said GM had pulled employees off hybrid prototype work earlier but informed them it would resume with plans for production in the fall.

The union says it will continue to pressure GM to reverse its decision to close the truck plant. It blockaded GM's Canadian headquarters in Oshawa for 12 days and is considering other actions.

That could include a complaint to the Ontario Labour Relations Board that GM allegedly broke the law by bargaining in bad faith.

Meanwhile, GM told workers in a bulletin yesterday that it will extend Cheverolet Impala production at the adjacent car plant on three shifts beyond January 2009 because of strong sales. The company had planned to reduce car plant output to two shifts.

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Magna to axe 400

St. Thomas Formet plant builds frames for GM pickups, SUVs

Jun 19, 2008 04:30 AM
Tony Van Alphen
Business Reporter

The impact of soaring gasoline prices will soon hit Magna International's biggest auto parts operation in Canada.

Magna revealed yesterday it will permanently lay off about 400 employees or 25 per cent of the workforce at Formet Industries in St. Thomas on Sept. 8.

The plant, the world's largest fully automated manufacturer of frames, produces them for General Motors pickup trucks and sport utility vehicles.

Aurora-based Magna attributed the cut to a recent sharp downturn in demand for pickups and SUVs because of soaring gasoline prices in North America and the collapse of housing construction in the U.S.

"The decision to lay off team members is a difficult one, particularly considering the impact it will have on their families and the community," said Scott Turner, executive vice-president of Cosma Structural Systems, the Magna division that runs Formet.

The plant, which covers the size of 22 football fields, has sputtered with hundreds of temporary layoffs earlier this year because of a strike at American Axle and Manufacturing. That strike stopped some GM assembly operations, which, in turn, affected other parts suppliers.

Magna's move came a day after Air Canada said it would slash flights and 2,000 jobs because of a huge jump in its fuel bills.

Analysts expect the effect of high fuel prices will continue to ripple through the economy by pushing up food and commodity costs.

Automakers including GM, Ford and Toyota have announced significant reductions in truck output in recent months as consumers shift to smaller fuel-efficient models.

GM cut one shift at its Oshawa full-sized truck plant in January; plans a further reduction this fall and says it will cease production there in the fall of 2009. The move would eliminate more than 2,000 jobs.

The Formet plant makes frames for the Oshawa truck operation and GM assembly facilities in Flint and Pontiac, Mich., and Fort Wayne and Mishawaka, Ind.

Formet indicated it will provide a severance package to workers based on length of service and set up an employment centre to help them find new jobs.

Hemi Mitic, a senior official for the Canadian Auto Workers, said the plunge in truck sales is causing a serious "cascading" effect on scores of other suppliers here.

For example, Lear Seating in Ajax provides seats to the Oshawa truck plant. Woodbridge Foam in Whitby supplies Lear with material for the seats. Both plants face serious production and job losses, according to Mitic.

"There is clearly structural change going on in the industry because of the way the market has shifted," he said.

The downturn in trucks has also affected Magna, the biggest independent parts maker in North America. Its employment levels have already dropped by several hundred workers this year to less than 20,000 in Canada.

The reduction at Formet marks the first time the plant has laid off workers permanently in its 11-year history.

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`We didn't get very far'
in GM talks, CAW says

Auto giant determined to shut truck plant down

Jun 18, 2008 04:30 AM
Tony Van Alphen
Business Reporter

General Motors has indicated it has no intention of reversing a decision to close the Oshawa truck plant, despite union pleas and promises of more pressure.

Senior labour relations officials for GM and leaders of the Canadian Auto Workers met for about an hour yesterday but made no progress in resolving the standoff over the company's plans to shut the plant next year.

"They were pretty clear," said CAW national president Buzz Hargrove. "As of today, the truck plant will close in the fall of 2009. So we didn't get very far."

Dean Munger, executive director of labour relations for Detroit-based parent General Motors Corp., and Cheryl Ollila, director of labour relations for GM of Canada, would not comment about the discussion as they walked by reporters after the meeting.

GM announced on June 3 that the award-winning truck plant will close, eliminating more than 2,000 jobs. The company blamed a continuing plunge in sales this year as soaring gasoline prices drive consumers to smaller, more fuel-efficient vehicles.

The decision triggered a 12-day blockade of GM Canada's headquarters in Oshawa. A motorcade around the company's assembly plants also held up production for about 45 minutes one day.

Calling the decision a "betrayal," the CAW said GM breached a newly signed contract regarding long-term product commitments and consultations with the union for possible alternatives before changing plans. In exchange, workers accepted concessions in the three-year contract worth about $300 million, according to the union.

GM countered that it bargained in good faith, but a dramatic shift in the market prompted the closing.

Hargrove said he told GM officials they need to suspend the abrupt decision, review it and see whether it really makes sense. He reminded the GM officials of two other "rash" company decisions on plant closings in the 1990s that led to strikes and hundreds of millions of dollars in extra losses.

Hargrove said GM held out the "carrot" at the meeting of more models to be produced at Oshawa car operations. Union leaders, however, noted the company has already confirmed under the contract that vehicles will be added there.

The union said GM could use the truck plant for one or two of the 18 models the company is introducing during the next 18 months, but the company did not respond.

CAW Local 222 president Chris Buckley, who represents GM's Oshawa workers, said the company has "fractured" its labour relations with the union and faces further trouble if the decision stands.

"The fight is far from over," he insisted.

Hargrove confirmed union lawyers are pursuing legal options before the Ontario Labour Relations Board and the courts.

*****************************************

GM

Top-level talks aim to end GM spat
Bob Newby, who works at Bombardier Aerospace in Toronto, supported GM workers in their blockade of the car maker’s Oshawa headquarters

But with blockade over, union official holds little hope
meeting will stop Oshawa plant from closing

Jun 17, 2008 04:30 AM
Tony Van Alphen
Business Reporter

General Motors and the Canadian Auto Workers hold high-level talks here today, trying to defuse the tense standoff over the future of the company's Oshawa truck plant.

Dean Munger, executive director of labour relations for GM Corp. North America, will meet with CAW president Buzz Hargrove and top Local 222 officials on how to resolve differences about the company's plan to close the Oshawa plant in the second half of next year.

The meeting comes a day after Local 222 lifted a 12-day blockade of GM's Canadian headquarters in Oshawa because of a judge's order. But the union has promised "further job action" until the company reverses the decision, which would eliminate more than 2,000 jobs.

This afternoon's session will be the first time the two sides have discussed the dispute since General Motors Corp. chief executive officer Rick Wagoner told union leaders again in Detroit on June 6 that the company will proceed with plans to cease truck production at the plant.

Keith Osborne, the union's chair for GM's Oshawa complex, said GM sought today's meeting last week. He said he is not optimistic about much progress in resolving the dispute, which has attracted international attention.

"I'm not expecting anything different from what we got in Detroit, which was nothing," said Osborne.

Osborne will join Local 222 president Chris Buckley and Cheryl Ollila, director of labour relations for GM Canada, at the meeting. Ollila testified at last week's court hearing on the blockade that she was not involved in the decision to close the truck plant.

Heading into the meeting, the two sides appear wide apart on dealing with union charges that GM violated its recent contract with workers on production commitments and consultations before any changes.

GM's closing decision triggered the blockade. After last week's ruling to end the action, GM said in a statement that the company is encouraging the union to focus on "more productive matters," including assistance to affected employees.

"We also wish to work together toward potential new product investments for the Oshawa car plant," the company added.

The statements infuriated union leaders, who said GM is again attempting to direct negative attention away from the truck plant to the company's new flexible manufacturing operation in Oshawa and potential models to be built there.

Osborne and Buckley have stressed GM is already planning more new models for the car plant.

"GM wants to put this behind us and do some sort of damage control by promising another car for the car plant and incentives" for affected workers, the union's executive board noted in a leaflet.

"We already had these on the table. Lies on top of lies only further complicate the situation and the mistrust we have with the company."

GM is to start building the Camaro muscle sports car later this year. Sources say assembling a Cadillac model will come later. The company is also pursuing other higher-volume models.

CAW Local 222 and GM are also dealing with a policy grievance, in which the union alleges the company broke the newly signed contract by not holding meaningful discussions before making the decision to close the truck plant. That dispute is likely proceed to binding arbitration, according to union officials.

The union is also considering a major complaint to the Ontario Labour Relations Board, seeking a reversal of the decision and/or extensive damages for allegedly breaking provincial legislation requiring bargaining in good faith.

"We're looking at a number of options, but nothing has been decided," said Hargrove.

On Friday, Mr. Justice David Salmers of the Ontario Superior Court of Justice ordered the end of the blockade, saying it would cause irreparable harm to the company's operations. About 900 staff employees worked from home or at an undisclosed satellite office during the blockade.

In a stinging criticism of GM's conduct, Salmers said the auto giant's Detroit parent "breached" the recent contract by not giving advance notice to the CAW or consulting with the union about alternatives.

GM Canada and the union negotiated a new three-year contract last month that included long-term production commitments, depending on market conditions, in exchange for wage and benefit concessions. The union has estimated the concessions would cost workers and retirees about $300 million over three years.

On June 2, GM announced it will close the award-winning Oshawa truck plant in the second half of next year and transfer output of the hybrid pickup to Mexico.

In addition to jobs at the truck plant, the move will eliminate employment for thousands of other workers who supply parts and services to the plant.

"Considering all of the evidence, including but not restricted to the deceit-like behaviour that induced CAW concessions and the almost immediate breach, without apology, of a newly signed collective agreement, I find without hesitation that GM Canada does not come to court with clean hands," said Salmers.

Later this week, Salmers will consider GM's demand for $1.5 million in damages from Local 222 and five union members.

***************************************

FORD TO EXPORT MORE
THAN $800 MILLION IN
VEHICLES AND PARTS TO CHINA

  • Ford Motor Company enters into export agreement today valued at more than $800 million
  • Ford to export more than 30,000 North American-built vehicles to China
  • Sale to include Michigan-built transmissions
  • Production for China to benefit various Ford operations in the United States and Canada

WASHINGTON, D.C., June 16, 2008 – Ford Motor Company will begin exporting additional automotive products and transmission parts to China, thanks to agreements signed in Washington, D.C., today.  The total value of the pact is estimated to be more than $800 million.

In one of the company’s largest export agreements, Ford will sell more than 30,000 North American-built vehicles in China, starting in 2009.  Ford also will begin supplying transmission components and parts this year to its passenger car joint venture in China – Changan Ford Mazda Automobile Co., Ltd.

“This historic export agreement with China is another step in our commitment to accelerate the development of new products that customers want and value and leverage Ford’s global assets,” said Alan Mulally, president and CEO, Ford Motor Company.  

“It solidifies the worldwide appeal of our products in delivering personal transportation to markets from Boston to Beijing,” Mulally added.  “It also is good news for the Ford teams that assemble these products and components in both the United States and Canada.”

Chinese government officials were joined by senior Ford management for a signing ceremony of the vehicle export contract conducted at the United States Chamber of Commerce in Washington, D.C.

The Chinese delegation was led by Vice Premier Wang Qishan, Minister of Commerce Chen Deming and Vice Minister of Commerce Ma Xiuhong. 
Ziad Ojakli, Ford’s group vice president for government and community relations, and Stephen Biegun, Ford’s vice president for international governmental affairs, represented the company in the signing ceremony.

Ford has a long history of exporting vehicles to China, dating back to 1913.  Most recently, Ford exported the Ford Escape – known as the Maverick in China – and Lincoln Navigator.  These U.S.-made SUVs were well received by the Chinese market and were sold out in 2007.  While Maverick was one of the best-sellers in the Chinese imported SUV market, Lincoln Navigator helped define the market for luxury full-size SUVs.

“This export program is just one part of a larger effort to continue momentum for Ford in China,” said Robert Graziano, President and CEO, Ford Motor China Ltd.   “We are continuously broadening our product offerings, satisfying customer needs and achieving the sales and growth we have been working toward.”

Ford Motor China recorded sales of 90,791 passenger cars and commercial vehicles in the first quarter of 2008, a 47 percent increase over the same period last year.  
The award-winning Ford brand vehicles sold in China market include Ford Focus, Ford Mondeo, Ford S-MAX and Ford Transit.  

With the new Ford Fiesta to be launched by the end of this year, Ford’s product offering in China will cover a range of vehicles from small cars to SUVs to the light bus segments.

Full details of the vehicles to be exported beginning in 2009 will be announced later.

 


*****************************

Insurance cut riles Chrysler retirees

Ex-salaried employees are finding it difficult to replace lost death benefit coverage.

Eric Morath / The Detroit News

Retired Chrysler salaried workers are angry that a one-time company pension payment -- offered when the automaker eliminated life insurance -- buys them little in the way of death benefits.

Retirees learned in March that Chrysler LLC planned to end their company-funded life insurance policies, part of a wider-cost cutting strategy by the Auburn Hills automaker. The benefit was equal to a worker's last year of pay for those who left before 2003, or $50,000 for those who retired after that. The change does not affect blue-collar retirees.

Along with cutting life insurance, Chrysler separately gave retirees a one-time pension payment of up to $4,000 and an opportunity to buy life insurance at group rates from MetLife. Chrysler executives said that although the money could be used to buy life insurance, the payment and the loss of life insurance benefits were not related.

Retirees learned this month that the payment won't buy much coverage, though many had hoped to use it for that purpose.

"The benefit reductions are unjust and zeroed in on salaried workers," said Chuck Austin, 66, who is president pro tem of a newly formed organization, the National Chrysler Retiree Organization, which aims to prevent future benefits cuts by the automaker.

According to documents sent to retirees and obtained by The Detroit News, a 70-year-old retiree with an approved statement of health would pay $103 per month for a $50,000 MetLife policy -- so the $4,000 would buy 38 months of coverage. For an 80-year-old retiree, $4,000 would buy less than two years.

Retirees who do not submit medical backgrounds or whose statement of health is not approved by MetLife have their policy capped at $20,000 of coverage and pay higher premiums. Since private equity firm Cerberus Capital Management LP acquired Chrysler last year, the automaker has worked aggressively to cut costs, doing everything from eliminating shifts and vehicle lines to reducing retiree benefits and seeking savings from suppliers. The cuts facing white-collar retirees come on top of health care benefit reductions in 2006.

Austin, a Lake Orion resident and ex-Chrysler engineer, hopes the new group, already with some 200 members, can establish regular communication with Chrysler executives. Their hope is that a united voice can ward off further cuts. The group plans to publicize its grassroots efforts among Chrysler's 14,000 white-collar retirees.
Chrysler said the benefit changes align the automaker with two-thirds of the country's 1,000 largest corporations that do not offer their workers post-retirement life insurance.

"Chrysler is trying to ease the transition for current and future retirees from doing business where Chrysler administers such programs to a new way of doing business, where other companies take on that administration," said Chrysler spokesman David Elshoff.

Such a change allows Chrysler to focus on its "core business," he said.
Retirees said they counted on the life insurance to help a spouse adjust to lower pension payments after their death or to pay off mortgages to make it easier for their children to inherit property.

William Webb, 77, a retiree from Warren, said he would have invested differently had he known Chrysler would cut benefits that had been promised upon his departure.
"I could have found my own insurance when I retired and it would've been a lot cheaper," he said. "I guess I should be happy they covered me for 16 years. Unfortunately for them, I'm still living."

Don Bachelder, a 65-year-old retiree from Hudson, Fla., said he is frustrated by the high price and that he couldn't continue the same level of benefits with MetLife without having to submit a new medical history. "These were benefits earned when I worked 35 years for Chrysler," he said "For the new Cerberus-Chrysler to come in and do this is wrong."

Some retirees and a benefits expert said the rates MetLife offers are not significantly better than what could be found in the open market. Retirees who can't afford the coverage must decide whether to look for other insurance or adjust their lifestyles to raise savings, said Marc Wise, an employee benefits attorney and partner at the Southfield-based law firm Maddin Hauser.

***************************************

Who will replace Buzz Hargrove?
Buzz Hargrove, national president of the Canadian Auto Workers, retires from the powerful post in 2009.

Current favourite in race to replace CAW
president is a hard-nosed Windsor unionist

Tony Van Alphen
Business Reporter

The fiery leader of a powerful local of the Canadian Auto Workers in Windsor is among the three leading contenders to replace retiring national president Buzz Hargrove next year, but he may not want the job.

Ken Lewenza, president of CAW Local 444, has dodged questions about his interest in the top job for months by saying the union is dealing with too many other pressing issues to talk about personal leadership intentions.

"Buzz has got a full year left and there are too many problems that affect workers right now to think about a leadership contest," Lewenza said in a recent interview.

But union insiders say if the 53-year-old Lewenza, a hard-nosed Windsor unionist with a booming voice, decides to take the leap, Hargrove and the CAW's top leadership groups would probably endorse him before a national convention next year.

The endorsement, insiders say, would give Lewenza a major advantage over two other potential candidates, Hemi Mitic and Jerry Dias, who are two of five Hargrove assistants.

Like Lewenza, Mitic and Dias declined comment on whether they'd run for the $150,700-a-year job leading Canada's largest private sector union, with 255,000 members.

"Talking about this is far too premature," said Dias. "People are getting ahead of themselves."

Dias, 49, revealed he wouldn't even run for the president's job if the senior officers, executive board and other leaders endorsed someone else. The top-level endorsement normally carries considerable weight among delegates at a leadership convention.

"I'm a team player," he said. "I will support the decision of the national executive board and our administrative caucus."

Hargrove, then an assistant, also won the endorsement of senior union leaders when he replaced the retiring Bob White in 1992.

Although no one is saying much publicly in deference to Hargrove, his successor is a topic of much private discussion inside the union, the labour movement and corporate boardrooms.

That will continue today when the CAW opens a convention here to set a bargaining agenda for the next three years in an environment where economic conditions in the union's traditional manufacturing base are crumbling.

"There's no doubt a lot of people are talking about it (succession) now," acknowledged Hargrove, who said he likely wouldn't discuss the issue for several more months.

Hargrove, who has become the face of the labour movement and a household name in Canada during the past decade, is leaving at a time when the union is under siege.

The CAW formed in 1985 after breaking away from the U.S.-based United Auto Workers in a dispute over bargaining direction. The union branded itself as a militant, socially conscious group; expanded organizing efforts and negotiated the richest contracts for industrial workers in Canada for a generation.

However, the economic climate has changed dramatically in recent years with the decline of the manufacturing sector and the Detroit-based Big Three automakers, where the union represents more than 30,000 workers.

Instead of making more gains, the union has been battling concessions and closings. Some critics question whether it has lost its edge in fighting back and succeeding.

"Not at all," Hargrove countered. "Tell those folks to come follow me around for a couple days."

Hargrove suggested they should go to Oshawa and see the blockade at General Motors headquarters in protest of the auto giant's decision to close its truck plant in the city.

"We're bargaining in some of the toughest times and often making good progress for our members."

The timing of Hargrove's departure is causing some debate internally because his 65th birthday is in March next year. The CAW's constitution says a union official must retire at 65, but a successor won't be chosen until a convention in August. Hargrove said the union will propose, at a meeting in December, an extension of his tenure to August. That will save the cost of a second convention, he said.

Lewenza has headed one of Canada's biggest CAW locals for 14 years and is a major political force in Windsor. He's been the union's chief negotiator at Chrysler for several years and is president of the union's national executive board.

Lewenza's friends say privately he is still wrestling with the idea of moving to Toronto and the responsibility of leading a sprawling union that represents workers in more than 20 sectors ranging from auto, mining and fishing to casinos, hotels and railways.

"I'll make the decision in the best interests of the union," Lewenza said. "My family realizes how important the decision is to me and they would support any decision."

Mitic, 57, started at Lear Corp. in Kitchener in 1967, became local president and joined the union's staff in 1981. He became national director of organizing in 1986 and developed support in several sectors, which would help in any run for president, insiders say.

Hargrove appointed Mitic as an assistant in 1992 and he is responsible for about 150 staff, 275 locals and 2,000 contracts.

"I've been encouraged by a lot of people to run but I haven't finalized any decisions yet," he said.

Dias started at de Havilland Aircraft in Downsview in 1978 and became president of the plant local in 1987. He joined the national staff in 1993 and Hargrove appointed him an assistant last year with responsibilities for auto parts and Chrysler.

Insiders say other possible candidates include Hargrove assistant Carol Phillips, former assistant Peggy Nash, now an MP, and Peter Kennedy, an assistant to national secretary treasurer Jim O'Neil.

"Our union will be in good shape regardless of who ends up as president," said Hargrove.

****************************************

Windsor plant at risk, CAW fears

Ford talks of cutting, truck utility output with UAW
so 'It doesn't look good' to CAW leader Hargrove

Jun 14, 2008 04:30 AM

Tony Van Alphen
Business Reporter

The Canadian Auto Workers union fears Ford Motor Co. will cut more parts jobs here because of plunging demand for pickups and sport utility vehicles.

Ford told the United Auto Workers in the U.S. yesterday the company will reveal new plans for production reductions next month and CAW officials say it could have some negative implications in Windsor.

"It doesn't look good but we'll have to wait and see," said CAW president Buzz Hargrove.

Ford operates a major plant in Windsor that makes V-8 engines for U.S. plants that assemble pickups and sport utility vehicles.

The struggling auto maker announced in May that it would cut production of trucks and sport utilities by 20 per cent because soaring gasoline prices were driving consumers to smaller, more fuel-efficient models. Ford also said it would increase factory output of cars and crossover models through additional shifts and overtime and realign some manufacturing capacity.

At that time, Ford sent out layoff notices to about 430 workers at the engine plant. The company noted it didn't expect that many actual layoffs when it completed the reductions by the middle of next month.

Ford is also cutting salaried staff, including an undisclosed number of positions in Canada.

Hargrove predicted then that the Windsor operation, which employs about 1,600, could lose an entire shift because of a continuing sharp decline in truck sales.

The Windsor plant supplies engines primarily to three assembly plants in Michigan and Kentucky.

At its meeting yesterday, Ford managers told UAW officials the auto maker must reduce the size of its workforce again because of a further shift away from trucks in the U.S. market.

Managers discussed additional buyout and early retirement offers that would be targeted to specific factories.

Windsor is already reeling from numerous plant closings in the auto industry.

Among them, GM announced last month it would close its major transmission plant in the city next year.

Last year, Ford closed its foundry and Essex Engine plant in Windsor. But three months ago, it announced the engine plant would partly reopen.

****************************************

CAW must dismantle
blockade, judge rules

June 14, 2008

A judge is ordering the end of a union blockade against General Motors of Canada at its headquarters in Oshawa on Monday, but criticizes the company for its "deceit-like behaviour" in the dispute.

Mr. Justice David Salmers of the Ontario Superior Court of Justice ruled late yesterday that although the Canadian Auto Workers must lift the high-profile blockade – now in its 11th day – by 7 a.m. Monday, protesters can continue picketing with limitations.

In an eight-page ruling, Salmers agreed with GM that the company would suffer irreparable harm were the blockade to continue. But the court also needs to recognize the workers' rights to freedom of expression under the Charter of Rights and Freedoms, the ruling said.

The blockade has prevented about 900 salaried employees from working at the headquarters in the city's southeast end since June 4. They have worked from home or at an undisclosed satellite office.

CAW Local 222 set up the blockade a day after GM announced it would cease production at the Oshawa truck plant next year because soaring gasoline prices have driven consumers from pickups to smaller, more fuel-efficient vehicles.

The union charged the company had breached a recent contract by reneging on production commitments and failing to consult the union on other solutions.

Salmers said the company breached the contract by not properly consulting the union before the announcement.

Furthermore, he said GM's Detroit parent engaged in "almost deceitful business practice" by allowing its Canadian negotiators to agree to the production commitments when truck sales were falling and it should have been at least aware of the possibility the Oshawa plant would close.

Salmers said GM did not apply for an injunction earlier this week with clean hands. "Considering all of the evidence including but not restricted to the deceit-like behaviour that induced CAW concessions and the almost immediate breach, without apology, of a newly signed agreement, I find without hesitation that GM Canada does not come to court with clean hands."

In his stinging comments on GM's conduct, Salmers added it may be difficult for the CAW to negotiate "confidently and trustingly" with GM Canada in the future.

In exchange for production commitments and provisions for consultations, the union said it agreed to $300 million in concessions in the three-year contract last month.

While ordering an end to the blockade, the ruling allows picketing of a maximum 20 people on public property adjacent to the headquarters but not on the roadway, curbs or sidewalks on Colonel Sam Drive at any time.

Peter Kennedy, a senior national CAW official, said the union will abide by the ruling and continue to pursue other options to reverse the planned closing.

GM said it wants the union "to sit down with us to focus on more productive matters ... such as steps to assist impacted employees ... to work together toward potential new product investments for the Oshawa car plant."

The court did not deal with a motion for damages of $1.5 million GM seeks from the union.

***************************************

Court will rule on bid
to end GM blockade

GM Protest

Firm says it may have breached contract by not consulting on plans

Jun 13, 2008 04:30 AM
Tony Van Alphen
Business Reporter

General Motors may have breached a union contract in the way it handled the closure of an Oshawa truck plant but that doesn't justify an illegal protest blocking the automaker's headquarters in Canada, the company says.

John MacDonald, a lawyer for GM of Canada Ltd., told a court yesterday that the Canadian Auto Workers should pursue the dispute at the Ontario Labour Relations Board and not be allowed to disrupt the automaker's business.

MacDonald said the blockade – now in its 10th day – is stopping about 900 staff employees from reporting to work and putting company operations at risk.

"It is a flagrant disregard of the property rights of GM," MacDonald told Mr. Justice David Salmers. GM is arguing for an injunction to end the union's action and for $1.5 million in compensation from the Oshawa local of the CAW and five of its members.

The Whitby court late yesterday reserved its decision on the GM application, but could rule as early as today.

Detroit-based GM Corp. said last week that it would close the Oshawa truck plant in the second half of next year because soaring gasoline prices have driven consumers to more fuel efficient vehicles, a move that would cost more than 2,000 jobs.

The announcement came two weeks after GM and the CAW signed a collective agreement the union says requires consultations if the company planned changes in product commitments due to market conditions.

Durham Regional Police have refused a GM request to open the blockade so staff could return to work, citing fears of a potentially violent confrontation

MacDonald said the blockade has allowed the CAW "to do indirectly what they can't do directly" if they stopped nearby auto production.

He also acknowledged that "perhaps" GM breached the contract by not consulting the union to explore alternatives before the closure decision.

The CAW has filed a grievance alleging breach of contract. Tim Gleeson, a lawyer representing the CAW, said the blockade is workers only recourse to spur "dialogue" and consultations.

He said GM workers gave up $300 million in concessions for the right to those consulations for alternative solutions. "It was paid for," Gleeson said. "It's not an onerous obligation."

Gleeson said if the union loses the right to picket the headquarters, the workers would lose their ability to press for consultations forever.

Regarding the legal issue of whether GM has a responsibility for the current dispute, Gleeson and Sean Dewart, another lawyer for the CAW, said the company's hands are not only dirty "but filthy."

Dewar also noted GM made its recent decisions to stop production of hybrid trucks and a new generation of pickups in Oshawa without testing the market. GM is steering production of the hybrid models to Mexico, according to the union.

While Justice Salmers heard arguments from GM and the CAW, more than 2,000 workers converged on the truck plant for a noon rally. Many of them wore red shirts with the slogan "Made in Canada Matters."

"The company believes that we are weak and they can get away with anything they want," Keith Osborne, chair of the union's Oshawa complex, told the cheering crowd. Mary Sue Hill, a 38-year-old mother, moved to the Oshawa plant three years ago after losing her job at the Windsor GM plant. She'd been there for 23 years.

"I have a 12-year-old," she told the Star's Robyn Doolittle.

"I uprooted everybody. Now we're probably going to have to move again," said Hill.

With files from the Star's wire services
GM Protest June 12, 2008

GM Protest June 12, 2008

********************************************

Police ignoring blockade: GM

GM Blockade

Court filing claims calls for help rebuffed; chief feared intervention would spark a confrontation

Jun 12, 2008 04:30 AM
Tony Van Alphen
Business Reporter

General Motors says police have refused to intervene in a high profile illegal union blockade at its Canadian headquarters in Oshawa that will cripple the automaker's business and reputation if it continues.

GM of Canada Ltd. reveals in court documents that the company asked Durham regional police repeatedly during the last week for assistance so staff could go to work at headquarters where union members have a set up the blockade in protest of next year's closing of a nearby truck plant.

But police chief Mike Ewles told GM in a letter that the force didn't want to trigger a confrontation through intervention and advised the auto maker to seek a court injunction, which the company is pursuing today.

"It is not our intent to intercede between disputing parties and aggravate an ostensibly peaceful demonstration by creating a major breach of the peace," Ewles said in the letter that GM includes in its application for an injunction.

"The ends simply do not justify the means."

GM, the country's biggest automaker, is seeking the injunction to lift the blockade and collect damages of $1.5 million against CAW Local 222, its president Chris Buckley and four other union members.

The CAW's blockade, which is now in its ninth day and attracting international attention, has stopped more than 900 staff employees from going to work. They have worked from home or at an undisclosed "temporary satellite location," the company says.

The blockade started a day after GM announced the closing of the Oshawa truck plant in the second half of 2009 because soaring fuel prices are driving consumers from pickups to more fuel-efficient vehicles. The move would eliminate more than 2,000 jobs at the plant, which has won several industry awards for productivity and quality.

An adjacent plant builds cars while a new flexible manufacturing operation will start assembling the Camaro model later this year. Ontario and Ottawa are in negotiations with GM for more aid to build other models at that operation. GM already expects to pay back millions of dollars it received for the same operation because it will likely miss minimal job guarantees.

Union leaders argue GM broke recent contract commitments on future production but the company counters that those pledges depend on demand.

Buckley said in a responding affidavit that GM's breaches have left the union with few options. The picket line has been peaceful and the union has allowed access to any staff employee that GM deems "essential," he noted.

Keith Osborne, the CAW's chair at GM's Oshawa complex, said late yesterday if the court ruled against the union, it would abide by the decision but pursue "other actions."

He would not elaborate. GM says in one affidavit supporting the injunction application that if the blockade continues, it will cause "irreparable harm" because the headquarters conducts essential business for operations in Canada, the U.S. and abroad.

Daniel O'Neill, GM's director of vehicle marketing, says in the affidavit that lack of staff access is leading to "rapidly escalating risk" to operations. They include:

Stopping the purchasing department from paying suppliers and therefore jeopardizing the flow of parts to assembly plants.

Stalling marketing efforts that could put the company at a competitive disadvantage.

Blocking technical people from maintaining computer systems that could crash and cripple communication with dealers.

Preventing legal staff from seeing files and meeting deadlines.

Halting parts orders from affiliates in China, South Africa and Venezuela, which rely on GM here.

Furthermore, O'Neill said if the union can continue actions that shut down assembly plants in Oshawa, it would affect other workers, contractors and vehicle deliveries to dealers, which would harm GM's reputation with customers.

"This damage to the reputation of GMC would be impossible to quantify and may never be regained," he added in the affidavit.

A union motorcade slowly wound its way around the sprawling Oshawa assembly complex for three hours on Saturday and delayed parts deliveries. It resulted in a 45-minute production stoppage and the loss of output of 138 cars and trucks, according to the company.

Buckley has told workers to continue reporting for their regular shifts and let the union lead the drive to reverse GM's decision.

O'Neill said GM understands the frustration of workers and the company has taken a "balanced approach" to avoiding confrontations between pickets and staff.

The CAW has allowed some staff to enter the headquarters to ensure the processing of payroll to thousands of workers but the pickets "have no right to dictate to GM" who is necessary, O'Neill said.

"The current situation is not sustainable and puts GM's business at significant risk," he noted.

O'Neill said he tried to get police assistance for access to headquarters on Monday but a sergeant at the scene talked to the union and then told him if uniform officers arrived, "an incident might ensue and this could cause things to escalate."

GM requested a police presence later in the day so staff could enter and leave headquarters. A duty inspector indicated a police unit would be there the next day, but then Chief Ewles rejected the request, according to O'Neill.

Ewles said demonstrators would "have their time" and staff employees could gain access "thereafter."

"Failing that, each party has the option to ... seek a remedy by way of an injunction," he said.

**************************************

More broken promises feared

If GM can renege on output commitment Ford might do it too, union leader suggests
Jun 11, 2008 04:30 AM

Business Reporter

Top Ford executives think that if General Motors can break production commitments at its Oshawa truck plant, then their company can do it too, says union leader Buzz Hargrove.

Hargrove, president of the Canadian Auto Workers, said yesterday Joe Hinrichs, vice-president of global manufacturing at parent Ford Motor Co., told him other senior company executives wondered about pulling back from commitments here after GM announced the closing of the truck plant last week.

However, Hinrichs stressed Ford had no plans to change its production commitments to a sputtering plant in St. Thomas and to hedge other pledges contained in its recent contract with the CAW, Hargrove told about 1,000 delegates at the union's national bargaining convention.

"After General Motors reneged on their decision at the truck plant, he (Hinrichs) called me and said, 'Buzz I know we made commitments in St. Thomas and we made other commitments,' " Hargrove said.

"He says 'I got to tell you, there's a lot of people at the top of this corporation (that) are saying if General Motors can do it, why are we not doing it?' " A Ford spokesperson would not confirm Hargrove's version of the conversation, which comes at a tense time in the GM-CAW dispute in Oshawa over the truck plant.

"We discuss a variety of issues with the CAW on a regular basis," said Lauren More, vice-president of communications for Ford Motor Co. of Canada Ltd. "We consider these discussions to be confidential.''

The future of Ford's St. Thomas assembly plant has remained a question mark for several years because it builds gas-guzzling Ford Crown Victoria, Mercury Grand Marquis and luxury Lincoln Town Car full-size passengers models.

It operates on only one shift, which reduces efficiencies and profits significantly.

In its labour contract, Ford agreed to continue production until at least the end of the three-year deal in September 2011.

But output at the St. Thomas plant is down another 10.5 per cent in the first four months of this year to less than 45,000 units, even with the addition of the Lincoln model.

Hargrove suggested output could fall further because cities like New York are putting fuel restrictions on taxi companies that use the models built in St. Thomas.

GM said last week it would close the Oshawa truck plant and three other assembly operations in North America because soaring gasoline prices have abruptly driven consumers from trucks to more fuel-efficient cars in recent months with no change in sight.

It plans to close the Oshawa plant in the second half of next year and eliminate more than 2,000 jobs. The move has triggered a week-long union blockade of GM's headquarters in Oshawa.

At the bargaining convention, the union passed a resolution calling on GM to honour its production commitments for the truck plant in their recent contract and provisions of the defunct Auto Pact.

The 1965 pact, which ended in 2001 with a World Trade Organization ruling, called on automakers to build one vehicle for every one it sells here or face stiff duties.

Furthermore, the union wants the federal government to enforce such a policy on automakers and the allocation of a proportional share of North American hybrid vehicle production here.

GM had planned a hybrid-truck operation in Oshawa but is moving it to Mexico, the union said.

Hargrove also unleashed a scathing attack against the federal government for not aiding the country's reeling manufacturing sector.

He said Prime Minister Stephen Harper should have fired Finance Minister Jim Flaherty for a lack of action and misleading Canadians on the economy's health instead of Foreign Affairs Minister Maxime Bernier for leaving classified documents at his girlfriend's home.

*****************************************

Ottawa has power to save
threatened GM truck plant

Buzz Hargrove

Invoking Auto Pact rules might violate NAFTA
but it's more important to protect Canadian jobs

Jun 11, 2008 04:30 AM

GM's plan to close its truck assembly plant in Oshawa next year has struck a painfully raw nerve – and not just among the 2,600 CAW members who will lose their jobs if this decision is allowed to stand.

Canada's manufacturing sector has been crumbling before our eyes for five years. It's shed more than 400,000 jobs. Dozens of plants have closed. Our trade deficit in manufactures reached a crushing $32 billion last year.

So why has this particular closure sparked such outrage? Because GM crossed a moral line with this decision. Several aspects of GM's announcement deeply offend Canadians' sense of fair play and mutual obligation:

It came two weeks after GM committed to operate the plant throughout a new three-year collective agreement with the CAW. In return, our members accepted unprecedented provisions (including a wage freeze) that will save GM a half-billion dollars over the same period. GM is happy to pocket these savings – but is walking away from the plant.

The truck plant won repeated honours for top quality and productivity. Incredibly, just as the closure was announced, the plant was recognized again by J.D. Power & Associates for the best quality of any large truck plant. Productivity is also higher than other GM plants. If delivering the absolute best quality and best productivity, along with freezing our wages, can't save our jobs, what will?

Yes, pickup sales have declined this year. That might justify down time at the plant – but not its outright closure. GM will still produce the vehicles we currently make in Oshawa. It just won't produce them in Canada.

We all recognize the need to adapt to environmental challenges. We've been pushing the companies (with government support) to invest in made-in-Canada production of "green" vehicles and components. Indeed, this very plant just began assembling the first-ever Canadian-made hybrid (a hybrid powered version of the pickup). But now GM is shifting production of the hybrid truck to Mexico.

In short, we had everything going for us: competitive costs, a newly inked contract, unbeatable productivity and quality, and an environmentally friendly product. Yet GM's corporate leadership snatched it all away with its panicked and unjustified decision to close this plant.

No wonder our members, other residents of Oshawa, and millions of Canadians (including major political figures of all stripes) have expressed such fury at this decision. And the federal government is feeling the heat as much as General Motors. The plant is in Finance Minister Jim Flaherty's backyard. His broken-record refrain that Canada's fundamentals are in "great shape" is wearing awfully thin as thousands of his constituents lose their jobs. Ottawa's inaction in the face of the worst crisis ever to hit Canadian manufacturing is inexcusable, and Canadians know it.

But with a simple change in trade law, Ottawa could prevent this closure (and others like it). GM sells 230,000 light trucks (including pickups, minivans, and SUVs) in Canada each year. Under the rules of the former Canada-U.S. Auto Pact, every participating company had to produce here as many cars, and as many trucks, as it sells here. If it closes this plant, GM will break the Auto Pact rules. So Ottawa can prevent the closure by simply announcing that Canadian auto makers must continue to follow those rules.

The Auto Pact was probably Canada's most successful industrial development policy ever. It was abolished after a kangaroo court ruling from the World Trade Organization. Ottawa meekly accepted that ruling – but it didn't have to. Even under the WTO, national governments still have legal power to set economic policies, in line with national interests.

After all, the Americans don't let trade treaties get in the way of defending their jobs – nor does Japan, China and others. Only Canada plays Boy Scout in international trade, following the "rules" (so loaded in favour of corporations) no matter the damage to our own jobs and industries.

The federal government should insist that the Canadian content rules of the Auto Pact will continue to apply to GM and other auto makers. Yes, this goes against the principles of the WTO and NAFTA. Yes, the companies will complain. But it's more important to protect Canadian jobs – the 2,600 direct jobs at the GM plant, the 10,000 other jobs that depend indirectly on that plant, and the many thousands of other auto-related jobs at risk in coming years if Ottawa sits on its hands.

The government can use carrots and sticks to force GM to reverse this outrageous decision (and to apply the same standard to other auto makers). It can make investment subsidies and tax cuts contingent on meeting Auto Pact principles. It can impose emergency tariffs on companies that do not. Merely expressing outrage over GM's decision would make a difference.

In short, there are many perfectly legal levers Ottawa could use to give this reasonable principle – if you sell here, you must produce here – some real teeth. But instead, Flaherty and his colleagues accept yet another plant closure as normal corporate behaviour.

Premier Dalton McGuinty's government, in contrast, has been active and supportive, recognizing the importance to the whole provincial economy of retaining these high-productivity jobs. But the crucial factors driving this crisis – a vastly overvalued loonie and a one-way flow of imports – are obviously beyond provincial control.

GM has no moral or legal right to close this plant. We will fight that decision with every means at our disposal. What about the Harper government? It has the power to make a difference for tens of thousands of Ontario workers who now fear for their future. But does it have the political will?

*********************************************

CAW asks Ottawa for trade action

At rally in Oshawa protesting truck plant closing,
Hargrove revives provisions of defunct auto pact

Buzz Hargrove, president of the Canadian Auto Workers, speaks to union members at the blockade outside General Motors' Canadian headquarters in Oshawa, June 8, 2008

Jun 09, 2008 04:30 AM


Business Reporter

The Canadian Auto Workers union has asked the federal opposition parties to press the minority Conservative government for a trade action that would force General Motors to keep a truck plant open in Oshawa next year.

Union president Buzz Hargrove told about 1,000 workers and supporters yesterday at a blockade of GM's Canadian headquarters in Oshawa that the government should make the company abide by the terms of the defunct Auto Pact.

The 1965 pact laid the foundation for Canada's modern auto industry by calling on manufacturers to produce one vehicle here for every one they sold in the country or face stiff duties.

"It's as simple as that," Hargrove said in a later interview. "We're asking the opposition parties to present a motion in the House of Commons that would force GM to meet the principles of the Auto Pact. They would have to build a truck in Canada for every one they sold here. That would keep the truck plant open."

The pact, which also contained minimum Canadian content levels for domestic auto production, disappeared in 2001 when the World Trade Organization ruled some provisions broke global regulations for the fair movement of goods between all countries.

GM announced last week that it would close the plant in the second half of next year. The company is also closing three other assembly operations on the continent.

But the union argues GM misled the CAW by agreeing in a recent contract to long-term production commitments in exchange for labour cost savings including a wage freeze.

The product commitments depend on demand but the CAW said GM knew it would close the plant in talks less than a month ago. Workers would have also never ratified the contract without the production commitments, the union says.

Hargrove said he will send letters to the opposition parties this week in the union's continuing fight to save the 43-year-old plant.

The closing of the Oshawa truck plant would eliminate more than 2,000 jobs as well as employment for thousands of others who provide parts and services.

Meanwhile, a blockade of GM's headquarters in east Oshawa by CAW Local 222 protesting the company's move enters its sixth day today. At a barbecue yesterday in front of the headquarters, Ken Georgetti, president of the Canadian Labour Congress, joined Hargrove in assuring the workers the union movement is behind them.

                               ******************************************

Labour congress pledges
support to GM workers

GM Blockade

THE CANADIAN PRESS
Jun 08, 2008 11:29 AM

Canadian Labour Congress president Ken Georgetti has pledged the support of his 3.2 million members to General Motors workers in Oshawa, now into their fifth day of a round-the-clock blockade of the company's Canadian headquarters.

Standing in the back of a grey GM pickup this morning, Georgetti pointed blame squarely at mega-corporations and the Conservative government for the impending closure of the Oshawa truck plant.

He urged unions around the country to get behind the GM workers through what he called "raw shows of force."

With no plans for major demonstrations – unlike the three-hour motorcade that circled the truck and car plants Saturday – today's protest is meant to drum up support among the community.

Canadian Auto Workers spokesperson Keith Osborne says the union will launch "Phase 4" of its action early in the week, but he wouldn't say what that entails.

CAW president Buzz Hargrove will rally the workers with a speech this afternoon.

**************************************************

Mexico's auto unions agree to cut wages

June 4, 2008 - 2:30 pm ET

MEXICO CITY (AP) -- Mexican auto unions are taking a cue from U.S. labor leaders by offering two-tier hiring schemes and salary cuts that bring already low wages down to near-Chinese levels.

As more automakers turn to Mexico, a big argument for the North American Free Trade Agreement in 1993 -- that Mexico's low wage rates would slowly rise to close the gap with U.S. wages -- seems to have been thrown in reverse.

'The pressure has not been to raise the Mexican wages up, it's been to push the U.S. wages down,' said Ben Davis, the director of the AFL-CIO Solidarity office in Mexico City. And now Mexican wages are being pushed down even more.

Wage concessions were apparently key to convincing Ford Motor Co. to direct many of the 4,500 new jobs involved in building Fiestas to the Ford plant in Cuautitlan, on the outskirts of Mexico City. Union leaders at the plant told The Associated Press they had agreed to cut wages for new hires to about half of the current wage of $4.50 per hour. 'We agreed to it,' said Ford union leader Juan Jose Sosa Arreola. 'We need to be more competitive. That's the truth. That's a reality.'

Jobs still flowing South

The UAW had hoped to preserve American jobs by offering a two-tier wage system last fall, cutting starting wages for new U.S. workers by half to about $14.20 an hour. But it hasn't worked -- the jobs are flowing to Mexico, where starting wages at some plants also have been two-tiered, to as little as $1.50 per hour with a lot less of the related pension and health care costs of U.S. workers.

With labor costs like these, Mexico is staying competitive with China, where an average worker at a foreign-owned factory or joint venture can make $2 to $6 per hour. While Mexican benefit costs run higher, Mexico may have already won the low-wage race.

Mexico also now has the advantage of a massive auto production platform based on experience with export plants and proximity to major markets that can't yet be beat in China, whose factories still produce mainly for its own domestic market.

Ford spokeswoman Alejandra Acevedo said she did not know what starting wages for new hires at Cuautitlan would be, but she acknowledged that to win the jobs, the plant had to compete against other Ford facilities worldwide.

'It makes business sense that labor costs are much lower here,and also it's much cheaper here to grow the local supplier network,' said Acevedo, noting Mexico's free trade deals help slash the cost of importing parts and exporting cars, Acevedo said.
Other U.S. automakers also are squeezing wages. General Motors said Tuesday it will stop using relatively high-wage workers to assemble slow-selling pickups at its plant in central city of Toluca. A labor leader there said the union had gotten the message, and would offer to work for less to keep the plant alive.

'I think we are going to have to sacrifice something in order to continue to be competitive,' said Edgar Arroyo, a union leader at the Toluca General Motors plant, where he estimated some workers earn about $6 per hour, an extremely high rate by Mexican auto industry standards.

Nothing in NAFTA stops this drive to the wage floor. The treaty only requires countries to enforce their own minimum wage laws, which in Mexico means about $5 per day.

Foreign investment in Mexico's auto industry is soaring, averaging about $2 billion per year since the 1990s. Ford's $3billion investment in the Fiesta project may accelerate that trend.

Auto exports grew by almost 68 percent between 2004 and 2007 to1.6 million units. Most went to the U.S., but also to European and other Latin American markets.
But since NAFTA's approval in 1993, the gap in overall manufacturing wages between Mexico and the United States has widened slightly, according to government figures.

Tough climate for organized labor

At Volkswagen's plant in the central city of Puebla, union spokesman Arturo Monter blames low wages on Mexico's antiquated system of labor laws that favor employers and discourage strikes and union organizing.

Unlike in the United States, where a single national union, the UAW, organizes most auto plants, in Mexico unions are deeply split and may only represent workers at one manufacturer, or even at a single plant.

Union leadership at Monter's plant agreed to cut starting wages to $1.50 an hour from $1.95 a few years ago. It can now take as long as seven years to work up to earning what was once the entry-level wage, Monter said.

Still, those lower labor costs helped win a contract for an as-yet unnamed Volkswagen model, known at the plant only as 'ProjectZero,' that the automaker had been considering building in the UnitedStates, Monter said. A VW spokesman declined to comment on production plans, saying only that nothing had yet been confirmed.
Mexico's abundant, youthful work force is still drawn to auto plants despite the low wages, union leaders say, because the firms offer stable employment, a rarity in Mexico's working world.

'Despite the fact that we're negotiating what you could call a cheaper contract, I guarantee you that if we advertise for 2,000workers, 10,000 people are going to show up,' said Sosa Arreola,whose plant sits on the outskirts of Mexico City.

*************************************************

GM Workers set up Blockade

Workers leave the General Motors truck plant in Oshawa at the end of the afternoon shift on June 3, 2008.

June 4, 2008, 10 AM

OSHAWA–Angry General Motors employees gathered outside the company's Canadian head office early Wednesday morning, saying they wouldn't leave until the company agrees to keep its truck assembly plant in Oshawa, Ont. open.

About 100 workers arrived at GM's corporate headquarters before 9 a.m. and more still were expected to arrive throughout the day, said Chris Buckley, president of the Canadian Auto Workers union Local 222.

"We're going to stay here until General Motors reverses that decision or at the very least, until somebody in General Motors Corporation tries to justify to us why they have violated our brand new collective agreement," he said.

"We'll be here as long as it takes.

"We are encouraging our members in the plants to continue to build cars and trucks, we are not asking our members to withdraw our services."

These people here are worried about their futures like every other worker in the plant . . . this is the first day of our action and we'll see how this goes but we're not leaving."

Jim Freeman, 25-year GM employee and president of the Durham Region labour council, said the plant's closure could have devastating effects on the community at large.

"Everybody's going to be affected," he said.

"The trickle down is going to affect the whole community."

The protest could be just the first step in an ongoing fight against the automaker's plans – which will leave about 2,600 people unemployed – although GM plant workers were being encouraged to continue working, he added.

The protest began as a blockade of the GM building but eventually some corporate employees were allowed to walk into work. Shortly after the business day began, however, GM decided to shut down the building and send staff home.

A spokesman for GM said the company understands the union's concerns and wasn't looking for police to immediately end the protest.

"There is a protest going on at our headquarters building and that's, frankly, understandable because this is a very tough thing for employees to go through and for the union to go through and us as well," said Stew Low, GM's director of communications.

Low said the company would be willing to meet with the union to explain its decision, which is a reflection of the changing market for more fuel-efficient vehicles.

"We'd love nothing better than to be continuing to build pickup trucks in great volumes but the thing that is going on in the U.S. marketplace and to a certain degree in the Canadian marketplace is consumers are moving away from big trucks to cars and smaller crossover vehicles and we're transforming to be a part of that," he said.

"This is a very difficult thing to go through, it's a tough decision that we've made but it's made in the context of providing customers with the kinds of vehicles that they want."

On Tuesday, GM announced that four North American truck assembly plants – including the one in Oshawa – would be closed.

The company said the shutdowns were in response to "recent developments on the global oil scene" that have led to high gasoline prices, which represent "a structural change, not just a cyclical change" in consumer demand and the company's prospects.

CEO Rick Wagoner said at the annual meeting in Delaware that the Oshawa pickup truck plant east of Toronto will cease production in the third quarter of 2009 "and we don't have plans to allocate future products" – meaning a probable permanent closure of the factory.

The CAW warned that the decision would not go down easily.

"This is not going to happen without a fight," Canadian Auto Workers president Buzz Hargrove declared at a news conference.

Asked how the union would respond, he said: "Watch us."

Hargrove said the union wasn't ruling out anything and "will explore all options." He declined to be specific, and when asked whether the options included a wildcat strike or legal action against the company, the union leader said "everything is on the table."

Police said Wednesday's protest was calm and under control with ``no skirmishes and nothing to talk about."

"They're allowed to picket," said Durham Regional Police Sgt. Paul McCurbin.

"We don't have a problem with that."

Tuesday's cuts are another blow to the battered manufacturing sector in Ontario and Quebec, which has been decimated by layoffs and closures in the lumber, auto assembly, textiles and auto parts sectors. A high Canadian dollar and a slump in the United States have squeezed exports in those industries and produced widespread streamlining at the so-called Big Three carmakers – GM, Ford and Chrysler.

At GM Canada, the CAW says 2,600 face job losses as a result of the closure and noted that GM's workforce in Oshawa will be half the size it was 20 years ago, falling from 20,000 in the late 1980s to about 9,000 this year. About 5,400 people work at an adjacent car plant in Oshawa which GM will keep open and may expand with a new product.

Ontario Premier Dalton McGuinty said Tuesday his government would try to recoup part of a $175-million provincial loan earlier than planned if GM was found to be violating minimum job levels specified in their agreement.

With files from Nick Kyonka

thestar.com

***********************************************

 

  Hargrove Lashes GM

Apoplectic CAW president vows automaker won't get away with closing truck plant
Jun 04, 2008 04:30 AM

Business Reporter

General Motors of Canada Ltd. has breached a contract by planning to close its Oshawa truck plant next year, union leader Buzz Hargrove charges.

GM confirmed yesterday that it will probably close the plant in the second half of next year because of plunging pickup sales. But Hargrove, president of the Canadian Auto Workers, said that decision clearly violates a contract commitment of less than three weeks ago to keep the operation open.

An angry Hargrove said GM made written commitments for future truck production and a new generation of models at the plant beyond 2011, and is now "illegally violating" those contract terms.

"In my opinion, they can't do that," he said. "If GM can get away with that in a contract, what would stop any other company from doing the same thing and getting away with it?"

The contract states those commitments depend on market demand, but Hargrove said "no intelligent human being" would believe demand could have dropped so quickly in a few weeks to justify the new decision.

Calling GM's move "unjust" and a "betrayal," Hargrove and other furious CAW officials said the auto giant misled union negotiators and workers into ratifying a contract that assured production and future models when the company knew otherwise.

The union charged workers would have never ratified the contract without product commitments.

CAW Local president Chris Buckley said workers overwhelmingly accepted the three-year contract with a wage freeze because of the commitments for future work.

"Can you imagine how our members today feel?" Buckley said. "They're now told by General Motors, `You don't have a job in 2009.' That's absolutely disgraceful of GM."

GM Canada spokesperson Stew Low said the company will not respond publicly to the CAW's comments. "We will discuss the issue privately with Buzz," Low said. "But this situation (of falling demand) has accelerated beyond anyone's expectations. You can't build trucks when there are no orders."

The news of the plant closing came as the industry released May sales figures.

In contrast to the U.S., Canadian sales of cars and light trucks declined about 1,000 vehicles or less than 1 per cent to 184,467 in May from the same 2007 period, according to manufacturers' statistics.

The performance came despite a 20-per-cent plunge in GM and a 6.4-per-cent drop at Ford. Chrysler's sales climbed 6.2 per cent in May.

Meanwhile Toyota and Nissan, which have strong car lineups, posted double digit increases. Honda reported a 2.6-per-cent gain.

Earlier in the day, GM announced it would probably close four North American assembly plants permanently in the next year, including Oshawa, because of a plunge in sales of pickup trucks and sport utility vehicles.

The company blames soaring gasoline prices and tightening credit in a weakening United States economy for a whopping 35 per cent slide in truck sales in the first quarter from the same period last year.

The company's reports show consumers who buy pickups primarily for personal use and not for work purposes are shifting in droves to smaller, fuel-efficient vehicles.

GM has already cut a shift, or 1,000 jobs, at the plant this year. The company plans to reduce production by the equivalent of another shift in the fall before a full closing in the second half of next year. The closing, however, could come sooner if demand continues to deteriorate, according to Troy Clarke, North American Group vice-president for GM.

The 43-year-old plant, which has won international industry awards for productivity and quality, builds the full-size Chevrolet Silverado and GMC Sierra models.

The operation produced more than 316,000 last year, but that will fall significantly this year. In a twist, the closing means GM won't start building much more fuel-efficient hybrid versions of the pickups later this year.

Hargrove said the union is considering its options, including legal remedies, but could not provide details. The union could file a grievance and pursue the issue before the Ontario Labour Relations Board to force GM to keep the plant open, Hargrove suggested.

"We're going to do everything in our power, and we have power, and we'll select our target," he told reporters. "But this is not going to happen without a fight. Our plant will not cease production in the third quarter of 2009."

In response to a reporter's question, Hargrove said the union would not rule out production disruptions.

GM informed CAW leaders of the decision Monday. They spent most of the day and evening trying to get a reversal.

Keith Osborne, the CAW plant chair in Oshawa, noted top GM labour relations officials looked "sheepish" when they told the union of the company's plans.

"I could never trust them again," Osborne said.

                    ***********************************************

Bargaining in Bad Faith

June 3, 2008

Sisters and Brothers;


The Company has just driven another stake through the heart of the Auto Industry in our community by announcing today it will cease production of trucks in the third quarter of 2009 within Oshawa.

How could this happen after we just ratified a collective agreement with product allocation being our number one demand? Were we misled, or lied to, or both? We negotiated agreements that gave us commitment to new products in both the Car and Truck Assembly Plants in 2012. We had secured the next generation of trucks for the Oshawa Truck Plant in writing. We have an agreement with the Company that they cannot ask for another Shelf Agreement during the life of this contract and we have this document in writing as well.

Various reasons are being given such as low truck sales, high fuel costs and the state of the economy in the United States. They have decided to move production of the trucks we build to Mexico and Fort Wayne.

We believe we have been deliberately misled and out-and-out lied to by this Company. This happens just two short weeks after the agreement was ratified by you the membership. These product allocations came with a price. We, understanding we have to compete with the UAW Agreement, acted responsibly to secure the jobs of our members and put the future of Auto Assembly and Auto Parts in this community on stable footing for years to
come. We were up front and honest at the ratification meetings with this information, good and bad. Skilled Trades were faced with tough decisions but understood that product allocation was worth the price and ratified it
also.

Although this Federal Tory Government has done nothing to help us we are not prepared to let General Motors off the hook. The bottom line is that they are taking the work we do and moving it to Mexico.

General Motors is building plants overseas but closing them here. Loyalty to its employees has been replaced with corporate greed. Both Car and Truck Plants have demonstrated a willingness to negotiate agreements that make us competitive but we could never compete with Mexico. Their wages, health care benefits, human rights and safety standards are well below par and in some cases nonexistent.

Both parties understood the state of the Canadian economy going into early bargaining and the Company was still willing to give us in writing product allocation for both plants. They must be held accountable for their actions and we will be pursuing whatever means we have at our disposal to get this injustice corrected.

We appreciate the patience and support you have shown us over the past few weeks and ask all of you to voice your displeasure with the false hope that this Company willingly bestowed upon all of us.

In Solidarity,
Chris Buckley, CAW Local 222 President
and the GM Shop Committee


*****************************************************

GM closing Oshawa plant
GM Closes Plants June 2008

June 3, 2008

General Motors Corp. is shutting four North American plants making pickup trucks and sport utility vehicles, including its pickup line in Oshawa.

Chief executive Rick Wagoner told a media conference that ``recent developments on the global oil scene have forced us to take additional actions."

Higher gasoline prices represent "a structural change, not just a cyclical change," Wagoner said.

"It is, by and large, permanent."

Speaking to reporters in a conference call ahead of the automaker's annual meeting, Wagoner said the Oshawa plant will cease production in 2009 "and we don't have plans to allocate future products" – meaning a probable permanent closure.

There also are "unlikely" to be new mandates for the other plants affected by Tuesday's announcement, two in the United States and one in Mexico, as GM moves "to address the rapid industry shift away from trucks and SUVs."

As the market has vapourized for pickups and large sport utility vehicles amid high gasoline prices and slumping construction-industry demand, the Oshawa plant lost one shift last year and GM announced in April that the second shift would end this fall. Each shift represented about 1,000 workers.

The pickups made in Oshawa are "crew-cab type products that have been most severely affected by the change in consumer sentiment," Wagoner said.

                   *********************************************

Ford rolls out new Flex
Ford started with the Fairlane concept, top, with radical doors, space-age cockpit and two seats in the back but settled on the Flex, bottom, with four rear seats, standard doors and basic cockpit.

How Ford's upscale new Flex crossover vehicle evolved from a boxy wagon with a radical look and a name from a bygone era

Jun 03, 2008 04:30 AM

Business Reporter

When Ford unveiled its provocative Fairlane concept model in Detroit in 2005, many industry watchers didn't think it would ever get out of the garage.

It was just too radical, they said. To them, a small, boxy wagon from a bygone era didn't make much sense.

Observers couldn't quite figure out where the model would fit in the market and who would buy it.

Three and half years later, Ford Motor Co. of Canada Ltd. will officially launch the Flex, the production version of that unusual concept, today in Oakville and its looks haven't changed much.

While Ford altered the Fairlane's length, doors, seating and roof, officials say the concept car went through fewer changes than most models that make it to production.

The Flex represents a gamble for the struggling auto maker, which needs more hits to stem a sales slide that is threatening its survival.

Auto analyst Chris Travell described the Flex as "a real cool vehicle" that will evoke a "love-hate relationship" with consumers.

"It has the potential to differentiate itself in the crossover segment and provides a very viable option for someone driving a minivan," said Travell, vice-president of Maritz Automotive Research.

Ford's designers came up with the idea of the model in 2004 with no direction or product mandate.

Its code-name was "Hampton" in reference to the image of New Yorkers lazily driving to the Long Island summer colony of the same name.

Consumers flocked to the Fairlane concept at the North American International Auto Show and Ford began to seriously consider it as a rival to the Honda Pilot and Toyota Highlander sport-utes.

At the same time, the company was looking for a "people mover" to replace its sputtering Oakville-built Freestar minivan, sales of which were plunging against stiff competition.

In the process of moving from concept to production, the company turned the Fairlane, a Ford name from an earlier generation, into a more practical vehicle without losing the unique look.

It was lengthened by 27 cm to provide more room for middle-row passengers and an extra seat was added in a third row, like a minivan. The comparisons ended there.

Whether the changes will translate into healthy sales for the full-size Flex crossover vehicle this summer is an open question as fuel prices continue to soar.

Ford is aiming for North American sales of about 100,000 annually, which would push the Oakville complex's three shifts near its production limit. The plant already produces the popular Ford Edge and Lincoln MKX crossover utility vehicle, or CUV, and may add a fourth low-volume luxury model.

But analyst Dennis DesRosiers noted that volume is not an overriding issue for the Flex because the Oakville flexible manufacturing plant can easily adapt to market swings and reduce inefficiencies.

The Flex's fuel economy as a full-size CUV and starting manufacturer's suggested retail price of $34,999 are not out of line with competing models, DesRosiers added.

Peter Horbury, Ford executive director of design for the Americas, said the production version of the "people mover" will grab public attention.

"When you see it on the street, it shares nothing with anything else around it," he said in an interview. "It doesn't blend in. And that's what we liked about it. People always have an opinion about that car. It's not just grey."

In market research, Ford found consumers either hated or loved it.

"The strangest thing of all is some people came in the morning, took one look at it and said that's awful," said Horbury, a former top Volvo designer.

"But by the time they left in the afternoon, they couldn't wait to buy one. It grew on them in such a short time, which I think is a very good sign."

Among other changes to the production model, Ford eliminated the back rear-hinged "suicide doors." But the company didn't replace them with expensive, heavy sliding doors common to minivans.

It replaced the canvas roof on the concept model with four glass panels.

The roof also comes in two tones coloured differently from the vehicle's overall colour.

Other exterior features include dark windows, horizontal grooves in the door panels and Ford's signature three-bar grille, which gives the Flex a slimmer look than the bulkier concept.

Inside, Ford also moved a small fridge from the tailgate to the console in the middle of the second row.

Ford said it emphasized a high-end, quiet interior in the production model. It maintained the concept's "command position" in which the driver is looking down at the instrument panel rather than facing it.

Under the hood, Ford also added a bigger engine and more horsepower to accommodate the vehicle's larger size.

Although the manufacturer's retail prices may appear high, Travell said Ford has a reputation for offering value such as roomier interiors and additional features.

****************************************************

    

Slots Staff Gamble on Strike

Two gaming facilities expected to be closed today unless union gets last-minute deal

Jun 01, 2008 04:30 AM

Staff Reporter

Casino Brantford and Slots at Sudbury Downs were expected to be closed today after about 800 unionized slot attendants, dealers, servers, bar tenders and maintenance staff were poised to walk off the job at midnight last night.

About 110 unionized security staff at the Slots at Woodbine Racetrack, also members of the Canadian Auto Workers' gaming section, are also expected to strike.

But since slot machine attendants at that location are not unionized, Woodbine will likely remain open with management replacement workers, said a spokesperson for the Ontario Lottery and Gaming Corp. (OLG), the employer at all three sites.

The provincial Crown corporation's treatment of full- and part-time staff is one of the key issues in the dispute, said CAW spokesperson Hemi Mitic.

Mitic said the province sold the concept of legalized gambling to taxpayers as a way of bringing good, full-time jobs to economically depressed communities.

But over the length of the union's 14-month agreement, which expired at midnight last night, the percentage of full-time workers at the three locations has dropped by 15 per cent to 45 per cent, he said. In addition, part-time workers who often work full-time hours aren't given a fair shake when full-time positions come available, he added.

"At a time when the province is losing good manufacturing jobs, it's disappointing that a Crown corporation which is owned by the government would be attacking good full-time jobs in this way," he said.

A spokesperson for OLG said provincial gaming facilities have a mix of full- and part-time workers to cover long hours of operation that can run up to 24 hours a day, seven days a week.

There are about 17,000 workers employed in provincially owned and regulated gaming facilities in Ontario. About 7,000 of them are unionized and represented by the CAW.

                            ***************************************

Bob White's Response to Sam Ginden's CAW Panic Bargaining Article

I decided to respond to the above article because I am so disappointed and angry with the diatribe contained in your piece entitled THE CAW & PANIC BARGAINING’‘ EARLY OPENING AT THE BIG THREE. This is a disgusting piece of commentary, starting off with the suggestion that the leadership, including Buzz and the elected local union leaders, had an air of panic about them.

A That’s A hell of an accusation considering the fact that commencing with Buzz, all the leadership have been elected by their local union except Buzz, who is elected by a convention of local union delegates. They know first hand what is going on in the Auto industry and the current and future impact it has on our members and their families. Their goal was an attempt to negotiate the best possible collective agreement in the most critical period in the history of our union when thousands of our members are losing their jobs.

You, of course Sam, were never elected to any position in our union. One of our locals was kind enough to arrange a membership for you. In addition our union donated one million dollars to establish the Sam Gindin Chair at Ryerson University. You are employed at York University and had an opportunity to receive public funding for international travel to analyse other countries economies etc. None of that however compares to a being the leader of CAW in such difficult times as exist now.

Sam, never have you had to face what thousands of our members and their families are facing today: loss of jobs, loss of homes, increased family stress and a very uncertain future What is your solution to the crises we face. You do an academic analysis comparing at times, the current situation to what we faced in 1982. I agree that we can learn from our history but that was 26 years ago and there is absolutely no similarity to what is taking place today.

In 1982 we were in a recession, however, we had an Auto Pact requiring investments and production based on sales of cars and trucks. The Asian manufacturers’ sales and production here were minuscule then compared to the situation today. In that period General Motors employed thousands more of our members than the total number currently employed by Ford, Chrysler and GM together.

Your article contained a number of WHAT IF’S. One suggested that if the CAW mobilized our members for a fight in September against the two-tier system that this would spark or reinforce a resistance to two tiers in the USA and that the possibility of such a rebellion in the U.S. against their union leadership as much as against the companies is not as far fetched as it may appear. Later you write that a high profile struggle against the two tier wage system in Canada could have a major impact on the U.S. defeating the two-tier system on both sides of the border.
You sometimes attend meetings with some of the activists in the US. They know and you and I know, the chance of that kind of action by large numbers of US workers is not going to happen.

Another of your WHAT IF’S suggests that the CAW strike only key facilities and leave the rest operating. Another absolute ridiculous idea given the integration of the various workplaces.

The more I read what you wrote in The BULLET and other musings you have done, the more I am convinced that there is enormous differences between the two L’s : Lectures and Leaders. The content of the BULLET is about you lecturing by writing with lots of rhetoric and what ifs without having to justify any results. The other L is about leadership. I am absolutely convinced that given the reality of the Auto Industry today all the bargaining teams lead by Buzz and the very competent team around him served our members and their families well in reaching these agreements in the most difficult period in the history of CAW.

Sam I noticed how quick, and very excited you were, to refer to the Oakville plant production workers vote. Maybe you should have waited for all of the results of our members votes before you go so excited. Chrysler 87 per cent. General Motors 84 per cent. Ford 67 per cent.

The results show once again, the vast majority of our members, have a good sense of the reality they are facing and trust there union and our leadership.

Sam your analysis is incorrect. Once again you are away off the mark and out of touch with the leadership and membership of the CAW.

Bob White

--------------------------------------------

Sam Ginden's Respose to Bob White

Dear Bob,

I’ve received many responses from CAW members to what I’ve been writing. A few disagreed and we had a constructive exchange on the issues; by far most of them welcomed someone expressing what they were thinking. What was so different about the letters I got from Chernicki, Ken Sr and Frank Mc, was that they raised no issues whatsoever, but only challenged my right to speak out publically – doing so was ‘disloyal’ and loyalty is apparently the most important (if not the only) virtue. Though you do raise a few specific issues, you basically do much the same thing. You put it in terms of my credibility to speak up, given that I’m not a ‘leader’ with no ‘responsibilities’, but am only an outside academic (a ‘lecturer’).

I wonder if you felt the same way in regards to what I wrote about the UAW leadership accepting and selling the devastating two-tier system? After all, Gettlefinger was an elected leader with complex responsibilities and I see no reason to believe that he cared any less for his members and their families than Buzz did. Was this kind of criticism ‘different’ (OK) because here I was on the same side as you and Buzz?

I also remember the statements the UAW put out when Victor Reuther began ‘interfering’ in the direction of the union. They aggressively emphasized that he had never led negotiations nor faced the responsibilities this implied, and therefore had no business being critical. Yet Victor was repeatedly brought to Canada as a hero to criticize what the UAW leaders were doing to a once-great working class institution. I’m no Victor, but your position does seem a tad inconsistent.

You assert that inspiring the Americans by our example is not a serious possibility – an example of academic speculation and ‘what-ifs’. Well, I’d agree that it’s a long shot. But so was the possibility of Canadian autoworkers successfully defying the largest companies in the world and their own parent union in the most internationally-integrated sector anywhere - and doing so not in good times but just as neoliberalism and deeper continental integration were emerging. As I recall, there were a lot of ‘what-ifs’ floating around in our internal discussions at the time.

The point is that the labour movement is slowly dying and this includes the CAW. If we want to reverse this, we need more ‘what-if’s’ and more debate not less. (Spare me the argument that the NEB or the CAW Council is a place where this happens to any degree that matches what we confront; any honest discussion with staff and delegates would confirm the frustrations).

As for the argument that ‘times have changed’, this was always thrown at workers when they tried to buck the tide. Of course times have changed; the question is whether the union’s response maintains its values, principles, and above all independent voice and structures, or whether - even if reluctantly – it is more or less accommodating to the new environment. What I see is the latter. It’s reflected in the union essentially echoing the companies on competitiveness and getting closer to ‘their’ companies as they move away from ties to the rest of the labour movement. It’s evident in the silence on executive salary increases as the same execs demand worker concessions, and in the defence of corporate subsidies even when the promised jobs don’t come. It’s plain in Jacket-gate and the president of the union campaigning for both Belinda and McGuinty and doing so without any democratic mandate. And it’s there in the Magna deal, including the perverse declaration, at the original press conference, that the deal represented a ‘unionism for the 21st century’. (The CAW as visionary was hardly helped when the NEB agreed to hand out truck-loads of money to the CCWU, a phony union set up by individuals well-know for their corruption).

The symbolic cap to this reorientation of the union may very well occur at the Collective Bargaining Conference itself. Normally about challenging the elite and mobilizing the members, it risks – with the traditional focus on Big Three Bargaining out of the way - being overshadowed by a mid-conference gala dinner in which Canada’s economic and political elite come together to contribute to a charity and pay tribute to Buzz on his coming retirement. I expect there will be little discussion of the shame of a wealthy society providing a measure of adequate housing only through charity, and even less discussion of the role of many of those present in causing or reinforcing the current suffering of not just the poor but workers more generally.

You end by pointing to my excitement at Oakville’s vote and gloat about the high sub-sequent votes at GM and Chrysler. Well, I was excited about the Oakville vote because it was a sign of hope, of workers’ standing up to what’s been done to them. On the other hand, the strong votes at GM and Chrysler highlighted the lowering of expectations and the pervasive fear amongst the members – a fear which the union has not just reflected, but in some cases reinforced.

Leaving aside the cynical scheduling of votes a day after the secondary leadership was called in and in the midst of the first summer four-day weekend, and setting aside a process in which the union asks to open bargaining before the Bargaining Conference that allegedly discusses direction and sets priorities can take place, exactly what it is in that vote that vindicates the leadership?

Amongst other things, workers gave up some of their paid time-off including, in Oshawa, the loss of relief time when the pace of work is accelerating. Oshawa also approved other companies coming into the complex and working beside CAW members but under inferior and likely non-union agreements – two-tier by stealth. Sure, I can understand why the members may have accepted this and even felt relief given the options they faced, but why would we celebrate it?

Finally, Bob, I was as much an academic when I worked so closely with you, as I am today - though in terms of learning, it was you who were often the teacher. Today, I spend more time with students, virtually all of whom come from the working class, and probably interact more with rank-and-file workers in Canada and the US than I did before. I write and criticize because I care about the working class, not because its comfortable questioning friends, and certainly not because I have nothing else to do. Like others, I’m struggling with what the labour movement and the left can do and I hope what I write makes some contribution to that. Others will decide if it does or not. Meanwhile, I’ll continue writing and criticizing - and accepting criticism.

Sam Gindin
May 23, 2008


***********************************************

Ford plans U.S. layoffs

Cuts will be complete by August 1, company says

May 28, 2008 03:49 PM
The Associated Press

DETROIT – Ford Motor Co. plans to conduct involuntary layoffs of salaried employees by August as part of a restructuring in the face of slumping sales and record-high gas prices, a spokeswoman said Wednesday.

Marcey Evans said the company (NYSE: F) hasn't yet determined how many white-collar jobs will be cut. But she said that unlike previous rounds of layoffs in recent years, employees won't be offered voluntary buyout packages with financial or early retirement incentives. Evans said the company wants the cuts completed by Aug. 1, which is not enough time to roll out voluntary offers and wait for employees to accept them.

"Given the speed that we're moving, we don't expect to conduct voluntary layoffs," she said.

The Detroit News reported Wednesday that some employees were told that Ford plans to cut its salaried workforce by 10 to 12 per cent, or more than 2,000 people. But Evans said Ford hasn't yet decided how many white collar jobs will be cut.

Ford announced last Thursday that it was cutting North American production for the rest of this year and no longer expects return to profitability by 2009 due to the rapidly deteriorating U.S. automotive market. The company said it would release more details about its cost-cutting efforts in July.

In a memo sent Thursday to employees, Ford's president and chief executive Alan Mulally said the company would need to make salaried job cuts. Mulally said employees will be notified once the company has determined the extent of the cuts.

"We want to do what is right for the future of our business and also respect the fact that these actions will personally affect our team and their families," Mulally said in the memo.

Ford had 23,700 salaried workers at the end of 2007. The automaker has cut the number of full-time salaried workers in North America by 10,800 since the end of 2005, mostly through attrition, early retirement offers and voluntary buyouts. In 2007, the company had so many people accepting offers that it was rescinding the offers from workers in some departments.

At the beginning of this year, Mulally said there would be more salaried cuts needed, but that those would likely come through attrition. Mulally said last week that the company has had to boost its restructuring efforts after sales slumped more severely than expected, especially for large pickups and sport utility vehicles.

With U.S. auto sales expected to drop to around 15 million this year, down from 17 million as recently as 2005, Ford needs to cut costs to help fund new technology and stay afloat until the market recovers, said Kevin Tynan, an auto analyst with Argus Research in New York. Ford and other automakers are investing in costly hybrid and electric vehicle technologies but won't see the benefits for several years, he said.

Tynan said Ford wouldn't be able to reach its layoff targets without involuntary layoffs. But he also noted the company and its U.S. competitors have weathered downturns in the past.

"If history is a guide, we've been through it before. You get to these points where you restructure, then you start to recover," Tynan said. "It's at least an industry and a group of companies that have proved they can get pretty creative when the back's against the wall."

David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. said Ford's efforts to globally integrate engineering and design have probably led to significant redundancy.

"It's like the general that will sacrifice a battalion to save a division," he said. "You've got to get to the turnaround point where you go positive on cash."

Ford shares fell four cents US$6.76 in afternoon trading on the New York Stock Exchange.

                        ****************************************

Inflation takes over
as public enemy No. 1

Move over credit crisis, spiralling global oil prices
have become the West's biggest economic worry

May 26, 2008 04:30 AM


Reuters News Agency

WASHINGTON–Somewhere between the implosion of Wall Street firm Bear Stearns in March and today's $130-plus oil, inflation supplanted the credit crunch as North America's biggest economic worry.

Just a few weeks ago, investors were paralyzed by fears that Bear Stearns could be the first of many financial firms to fall. But the relative calm – and rise in the case of Canada and Mexico – that has settled over markets since then encouraged buyers to tiptoe back into stocks.

Now, the mood is wary once again as oil has surged more than 30 per cent so far this year and economists warn that it is cutting into consumer spending and eroding corporate profits. U.S. stock markets, which had been taking cues from the latest bank rumour, now slide on each new high for crude.

"For the first time in our memory, inflation, not growth, is the primary macro driver at the global level," Merrill Lynch economists wrote in a note to clients.

"The inflation shock has already happened. What matters now is how persistent it is, and how markets and policy-makers react. At a global level, this begs for an accident that will awaken markets and policy makers to the risks."

The side effects will be accelerating wage growth, particularly in emerging economies, and a blow to consumer confidence in rich countries, where wages are not likely to keep up with inflation.

Confidence is already slumping in the United States, the euro zone and Japan. The next readings on euro zone consumer and economic sentiment are due Friday, and are likely to remain weak. U.S. consumer confidence figures come tomorrow and are hovering at recessionary levels.

"We have been in a camp saying that we won't see a recession ... but if oil continues to move higher, that could drive the United States into recession because of the strain on the consumer," said Wendell Perkins, of Optique Capital Management in Racine, Wisc.

U.S. gasoline prices hit another record high of $3.79 (U.S.) per gallon last week, according to the federal Energy Information Administration. With today's U.S. Memorial Day holiday marking the traditional start to the summer driving season, prices are expected to go even higher in the coming weeks.

Japanese consumer price data for April comes Friday, and is likely to show cost pressures remain near a decade high.

What has caused oil's dramatic rise this year is a subject of debate. While there is no denying strong demand from emerging economies such as India and China, some analysts wonder why oil has risen so sharply when the global economy is cooling.

They have pointed the finger at commodities speculators, a weak U.S. dollar and even the U.S. Federal Reserve, which has more than halved interest rates since mid-September.

In the corporate world, rising oil prices are taking a toll on profits because a weak economy makes it tougher to pass along the full brunt of inflation to cash-strapped consumers.

Alan Mulally, chief executive of auto maker Ford Motor Co, pointed to a "real change" in demand for gas-guzzling pickup trucks and sport-utility vehicles this month. "It seemed to us that we reached a tipping point where customers began shifting away from these vehicles at an accelerated rate," he said.

Ford cut production through the end of the year and no longer expects to return to profitability next year.

Soaring energy costs have also complicated matters for central bankers, who face the unenviable task of trying to bolster growth without inadvertently stoking inflation. The normal policy response to rising prices is higher interest rates, but that risks slowing an already weak economy.

Bank of Canada Governor Mark Carney said last Thursday that the sharp rise in oil prices will be a consideration in the bank's next monetary policy decision on June 10.

Inflation fears have also sunk deeply into the thinking at the U.S. central bank, which appears to be putting interest rate cuts on hold indefinitely as it frets about oil prices adding to broad-based consumer price pressures.

The Fed is keeping a particularly close eye on consumers' inflation expectations, which have been creeping up in recent weeks. Should consumers conclude that inflation is here to stay, they might demand higher wages, kicking off a spiral of higher costs for goods, leading to still-higher wages.

For now, the Fed still thinks inflation will cool later this year as a weakening economy pushes unemployment higher.

***************************************

Ford slashes production,
cuts more jobs in Windsor

430 layoffs ordered at V8 engine plant, but some workers land jobs at Ford's busy Oakville complex

May 23, 2008 04:30 AM


Staff Reporters

Ford says it will trim as many as 430 jobs at its Windsor engine plant in the fallout from major new production cuts by the struggling automaker.

The company confirmed yesterday it sent out layoff notices to affected workers at the operation during the past week as a consequence of lower production at North American assembly operations for the remainder of the year.

Ford is reacting to falling demand for gasoline-guzzling pickup trucks and sport-utility vehicles that use the Windsor plant's V8 engines.

Mark Truby, a spokesperson for Ford, said there could be fewer layoffs by the time they take effect in mid-July.

"We haven't worked out the full impact," he said.

Buzz Hargrove, president of the Canadian Auto Workers, said Ford told him it will cut about 300 jobs.

"We'll be losing the shift very soon, but one would hope it's not permanent and fuel prices go down," Hargrove said.

Ford announced earlier in the day it will reduce its overall North American production by 15 per cent in the second quarter from the same period last year.

The company, which reported a surprise first-quarter profit, intends to also shave output by 15 to 20 per cent in the third quarter and another 8 per cent in the last three months of the year.

Soaring gasoline prices and a slowing U.S. economy are reducing vehicle demand significantly south of the border, particularly among bigger models.

While reducing truck and big SUV production, the company said it expects to increase output of the strong-selling Ford Focus compact, Edge and Lincoln MKX crossover models, Fusion mid-size car and Escape small sport ute.

Ford builds the Edge and Lincoln crossover models at its Oakville complex, which is currently running flat out. The company will also soon start using Oakville to build the Flex cross-over model, which is the replacement for the defunct Freestar minivan.

Some laid off workers from Windsor are taking new jobs in Oakville to meet increasing demand. The Oakville operation is currently hiring 500 workers.

Hargrove said about 1,200 Ford workers are already on layoff in Windsor, a city that has one of the highest unemployment rates in the country primarily because of layoffs in the auto-parts sector.

Last week, General Motors announced it will close its transmission plant in Windsor and trim 1,400 jobs in the middle of 2010.

Hargrove, who recently negotiated new pacts at Ford, GM and Chrysler, said Ford workers who face layoffs may not be able to get much financial help to cushion the impact because of earlier buyout and early-retirement incentives.

Meanwhile, NDP Leader Howard Hampton said the Ontario government should give plane tickets to laid-off Windsor auto workers so they can commute to jobs in Western Canada.

"Far better to have someone commuting somewhere else until they're able to retire or find a job in their own community," Hampton said in an interview.

"The other option is that you sell (your house) and move and that's not good, or you end up on Ontario Works, which no one can survive on."

The mayor of Windsor has raised the idea of helping laid-off workers commute and Hampton said it's an idea the province should support with some money.

"We'd like to keep (skilled workers) in the community. If it means flying them out to Saskatchewan or Alberta to work and flying them home every two weeks ... that may be the best workable strategy."

Hampton added the government must also stop handing out taxpayer dollars to auto makers without getting job protection guarantees.

"The evidence grows every day that the McGuinty government made a $100 million investment in Ford (since 2004) and didn't get any job guarantees," Hampton said.

Economic development minister Sandra Pupatello, who is a Windsor MPP, said she's hopeful the final layoff numbers won't be as severe as current estimates.

"We do anticipate that sales in the U.S. will pick up," Pupatello said in an interview.

She rejected Hampton's suggestion that Ontario pay for plane tickets so laid off workers could commute to jobs out west.

"That would not be a priority for us. Our priority is bringing jobs to Ontario and maintaining the jobs we have," Pupatello said.

She also defended the money the province has given manufacturers like Ford.

"If we didn't have this, we would have five major (auto assemblers) who would not have made a $7.5 billion investment in Ontario just in the last couple years."

**************************************

 

High cost of gas sparks
Ford production cut

Alan Mullaly
The Associated Press and Globe and Mail

May 22, 2008 at 12:13 PM EDT

DETROIT — Ford Motor Co. is cutting North American production of pickups and SUVs as car buyers eyeing record gas prices turn toward more fuel-efficient models. The auto maker says it no longer expects to return to profitability by 2009 and didn't rule out layoffs and plant closures.

Dearborn-based Ford also on Thursday cut back its projections for total U.S. light vehicle sales in 2008 to between 14.7 million and 15.1 million vehicles. That's down from 17 million vehicles as recently as 2005. Light vehicle sales exclude heavy trucks.

“We all would like the basic business environment to not have deteriorated, but clearly the most important thing we can do for the long-term success of the Ford Motor Company is deal with this reality,” Ford President and Chief Executive Alan Mulally said in a conference call.

Mr. Mulally said the company expects a longer and slower recovery from the economic downturn than it did several weeks ago.

Canadian Auto Workers union president Buzz Hargrove said the reduction in truck and sport utility vehicle production will mean about 300 job cuts at Ford's Windsor, Ont., engine plant, which assembles V8 and V10 engines for those vehicles.

Ford said last month that 4,200 hourly workers — just over half the number the company wanted — had accepted the company's latest buyout and early retirement offers. On Thursday, Ford said it will continue offering buyouts to manufacturing workers on a plant-by-plant basis. Ford plans to give more details about possible salaried layoffs and plant closures in July, he said.

Ford shares dropped 55 cents, or 7 per cent, to $7.24 in morning trading.

Ford said it will cut production by 15 per cent in the second quarter, 15 to 20 per cent in the third quarter and 2 to 8 per cent in the fourth quarter. The cuts will primarily affect pickups and sport utility vehicles, which have seen sales plummet in recent months due to rising gas prices and the slowdown in new home construction.

Ford plans to increase its production of cars and crossovers through additional shifts and overtime. Ford's smallest offering, the Focus sedan, saw sales jump 29 per cent in the first four months of this year, while its Ford Edge crossover was up 38 per cent.

Ford reiterated plans announced earlier to boost production of the Edge and the Lincoln MKX at its Oakville, Ont., assembly facility.

As recently as 2004, trucks and SUVs accounted for 70 percent of Ford's sales volume, according to George Pipas, Ford's top U.S. sales analyst. That has reversed completely: Retail sales of trucks and SUVs accounted for just over 30 per cent of sales in April, he said. But Ford is still heavily reliant on the kinds of large vehicles that have been struggling in the current market. Ford's F-series trucks, long the best-selling vehicles in the U.S., were down 16 per cent in the same period.

Still, Mr. Mulally said the company is not considering dropping any large SUVs from its lineup. Instead, it is working on improving the fuel economy of its current trucks and offering more options.

“There's always going to be a market for the truck-based platforms for their capability to tow and haul,” Mr. Mulally said.

Ford said in addition to realigning its manufacturing capacity to produce more small cars and crossovers, it plans to accelerate the North American introduction of some of its small cars from Europe and South America. Mr. Mulally gave no details on what vehicles might come to the United States, but he did say Ford can't get the subcompact Ford Fiesta to the United States any faster than 2010.

Ford had said in March it planned to cut second-quarter production by 10 per cent and confirmed additional cuts at a factory in Michigan earlier this week. But it revealed the full extent of the cuts Thursday.

Production cuts hurt revenues, because automakers book vehicles as sold once they leave the factory.

Consumers have been shifting to smaller, more fuel efficient cars in the last few months at a pace that stunned the industry. Through April, U.S. sales of subcompact cars shot up 33 per cent, while sales of large SUVs were down 29 per cent, according to Autodata Inc. Overall U.S. sales were down 8 per cent in that period.

“We're also really trying to understand what the real demand is going to be from this point forward,” Mr. Mulally said.

Ford is projecting gas prices will be in the $3.75 (U.S.) to $4.25 range for the remainder of this year.

Ford said it is on track to reduce North American automotive operating costs by $5-billion by the end of this year. But it said the rising price of steel and other commodities are offsetting expected gains from its new contract with the United Auto Workers.

******************************

Buyout offers ending at GM

Deadline is today for thousands of hourly workers; 5,500 others must decide by May 29.

Thursday, May 22, 2008

STERLING HEIGHTS -- Marty Sullivan knows he's making a choice between two uncertain futures. A General Motors Corp. hourly worker for 38 years, Sullivan always planned to put in four full decades with the automaker before retiring. But the more he hears about layoffs and turmoil roiling the auto industry, the less confident Sullivan feels about sticking around.

 

He's among tens of thousands of GM's unionized employees who must decide by today whether to leave the company for good in exchange for the richest retirement incentives ever extended by GM. Another 5,500 workers have until May 29 to decide.

 

"I'm gonna hold out until the last second," said Sullivan, who commutes to GM's Milford proving grounds from his northern Michigan home. He recently attended a job fair hosted by the automaker to help convince workers there can be life after GM.

"I always thought I'd stay a couple more years. But you don't know what's going on anymore. I just don't know what I'm going to do."

 

GM has put the hard sell on workers this spring in hopes of convincing them to take a buyout or retirement incentive to leave for good. In the past several months the automaker has enlisted career-building experts, retirement planners and college advisers to help workers see a life outside the factory. It's a daunting prospect for many, especially given Michigan slumping economy and high unemployment.

 

Workers have a week to change their mind after making a decision. GM hopes to have the takers cleared out by July 1. All of GM's 74,000 hourly workers are eligible for a buyout or retirement incentive.

 

"I'm just not sure what they're offering is enough for me to survive on until I finish school," said DeShawn Letbetter, who wants to get out of the auto industry but also has three children to support. A worker at GM's Warren Powertrain factory, Letbetter was still deciding whether to take an offer.

 

To help sell the rank-and-file, GM is making offers more generous than those extended in 2006, when 34,000 workers left the No. 1 U.S. automaker Retirement-eligible workers will be offered up to $62,500 to leave with full pension and benefits. Less senior employees will get a range of buyout offers.

 

Clearing out veteran employees is a central part of GM's plan to create a second tier of lower-paid autoworker within the company. New hires will earn about half the $28-an-hour wage of current workers. They'll also earn more modest benefits.

The move is part money-saving labor pact GM struck last year with the United Auto Workers. When the deal fully kicks in by 2010, GM says it'll be saving up to $5 billion a year in labor costs.

 

Before the savings can start, veterans like Sullivan must go. GM won't say how many workers it's looking to trim. UAW President Ron Gettelfinger has estimated 15,000 to 20,000 GM workers could take the packages. The automaker has 46,000 workers eligible for retirement.

 

GM is hoping for a take rate better than Ford Motor Co. About 4,200 Ford workers took its latest offer, half of what Ford wanted. "It's a bad economy, so sure they're not going to do as well as they did a year and a half ago," said Sean McAlinden, chief economist at the Center for Automotive Research. "But the presumption is that they'll do better than Ford based on the vast number of people who are eligible."

 

Thousands of workers have turned out for the job fairs and expos GM has hosted around the country near dozens of factories. At one of the events last month, hundreds of workers filed through a massive ballroom in Sterling Heights, where upbeat career coaches guided them through job listings customized to fit the workers' talents, schedules and income needs.

 

"We know that people don't believe there are jobs in Detroit, but there are," said Laura Herring, president of IMPACT Group, a career transition company GM signed on to help workers warm to a second calling.

 

Detroiter Clarence Parker said he would rather risk the unknowns of a new career than spend decades on the factory floor. He works at GM's Hamtramck assembly plant, one of many idled for weeks by the lengthy strike at auto parts maker American Axle & Manufacturing Holdings Inc.

 

"I just don't see spending 20 more years at GM," said Parker, who has worked 10 years at the company and would like to become a teacher. "The jobs aren't secure anymore and I feel like I'm shackling myself to something. "I just want to do something else."

 

****************************************

Clean Sweep for Historic Auto Deal

Chrysler workers follow in footsteps of Ford,
GM in ratifying three-year deal that freezes wages

May 18, 2008 04:30 AM

Staff Reporter

Canadian auto workers with Chrysler LLC yesterday followed their colleagues at General Motors and Ford and ratified a three-year contract that freezes wages, suspends cost-of-living allowances and reduces vacation pay.

Voting at locations across the GTA and in Windsor, more than 5,000 Chrysler employees voted 87 per cent in favour of the new contract.

"I think it was an overwhelming endorsement of the union strategy to go in early," said Buzz Hargrove, president of the Canadian Auto Workers union, who took his members into contract negotiations four months ahead of their current deal's expiry date.

CAW and Chrysler negotiators reached a deal Thursday, then turned it over to the 8,000 Chrysler employees for a vote.

Yesterday's ratification comes one day after GM auto workers ratified a similar three-year deal affecting about 13,000 employees.

The provisions in both agreements are similar to terms Ford Motor Co. of Canada Ltd. and the union negotiated earlier this month for about 9,000 workers.

The approval rate at Chrysler was the highest, with GM workers voting 84 per cent in favour, while 67 per cent of Ford workers backed the new contract.

Hargrove said the union pressed for early deals as worsening conditions in North America's struggling auto industry could have weakened members' bargaining positions in the summer.

The deal comes as rising fuel prices and a high Canadian dollar continue to batter the domestic auto manufacturing industry.

Despite these challenges, Ken Lewenza, chair of the CAW-Chrysler master bargaining committee said the biggest challenge to the Canadian automotive industry comes from the falling market share of the Big Three American auto makers and from the cheaper labour sources used in other countries.

"It's not about the worker, his or her benefits or wages; we cannot be expected to compete with Third World countries," he said.

As well as a wage freeze and suspension of a cost-of-living allowance until the end of 2009, new workers won't receive full wages for three years, instead of two.

However, in a statement released yesterday, the CAW said the three-year deal resisted two-tier wages, improved benefits and strengthened health and safety regulations.

************************************

It's a deal for GM, Chrysler

With `dark clouds' on horizon, autoworkers to
vote on tentative agreement by weekend

Buzz Hargrove

May 16, 2008 04:30 AM

Business Reporter

Bracing for "tragic" times, the Canadian Auto Workers reached early tentative agreements yesterday with General Motors and Chrysler, which they hope to ratify in speedy fashion over the long weekend.

"We see more dark clouds on the horizon (so) we wanted to move quickly. It was a real motivator for us," CAW president Buzz Hargrove told reporters in Toronto.

"The best way was to get in, get out," he said, noting he and negotiating teams were exhausted after round-the-clock, back-to-back bargaining with both automakers.

The twin agreements, reached four months before September's deadline, are identical in many respects to the Ford deal hammered out nearly two weeks ago. All three include a three-year wage freeze with some cost-of-living increases in the second and third years, along with a cut in vacation pay. New workers will wait longer for full pay.

Still reeling from this week's announcement, Windsor's transmission plant will close in 2010, Oshawa's GM workers have a few things to look forward to in the new deal.

Hargrove said GM has committed to building a new car at its flexible manufacturing plant in Oshawa. Sources said GM will soon announce the high-volume model for the new plant, but production won't start until late 2011 or early 2012.

GM will also build the Chevrolet Impala in Oshawa until 2012. Despite plans to phase it out in 2010, sales have stayed strong.

The company has also committed to produce a six-speed transmission at its St. Catharines' engine plant, the union said, and agreed to produce its next-generation V8 engine in St. Catharines and Oshawa.

Hargrove said about 900 jobs will be saved, extending the life of the second shift at Oshawa's truck plant, which will work two weeks on, two weeks off. The plant makes GMC Sierra and Chevrolet Silverado pickups. Production of hybrid versions will begin later this year.

Chrysler has extended the life of Etobicoke's casting plant, which employs 350, until June, 2011, as it works to find a buyer, he said. Chrysler and the CAW shook hands on the tentative deal, agreeing tough times call for tough decisions.

"It's pretty obvious that there are a lot of challenges ahead of us and we're going to have to continue to evolve to address those changes," said Al Iacobelli, vice-president of employee relations at Chrysler.

Hargrove said the tentative GM deal is also aimed at protecting workers affected by plant shutdowns. The severance agreement for more than 1,300 GM workers hurt by the upcoming closure of the Windsor plant is "groundbreaking," he said, including buyouts worth up to $125,000 and pro-rated early retirement packages.

Workers will get a $2,200 "productivity and quality" bonus immediately and a $3,500 lump sum early next year as compensation for the loss of the vacation pay.

Big Three workers are among the highest-paid industrial workers in Canada. Production technicians earn $33.90 an hour, including COLA, while tradespeople receive $34.30. Despite the wage freeze, the union estimates the COLA will generate an extra $1 an hour for workers by the end of the contract.

"The market is changing so radically right now. The changes reflect the state of the company and the state of the industry," said Hargrove, whose term as the CAW's legendary president is set to expire at a time when the Big Three are struggling from tough competition and lower demand.

"Normally we wouldn't have accepted this package. Normally we would have gone to a strike deadline, but when you look at the closure of the Windsor transmission plant (announced this week), and the state of the industry ... this is a win-win," he explained at a news conference at the Sheraton Centre Hotel."We could see nothing but a downside to delaying our bargaining."

GM workers vote on the proposal today and Chrysler workers will vote tomorrow. Hargrove wouldn't speculate on the outcome but noted the master and local bargaining committees were unanimous in endorsing both the GM and Chrysler agreements. The Ford agreement was approved by a 67 per cent majority of its workers.

GM employs 12,955 CAW members in Canada, including 1,914 currently laid-off at four main sites across southern Ontario. The agreement covers 9,600 Chrysler employees.

Files from Tony Van Alphen


******************************************

Deal close with GM, Chrysler

May 15, 2008 04:30 AM

Contract talks with General Motors and Chrysler were continuing through the night as the Canadian Auto Workers moved closer to a deal, following last week's contract ratification with Ford, CAW president Buzz Hargrove said last night.

There are several "sticking points," Hargrove said, without giving details, but he said negotiators, talking separately to the two companies, were close enough to expect a tentative deal today.

But, he warned, "we're close enough to finalize this thing; far enough apart that it could fall apart. But we're still optimistic we can get this done."

After Ford workers agreed to a three-year deal, including a wage freeze, by more than a 2-1 margin, Hargrove had said he expected GM and Chrysler negotiators to follow suit under traditional pattern bargaining with the Big Three North American-based automakers.

"The second and third companies always don't like some pieces of the pattern but we don't anticipate any problems," he said.

                                ****************************************

 

American Axle threatens
additional plant closure

UAW president says union will accept massive concessions

Strikers in Tonowanda

By Shannon Jones

13 May 2008

In the wake of an offer by General Motors to provide $200 million to help settle the now 11-week strike against Detroit-based American Axle, the company is threatening to close another plant.

On Saturday the United Auto Workers revealed that American Axle wants to close its Cheektowaga, New York machine shop, which employs 116 workers. The company previously announced plans to close its forge plant in Tonawanda, New York—with 460 workers—and its Detroit forge plant, which employs 300 workers. The shutdown of the Cheektowaga plant would mean an end to American Axle operations in the Buffalo, New York area.

The strike began February 26 over company demands for huge cuts in pay and benefits. About 3,600 American Axle workers are on strike at five facilities in Michigan and New York.

UAW President Ron Gettelfinger revealed the American Axle demand for the closure of the Cheektowaga facility in an interview with Detroit’s WWJ radio on Saturday. In the same interview he confirmed reports that the union had already agreed to the closure of the Tonawanda and Detroit forges.

The UAW president also acknowledged that the union had already agreed to massive concessions. “We have literally made hundreds of changes in this contract and throughout these negotiations. And I mean literally hundreds of changes, all to the company’s advantage.”

As an example he cited the Three Rivers, Michigan facility where he said the union had agreed “to a wage rate so low, that they will have to work six months just to earn what the company gave their board of directors in an increase on their retention pay, which is $10,000.”

If what Gettelfinger says is literally true, then the union has accepted a below poverty pay rate of less than $10.00 an hour, based on a standard 40-hour workweek. Further, this admission confirms that the UAW has agreed to split up the national contract and conduct plant-by-plant negotiations, encouraging a bidding war between union locals.
In an interview in the May 12 edition of the Detroit News, Dana Edwards, shop chairman of UAW Local 235 in Detroit, acknowledged that the union had already agreed to pay cuts ranging from $5 to $8 an hour.

Last week General Motors announced that it would provide $200 million to finance early retirements, buyouts and buydowns of American Axle workers contingent on an early settlement of the strike. Thirty GM facilities have been fully or partially shut down due to parts shortages caused by the strike.

GM created American Axle in 1994 by selling off a group of axle, driveline and forge plants to private investors with the aim of slashing wages and benefits in its components operations. The company is still largely dependent on GM, which accounts for 80 percent of its sales.

American Axle is reportedly prepared to offer workers $140,000 for a buyout if they walk away from their current jobs or a $90,000 buydown if they agree to stay on at lower wages.

GM’s offer of a cash payout has apparently encouraged American Axle to take an even harder line in negotiations. The UAW president said a settlement was near prior to the announcement by American Axle of plans to close the Cheektowaga plant.

A report in the May 12 Wall Street Journal speculated that, despite the capitulation of the UAW to all of American Axle’s demands, the auto parts maker and the union may be deliberately holding up a settlement in hopes of extracting more money from GM. “Brushing off GM’s initial offer could pressure the auto maker into proposing a larger sum,” the Journal writes.

The UAW is continuing strikes over local issues at a GM assembly plant near Lansing, Michigan and another GM facility in Fairfax, Kansas. By all indications the UAW called the walkouts as part of an effort to pressure GM into intervening in the American Axle strike.


A report in the March 28 edition of Businessweek titled “GM’s Broken Axle” indicated that prior to the strike GM offered to take back some 2,000 American Axle workers so that the company could bring in new hires at lower wages. At the time American Axle CEO Richard Dauch rejected the offer because he would not accept demands by GM that he cuts prices.

The strike continues to reveal the enormous chasm that exists between the UAW and the rank-and-file membership of the union. Local union leaders have estimated that 2,000 of 3,600 American Axle workers would take buyouts if offered, a devastating vote of no confidence in the union.

The protracted character of the American Axle strike has evoked worried and hostile words from industry commentators. Jerry Flint, automotive editor for Forbes, wrote a column in the May 9 edition of the magazine on the American Axle strike containing a barely veiled warning to the UAW bureaucracy to wrap up the strike. “I am starting to wonder whether Detroit—General Motors, Ford Motor and Chrysler—would be better off today without the auto workers union,” Flint wrote. “The same goes for the current members of the UAW.”

He went on to draw attention to the inability of the union to either defend jobs for its membership or win support among workers at Toyota, Honda and other Asian and European transplants. Calling GM’s proposal to spend $200 million for buyouts at American Axle “a dangerous policy,” he suggested instead that the automakers in the future should consider open union-busting: “Detroit automakers might weigh the risks of a fight to break a strike, as new workers replace old union loyalists in these plants. That day is still way off, but it is closer than it was.”

While American Axle is still relying on the UAW to wear down the opposition of its members, corporate CEO Richard Dauch is also testing the waters for a strikebreaking operation if workers continue to resist his wage and job-cutting demands. The company has advertised for scabs and accepted hundreds of applications.

In any event, the conduct of the UAW in the American Axle contract dispute has amounted to little more than strikebreaking against its own membership. The UAW has largely insulated itself from the impact of its own betrayals by working out corporatist arrangements with the auto companies to secure its own financial interests even as its membership plummets. Under contract terms it negotiated with the Detroit automakers last fall the UAW will administer a multibillion-dollar retiree health care trust fund, much of it funded with auto company stock.
The way forward for American Axle workers lies with an independent struggle against the UAW, mobilizing workers throughout the auto industry in a united struggle against job cuts and concessions.


                    ***********************************************

GM cuts 1,400 more jobs

May 13, 2008 04:30 AM



Staff Reporters

Struggling Windsor took another big hit yesterday when General Motors announced the shutdown of a major transmission plant that will eliminate 1,400 jobs directly and thousands more indirectly.

The auto giant, which continues to lose market share in North America, said the company will shut down the 45-year-old plant in two years because consumer demand has shifted to fuel-efficient six-speed transmissions rather than the four-speed versions produced in Windsor.

"This has become a very tragic situation for the city of Windsor," said a glum Buzz Hargrove, president of the Canadian Auto Workers.

Hargrove added that beyond the job losses at the sprawling GM plant, several thousand workers at factories, stores and restaurants around the region will face layoffs.

Also in doubt are hundreds more GM jobs at another operation in St. Catharines, which relies on the transmissions produced in Windsor for much of its work.

"For every manufacturing job that goes out of this plant, the economists will tell you there are six or seven other jobs that will be gone," Hargrove told reporters.

Windsor, a city of about 216,000, estimates that it has lost 10,000 manufacturing jobs in the past five years and city officials expect more bad news because of an overreliance on the struggling Big Three automakers.

The city has one of the highest unemployment rates in the country.

A Ford engine operation in the city has also eliminated more than 1,000 jobs in the past year.

The Windsor plant currently builds and ships front-wheel-drive, four-speed transmissions to the U.S. and Mexico for use in medium-sized and compact vehicles.

GM, which announced the decision in the middle of early contract negotiations with the CAW, has already cut a shift and 1,100 jobs at its truck assembly plant in Oshawa.

It plans to cut another shift and more than 900 jobs this fall at the same plant.

GM's latest decision raised questions whether the Ontario government should have given $235 million in public money to GM for projects when it is cutting work elsewhere in the province.

Hargrove again accused the federal government of ignoring the industry and not dealing with unfair trade, which denies Ontario-made autos from access to offshore markets. Government officials denied the charges.

                            ********************************************

Has Canadian labour
given up the fight?

Financial Post

Nicolas Van Praet

 

When lawmakers were busy sketching out the details of the North American Free Trade agreement in 1988, Buzz Hargrove, then assistant to Canadian Auto Workers president Bob White, said the union would "fight like hell" against lower U.S. wages and benefits that could creep into Canada.

And when DaimlerChrysler AG cancelled its plans for an Ontario pickup truck plant in Windsor in 2003, Mr. Hargrove again said he would "fight like hell" to make Chrysler live up to its commitments. In fact, "fight like hell" has been such a repeated part of the labour leader's lexicon over the years that it has become a cliché.

Now, some trade unionists argue, it's also a downright lie.

The CAW's newly ratified three-year agreement with Ford Motor Co., which leaves wages and benefits essentially flat, has drawn criticism of Mr. Hargrove from all sides. While investors may think he won too much for Ford workers at a time when the automaker is losing millions of dollars in North America, unionists say the deal and the way it was done was the CAW's biggest bendover to corporate power in years. It proves Mr. Hargrove is no longer fighting at all, and hasn't for some time.

And if the head of one of Canada's largest private sector unions is perceived to have given up on unions' traditional role as aggressive defenders of the working class, can other labour leaders be far behind?

"The fact is that Canadian unions increasingly seem as disoriented as their American counterparts and Canadian unionism generally seems no less frozen in the headlights," Sam Gindin, a former CAW economist, concluded this past week in an analysis piece in The Bullet, a collection of opinions published by the Socialist Project group.

"There are of course sporadic and impressive struggles," wrote Mr. Gindin, now a lecturer in political economics at York University. "But these occasional bursts of militancy do not add up to a reversal of direction."

With some notable exceptions - the United Auto Workers strike at American Axle & Manufacturing Holdings Inc., now more than two months old, and the year-long lockout at Quebecor Inc.'s Journal de Québec newspaper, embattled with the Canadian Union of Public Employees - major confrontations between management and labour has generally subsided over the years in North America. Quickie strikes, like the ones the UAW took last year against General Motors Corp. and Chrysler LLC, have become the norm rather than the exception.

But Mr. Gindin and others claim Mr. Hargrove, considered by many to be one of the country's smartest labour leaders, has taken union-weakening to a whole new level. The deal with Ford, Mr. Gindin argued, is the latest and clearest example yet of what he calls Mr. Hargrove's re-orientation "from taking on power, to accommodating it."

It started when the CAW leader stood on stage in 2005 with then Prime Minister Paul Martin and declared he was personally backing the reigning Liberals, Mr. Gindin argued. It continued when Mr. Hargrove negotiated a deal with Magna International Inc. that gives up the union's right to strike, he said. And it came to a crashing climax when Mr. Hargrove announced on April 28 that his bargaining team had struck a deal on a new master contract with Ford - nearly five months before the current contract was set to expire and two months before the union's collective bargaining conference, where delegates debate the union's bargaining priorities, including the auto talks.

"Ford 'bit' and bargaining was over before anyone, including the Ford workers, had a whiff that anything was going on," Mr. Gindin wrote. "That many workers may now be relieved - it could have been worse - doesn't speak to the larger question of how the union got to the point of a leadership with no intent to fight and a membership passively waiting to see how bad things might get."

On Internet discussion boards and in private, some CAW workers are questioning whether they could have gotten a better deal from Ford, and why Mr. Hargrove settled early without mobilizing union members through widespread meetings as he has done in past campaigns. They argue the union has to take a more aggressive approach precisely to avoid being swept into the financial logic being put forward by companies. "We are too busy playing survivor to get that it is not a game we can win by caving into believing we are the problem," one worker wrote.

"The problem, it seems, is that once the union accepts the argument that competitiveness is a goal workers must conform to ... the union ends up with no agenda independent of the corporations," Mr. Gindin said.

"Mobilizing the workers to fight the corporations is then largely irrelevant."

Some critics argue that unions' unwillingness to engage in the major confrontations of years past is further evidence they are becoming an extension of corporations' human resource departments. And they wonder why anyone would pay union dues for that. Workers at two big manufacturers, ArcelorMittal Dofasco Inc. and Toyota Motor Manufacturing Canada Inc., rejected union drives this spring. In Toyota's case, management argued the union would no better protect its interests than the company would.

Alan Levy, a labour relations specialist at the University of Regina's faculty of business administration, sees in Mr. Hargrove's actions not a sign of the impending implosion of organized labour, but rather a very calculated approach by a leader working within the geographical confines of an ailing manufacturing economy in central Canada.

"The crucial element here is would the results have been any different" if Mr. Hargrove had pressed harder, Mr. Levy said. "I would surmise that Mr. Hargrove and his executive are once again trying to make the best of a very bad situation."

The CAW president himself certainly sees it that way. "Snooze and you lose," Mr. Hargrove said in an interview this week, arguing the union risked losing more at Ford if it waited longer and industry conditions worsened. "Every elected [auto] leader supported trying to do something early here. That's over 500 elected people at the three companies. I could be wrong. All those folks can't be wrong."

But Mr. Hargrove was wrong in one crucial way in his handling of the Ford deal, said Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass. He didn't create enough appearance of conflict, which modern day labour relations requires. In that sense, he got the deal but didn't do enough to sell it to the membership. Overall support for the contact was 67%, an all-time low in the 23-year history of the union.

"Usually, there's a little theatre involved," which can include short strikes by workers who are made to feel they're fighting for something, or grandstanding by labour leaders, Mr. Chaison said. "He didn't go into theatrics. And as a result, he had difficulty making a case that the ultimate pressure was brought to bear on the company."

All is not settled, of course. The CAW leader, who represents about 33,000 workers in total at three Detroit-based automakers, still has to reach deals with Chrysler and GM. Mr. Chaison said it will only get more difficult for Mr. Hargrove in the weeks ahead. "It's going to heat up."

These are Mr. Hargrove's last negotiations with the Detroit-based automakers before he retires next year. We may see a fight, or an approximation of one, yet.

 

********************************************

 

 

2009 FORD FLEX: BUILT IN CANADA CROSSOVER REDEFINES TRAVEL FOR
MODERN NORTH AMERICAN FAMILIES

Ford Flex

 

  • On Sale:  The 2009 Ford Flex goes on sale this summer.  It will be manufactured at Ford's Oakville Assembly Complex in Ontario, Canada.
     
  • Crossover Leadership:  From its bold design and striking interior to its segment-exclusive features, Ford Flex builds on the success of the new Ford Edge and Lincoln MKX, also built at the Oakville Assembly Complex.
     
  • Cool Features, Built Right In:  A class-exclusive refrigerated 2nd row centre console, capless fuel system and available Multi-Panel Vista RoofTM are three more reasons Flex stands out in the crowd of crossovers.
     
  • Leading Technology:  Voice recognition, a 23,000-song personal juke box and programmable ambient lighting become realities with Flex's suite of innovations, including Ford SyncTM, the exclusive hands-free, in-car communications and entertainment system.
      
  • Safe and Secure: Standard front-and-side-seat air bags, a three-row Safety Canopy® side air curtain, Advance Trac® with RSC (Roll Stability Control) and an available rear back-up camera offer security customers desire.
     
  • Versatility Defined:Strong engineering – including a proven 3.5-litre V-6, a fuel-efficient 6-speed transmission, available intelligent all-wheel-drive and uncompromising road manners – power the new Flex.

Ford Motor Company redefines the modern North American family journey with the 2009 Ford Flex, a new full-size crossover that sets a new standard for style, features, functionality and comfort in the industry's hottest segment.

The Ford Flex will give customers the family-vehicle alternative they've long wanted but couldn't find in showrooms.  The Ford Flex's cutting-edge technology, segment-exclusive features and distinctive design underscore Ford's leadership in a fastest growing segment that's redefining family mobility.

On sale this summer, Flex is arriving as crossovers continue to outpace even the remarkable growth of SUVs during the 1990s. 

The success of our all-new Edge indicates the strong demand consumers have expressed for crossovers. Ford is well-positioned to offer customers what they want with the freshest crossover line-up in the industry. The Ford Flex simply builds on that, providing customers even more choices of distinct, expressive crossovers.

Redefining the Modern Family Journey

Bold, expressive design and exclusive innovations provide Flex the features and character that signal a new direction for modern crossovers.

The Ford Flex has the power to move people emotionally as well as physically. This crossover has been created for people who know it's the journey – not the destination – that matters most.  Its upright, upscale design, versatility and clever touches allow Ford Flex to stand out in an increasingly crowded sea of crossovers.

The Ford Flex brings to production the Ford Fairlane concept vehicle that turned heads at the 2005 North American International Auto Show with its distinctive profile, purposeful stance and machined character lines, running the length of the side panels and contrasting white roof.

Flex signature exterior design touches include:

  • Ford's signature chrome horizontal three-bar grille, which builds on the family "face" that makes Ford Edge and Taurus X crossovers stand out on the road.  The grille is encapsulated into a single graphic element that also includes a step-up headlamp design with available HID headlamps. This front-end graphic wraps around the sides of the vehicle, accentuating Flex's width and solid stance.
     
  • An all-black greenhouse – a Ford first – that visually integrates the body with the available two-tone roof.  Customers can pair a White Suede or Silver roof option with one of Flex's 10 available exterior colours – or choose a body-colour roof.
     
  • Standard 18-inch or available 19-inch bright aluminum wheels that plant the crossover firmly on the road.   Flex's solid stance helps make it surefooted on the road, while entry and exit is easy for passengers.  That's also owing to Flex's integrated rocker panel design, which eliminates the need for customers to step over the rocker panel when getting in and out of the vehicle.
     
  • Edge-inspired tail lamps, outlined in chrome.  Limited models have LED tail lamps and a brushed satin finish metal appliqué spanning the centre of the liftgate.

Raising the Bar on Interior Quality

Ford Flex also delivers textures, features and functionality – including segment exclusives – that create an ideal atmosphere for discerning customers. 

Flex's interior provides a level of craftsmanship inspired by fashion and furniture design, with modern materials and soft touch points.  Customers will appreciate accents including tweed-like fabric used for the base-level SE's seats, with inserts delivered in a miniature hounds tooth. 

Meanwhile, the SEL series features a soft insert with a more pronounced grain on the seat bolsters, while the Limited features unique diamond-pattern perforations on the leather seat inserts, resembling fine, hand-tooling.  Contrast stitching is available on leather seats and the beautifully finished, more ergonomic centre console.

Cool Features, Built Right In

Flex's interior also is set apart from other crossovers, thanks to clever touches including:

  • An available class-exclusive refrigerator, mounted between the second-row Captain's chairs.  Unlike competitors' systems that merely keep cold beverages cool, the Flex's compressor-driven refrigerator can cool up to seven 12-oz. cans, four half-litre bottles or two 20-oz bottles from room temperature to 41 degrees in just over two-and-a-half hours. That's 40 percent faster than a standard home refrigerator.
     
  • A Multi-Panel Vista RoofTM.  It not only brightens the interior, it gives Flex occupants seated in each row their own special skylight. The front panel is the size of a traditional power moon roof, while the rear is divided into three specific areas – two openings over the second row seats and one large opening over the third row.  Each "skylight" is recessed into the headliner and comes with a manual sunshade.
     
  • Second-row best-in-class legroom that includes comforts such as class-exclusive adjustable and removable footrests. The Flex's second-row seats also fold and tumble to provide access to the third-row and fold flat into the floor for added cargo space. An available one-touch system folds and tumbles the second row.
     
  • Seven-colour programmable ambient lighting.  Flex owners can choose interior lighting to fit their mood with this unique feature.  With a flip of a dashboard switch, colour lighting can be selected for two LEDs mounted on the front console and two mounted to flood the footwells.  Two additional LEDS light up the rings around the Flex's cupholders.
     
  • Capless fuel filler system, another segment exclusive.  This feature not only eliminates the likelihood of forgetting to put the gas cap back on after fuelling, it also saves time by doing away with unscrewing and replacing a fuel filler cap.  Flex owners also will like its environmental benefits, as the capless fuel filler provides a much better seal than a cap, cutting down the emissions of smog-forming vapours.

Sophistication through Innovation

The Flex's sophistication also extends to its innovative technology, with features such as:

  • Ford SyncTM, the industry-exclusive, voice-activated hands-free in-car communications and entertainment system.  This available system fully-integrates mobile phones and digital media players into the vehicle. The Sync in-car communications system was developed in collaboration with Microsoft and is offered exclusively on Ford, and Lincoln products.
     
  • Ford's next-generation navigation system, featuring voice recognition technology and more than 150 hours of music storage.  Users can browse the music jukebox via touch-screen or by using voice recognition.  They can also create custom play lists and burn CDs for storage on the system's hard drive.  The system also integrates the climate control and SIRIUS satellite radio into one easy-to-use, smudge-resistant, eight-inch touch-screen display.  Premium AM/FM/MP3 audio systems also are available with a six-CD changer, auxiliary jack to accommodate MP3 players and the latest generation DVD entertainment system with a large eight-inch, drop-down screen.
     
  • Ford's exclusive second-generation door-entry keypad.  Housed within the vehicle's black B pillars, the flat-panel, backlit keypad eliminates the need for door-mounted buttons and gives customers the ability to unlock doors, disarm the alarm system and disable the auto-lock function by entering a five-digit code.

Quiet, Confident Ride without Sacrificing Capability

The Ford Flex's chassis was designed to provide a spectrum of capabilities, including more than
1814 kg (4,000 pounds) of towing capacity, while still delivering the quiet, confident ride that crossover customers demand.

This included a new independent rear suspension (IRS) with unique geometry that allows for better tuning to deliver a broad range of capabilities without compromising the interior package.

Interior noise was minimized by using sound deadening materials in the dash panel, headliner and under the carpeting. A six-millimetre thick windshield helps reduce wind and powertrain noise, and specially selected tires make road noise nearly unnoticeable.

Powerful V-6 and the confidence of AWD

Flex is powered by Ford's 3.5-litre V-6, and is mated to a fuel-efficient 6-speed transmission. The powertrain is expected to deliver more than 260 horsepower, 240 lb.-ft. of torque and fuel economy numbers on par with other full-size crossovers. Engineers tweaked the sound induction system to deliver a refined yet powerful engine note.

Flex's available intelligent all-wheel-drive system is tuned to provide confident driving in all-weather conditions. Intelligent AWD uses an active, on-demand electronic centre coupler to allocate a precise amount of torque from front to rear, up to 100 percent to either axle.  This system can also anticipate wheel slip before it happens.  

Safety Features Customers Desire

In addition to a body structure that has been optimized for safety with side intrusion beams in the doors, strategic use of high-strength boron steel and specially designed, energy-absorbing interior door trim, the Flex also comes equipped with safety features that reflect our focus on the customer.   

They include:

  • AdvanceTrac® with RSCTM (Roll Stability Control). This system can predict a vehicle's path, using a sensor to measure oversteer and yaw by monitoring the vehicle's speed, throttle position and steering wheel angle. When the system senses wheel slip or the loss of traction, the system applies braking where needed to keep the car safely on its intended path.
     
  • Ford's Personal Safety System. This suite of safety features includes dual-stage driver and front passenger air bags, thorax side air bags for the front seat occupants, safety belt pretensioners, seat weight sensing system for the passenger seat and crash severity sensing.
     
  • Ford's exclusive Safety Canopy® side curtain air bag. Designed for all three rows, this feature utilizes roll-fold technology to efficiently deploy the air bag when an occupant's head is resting against the side glass. In the event of a crash, the roll-fold bag will deploy between the occupants head and the side of the vehicle.
     
  • Ford's BeltMinderTM safety belt reminder for driver and front passenger. In addition, Flex comes equipped with standard features, such as child safety locks on the rear doors, the trunk LATCH system and a Tire Pressure Monitoring System.
     
  • Available rear back-up camera. Mounted in the bottom of Flex's liftgate badge, the camera is activated when the vehicle is shifted in reverse, giving the driver a view of what's behind the vehicle. The system works in conjunction with the vehicle's reverse sensing system and uses the navigation screen as a display.

                     ********************************************

Chrysler and CAW to start contract talks next week

May 09, 2008 04:30 AM

Contracts talks between automaker Chrysler LLC and the Canadian Auto Workers union will start next week, a union official said yesterday.

Jerry Dias, a national representative of the CAW, told reporters at a Chrysler assembly plant in Brampton that the two sides were working out the final schedule.

"They are going to start next week. They are just nailing it all down," Dias told reporters at an event to mark the manufacturing launch of the Dodge Challenger.

A Chrysler spokesperson had no comment.

Separately, Dias said the CAW expects General Motors Corp. to meet the pattern established by a recently ratified contract between the union and Ford Motor Co.

************************************


CAW, Chrysler consider early talks

May 07, 2008 07:57 AM


THE CANADIAN PRESS

CAW national president Buzz Hargrove says Chrysler didn't immediately commit to early negotiations for its new labour agreement after an initial meeting Tuesday, but the automaker didn't reject the idea either.

Representatives from the Canadian Auto Workers met with Chrysler to try to prompt it into early negotiations, after completing a deal with Ford on Sunday and securing a promise the following day from General Motors to begin talks on Thursday.

Hargrove said the CAW and Chrysler "had a very cordial meeting," to share the information on the pattern agreement at Ford and the company "agreed that they would get back to us in a couple of days."

"They didn't make any commitments to enter into early bargaining yet. They did not reject out-of-hand the pattern as some expected that they might, but they didn't endorse it either."

The CAW-Chrysler meeting followed a vote over the weekend in which members of the Canadian Auto Workers ratified a three-year deal affecting nearly 9,000 employees at Ford Canada.

The CAW typically reaches an agreement with one of the North American automakers and then uses that deal as a framework for deals with the other two automakers where it has collective agreements.

The current contracts with GM and Chrysler run out in September and affect around 22,000 workers.

In the past, both GM and Chrysler have taken a harder line than Ford on the need to cut costs in the face of rising competition from Japanese-based manufacturers.

Hargrove said Chrysler didn't highlight any particular factor that would be a problem for them at the Tuesday meeting and didn't address specific issues.

Still, the cordial nature of the meeting "gives us some optimism that Chrysler will at least be willing to get around the bargaining table and talk with us and see if we can put together the pattern and solve the other issues that face Chrysler workers."

Among those issues, the CAW wants new confirmation for commitments that have been made for new investment and refurbishing of the 300 Series at Chrysler's Brampton, Ont., plant, as well as a guarantee that the three shifts of production of mini-vans will continue in Windsor, Ont., "as long as the market is there."

They also want to keep open a casting plant in the Etobicoke area of western Toronto.

"We've got all kinds of issues but we faced all those at Ford and we worked our way through them so we're hopeful we can do that here as well," Hargrove said.

************************************

Oakville rejection a first
in CAW history

'Mistruths' helped push local to vote 56% against

May 06, 2008 04:30 AM

Business Reporter

Employees at Ford's assembly plant in Oakville have become the first union local to reject a tentative contract at the Big Three in the history of the Canadian Auto Workers.

The union confirmed yesterday that CAW Local 707 voted 1,108 to 863, or 56 per cent, against a three-year deal at Ford Motor Co. of Canada Ltd. after a raucous ratification meeting on Sunday.

Workers at other plants, in Windsor, St. Thomas and Brampton, voted overwhelmingly in favour of the contract, which contains a wage freeze, a temporary suspension of a cost of living allowance and loss of a week of vacation pay every year.

The rejection in Oakville pulled down overall support to 67 per cent, which also marked the lowest percentage in favour of a Ford, General Motors or Chrysler deal in the union's 23-year history.

Workers have traditionally ratified Big Three contracts by heavy margins after getting unanimous recommendations for acceptance from bargaining committees.

The union initially did not break out results for each location but finally released them yesterday, in line with past practice.

CAW president Buzz Hargrove said the result will not have any impact on contract negotiations and voting at GM or Chrysler later.

Hargrove said no one spoke positively at the meeting of Oakville workers after earlier distribution of leaflets at the plant that were filled with "mistruths and distortions."

"It was just one of those situations where a handful of people got control of the mikes early and shifted the mood," he said.

"It was a mood we couldn't turn around in a three-hour meeting. The results from Windsor, St. Thomas and Bramalea (Brampton) were more reflective of where the membership of our union is today," he maintained.

Local 707 president Gary Beck said workers at the busy plant, which will move to three shifts later this year, didn't understand the industry's overall problems.

"They didn't see outside of what's going on at our plant," he said noting Ford operations in St. Thomas and Windsor are struggling.

********************************************

 

Chrysler tries fuel-price
guarantee to boost sales

 

DETROIT, May 5 (Reuters) - Chrysler LLC will let U.S. consumers lock in gasoline prices for three years under a new incentive program launching at a time of sliding vehicle sales, rising oil prices and deepening consumer uncertainty.

The U.S. automaker, which has seen sales drop by almost 18 percent this year, said it would offer anyone buying one of its vehicles a pre-paid card that could be used to cap fuel prices at $2.99 per gallon for three years.

The sales incentive, which will be rolled out on Tuesday, will only cover the first 12,000 miles (19,000 km) driven based on the estimated mileage for the Chrysler car or truck purchased, executives with the privately held automaker said.

The novel Chrysler incentive offer is introduced at a time when high gas prices have hammered sales of the SUVs and trucks that dominate Chrysler's line-up.

"This could be a game-changer in terms of how vehicles are sold in the marketplace," Chrysler's head of North American sales, Steve Landry, told reporters.

Chrysler, now owned by Cerberus Capital Management [CBS.UL], said it would hedge its financial exposure to rising gas prices as a result of the incentive offer.

Other automakers have experimented with pre-paid gas cards as an alternative to traditional showroom incentives, such as cash rebates and zero-percent financing.

But Chrysler said its program marked the first effort to set a ceiling on fuel prices for consumers across the United States and was prompted by its own research showing that uncertainty about gas prices had become a major drag on sales.

"One of the things that weighs heavily on people's minds is the volatility of fuel prices," said Jim Press, Chrysler's vice chairman and sales chief.

Chrysler said its "Let's Refuel America" program would be offered for May and would exclude gas-thirsty performance cars like its Dodge Viper and new Challenger muscle car.

Because of the way the program is structured, it amounts to a heavier subsidy on bigger, less-fuel-efficient vehicles.

For example, the program would cover some 2,100 gallons of fuel for an entry-level Dodge Ram pickup but only about 1,300 gallons for the Dodge Caliber, currently the smallest car in Chrysler's line-up, based on published mileage estimates.

Chrysler said a more detailed estimate based on gallons of fuel covered by the guarantee would be available this week.

Based on the current national average of $3.61 per gallon for regular unleaded as tracked by AAA, the incentive would be worth about $1,300 for the pickup truck and about $800 on the smaller hatchback.

Chrysler said consumers would have the option of choosing between the fuel-price cap and more traditional incentives.

For example, a Caliber buyer would have to pick between a $750 cash-back offer and the fuel guarantee. In the heavily discounted truck segment, buyers will have the option of taking a $5,500 rebate on the Dodge Ram or a reduced $3,000 rebate plus the fuel-price guarantee.

Chrysler, which lost $1.6 billion in 2007, has been criticized for its truck-heavy line-up and the low mileage of a line-up that also includes the Jeep and Chrysler brands.

Press, a former Toyota Motor Corp executive, has said Chrysler will look to cut its SUV line-up and the company has announced a tie-up to get Japan's Nissan Motor Co to build it subcompact car starting in 2010.

With just under 12 percent of the U.S. market, Chrysler now ranks as the No. 4 player by sales volume, although Honda Motor Co has closed the gap on the strength of its small car line-up and reputation for fuel economy.

Industry-wide U.S. auto sales dropped 14 percent in April to their lowest annual rate in a decade. Analysts and automakers now expect sales to fall below 15.5 million units this year, marking the industry's weakest year in a decade.

Chrysler's larger Detroit-based rivals General Motors Corp and Ford Motor Co have responded to the downturn by cutting production without resorting to the kind of cut-rate incentives the industry used to bounce back from the brief recession in 2001

****************************************************

Ford to add new vehicle
at Oakville plant

 

TORONTO, May 5 (Reuters) - Ford Canada will add a fourth vehicle to its Oakville, Ontario, assembly plant, as part of its recent contract agreement with the Canadian Auto Workers union, an industry source said on Monday.

The source said the type of vehicle is as yet unknown, but it will go into production sometime over the course of the new three-year contract, which begins in September.

Ford is also set to add a third shift to produce the Flex crossover vehicle at the Oakville plant, where it already builds the Ford Edge and Lincoln MKX

                                         *************************************

 

Ford workers accept deal to freeze wages

CAW will ask GM and Chrysler to match historic
contract after a more than 2-1 positive vote

May 05, 2008

Business Reporter

The Canadian Auto Workers will ask General Motors and Chrysler today and tomorrow to match a historic early contract, including a wage freeze, that union members at Ford Motor Co. of Canada have ratified.

CAW president Buzz Hargrove said last night he doesn't expect much opposition from GM and Chrysler negotiators in accepting the Ford contract under traditional pattern bargaining with the Big Three North American-based automakers, although it falls far short of the companies' initial demands for deep cuts.

"We'll go first to whomever shows us the most interest," Hargrove said in an interview. "The second and third companies always don't like some pieces of the pattern but we don't anticipate any problems."

Despite a surprise rejection at Ford's assembly plant in Oakville yesterday, overall results showed union members ratified the three-year deal by more than a 2-1 margin because of strong support at the company's car operation in St. Thomas, engine factories in Windsor and a parts depot in Brampton after their bargaining committee unanimously recommended acceptance. About 9,000 production workers, skilled tradespeople and office staff were eligible to vote.

At their membership meeting earlier in the day, workers from the busy Oakville plant expressed dissatisfaction with the union's decision to bargain months before the expiry of their contract which, they said, lifts the pressure of a strike deadline on the company.

It marks the first time the CAW has negotiated a Big Three contract so far in advance of normal mid-September expiry dates and strike deadlines in its 23-year history.

Hargrove said workers strongly supported the deal because it protects their wages and benefits at a time when the Big Three are struggling from tough competition and lower demand.

"I think our members understand where the industry is today and the potential for even worse conditions if we waited until September and a possible strike," he added.

Hargrove also said the union stuck to its principles and beat back demands for a two-tier wage system that the United Auto Workers accepted last fall. It will slash the pay and benefits of new workers at the Big Three permanently south of the border.

The CAW said the system creates an "underclass" of workers doing the same jobs as their colleagues, represented "a sellout" of them and would be a "death sentence for trade unionism."

The Ford deal will freeze wages for three years; suspend a cost of living allowance (COLA) until the end of 2009; cut vacation pay and raise benefit expenses such as prescription drugs. New retirees will also lose inflation protection on their pensions for one year.

It will also take longer for new workers to get to full pay. They will start at 70 per cent of the top wage rate and gradually reach 100 per cent after three years. They will also not receive a COLA until the end of the contract.

Under the old contract, new workers started at 85 per cent and received a COLA. They also reached 100 per cent of the full rate after two years.

Hargrove and other CAW leaders insist that provision for new employees, the wage freeze for current workers and some other provisions do not represent concessions. They described them as "offsets" to other improvements in the deal.

Workers will get a $2,200 "productivity and quality" bonus immediately and a $3,500 lump sum amount early next year as compensation for the loss of the vacation pay.

Production technicians currently earn $33.90 an hour including COLA, while tradespeople receive $34.30.

Despite the wage freeze, the union estimates the COLA will generate an extra $1 an hour in wages for workers by the end of the contract. Big Three workers are among the highest paid industrial workers in the country.

The union pressed earlier this year for bargaining and, in March, a Big Three committee responded with a number of concessions to close a significant gap in labour costs between U.S. and Canadian auto workers.

The Big Three calculated the labour cost for workers here had risen to $81.40 an hour including benefits and pension liabilities, which was $33.90 more than the amount for Honda, Toyota and Nissan workers in the U.S.

The three companies proposed wage cuts; elimination of the COLA; reductions in vacation time; and increasing costs for health care. CAW economist Jim Stanford said Ford and the union struck "a balance" so the labour cost gap won't increase between Canadian workers and their U.S. counterparts at the Big Three because of a productivity edge here.

The union said a comparison with Japanese-based automakers with no unions in the U.S. South is not fair. Stanford noted the deal should not adversely affect any future investment by the Big Three automakers here.

Ford has not indicated how much it expects to save annually because of the deal but industry analysts say the labour cost gap remains wide and could eventually affect investment decisions.

                         *********************************************

 

`Relieved' Union Promotes New Pact

Local plant issues resolved, members to vote this weekend

May 02, 2008 04:30 AM


Business Reporter

Buzz Hargrove

Ford and the Canadian Auto Workers have reached an historic tentative contract that would freeze pay and cut benefits, but won't include a controversial two-tier wage system.

Against a backdrop of deteriorating economic conditions, the union and company announced yesterday they had resolved numerous local plant issues as part of a three-year deal that comes more than four months before expiry of the current contract.

The CAW's top bargaining committee at Ford is unanimously recommending that about 9,000 workers at plants in Oakville, Windsor and St. Thomas accept the contract in voting this weekend.

"We've done it and I'm very relieved," said CAW president Buzz Hargrove.

Stacey Allerton Firth, chief negotiator for Ford Motor Co. of Canada Ltd., said the early deal is "unprecedented" and will improve the company's competitive position here.

"Both the company and the union recognized that we had to do things differently if we were going to be successful," she said in a statement. "We felt that the best way to find innovative solutions to the challenges faced by the industry was to pursue a transparent, practical and collaborative bargaining process."

If they ratify the contract, the union will seek the same deal at General Motors and Chrysler under traditional pattern bargaining at the Big Three automakers.

Bargaining during the last few days focused on settling disputes over utilization of tradespeople and use of outside contractors at the company's Oakville complex.

Ford and the union quietly negotiated most of the key monetary terms at the Sheraton Centre in Toronto during the last two weeks after the company indicated it would no longer press for much lower wages and benefits for new workers under a two-tier wage system.

Instead, Ford told the union the two sides would negotiate other ways to lower labour costs so they could become more competitive with plants in the U.S.

Under the tentative deal, new workers would receive 70 per cent of full wages and move to 100 per cent after three years. They would also get a cost-of-living allowance then.

New workers now start at 85 per cent of full wages, which will rise to 100 per cent after two years with cost of living allowance.

Current workers will face a wage freeze for three years and a suspension of a cost of living allowance until the end of 2009 under the deal.

Workers would also lose one week of vacation pay annually and face more expenses for drugs.

But the workers would receive a "productivity and quality" bonus of $2,200 immediately after ratification and $3,500 next year in compensation for the loss of the vacation pay.

                *******************************************************

Ford reaches early labour pact

CAW president Buzz Hargrove announces the centrepiece of a three-year deal between the union and Ford.

Canadian Auto Workers' chief says tougher times
behind move to bargain outline of deal in advance

Apr 29, 2008 04:30 AM

Business Reporter

The Canadian Auto Workers stunned the auto industry yesterday by announcing it had reached agreement with Ford Motor Co. on key monetary items for a three-year deal that would freeze wages for current workers, cut one week of vacation pay and trim some retiree benefits.

In a dramatic shift from traditional bargaining at the Big Three automakers, the union revealed it had negotiated the "centrepiece" of a new deal five months earlier than in past contract years and it would set the pattern for subsequent bargaining at General Motors Corp. and Chrysler LLC.

"We do recognize the problems of the companies and the industry and we recognize the times are different and we (have) got to do things different," CAW president Buzz Hargrove said in an interview.

"I've read a lot about the tsunami. If I was on low ground and saw it coming I would be heading to high ground. That's what we did here."

Hargrove said union and company negotiators would now drive for a tentative contract, including resolution of local issues, by the end of the week at a Toronto hotel.

If the two sides reach a deal, about 9,000 workers in Oakville, Windsor and St. Thomas would vote on it within a week.

Ford spokesperson Lauren More cautioned that a tentative contract will depend on successful agreement on local issues specific to each operations.

If workers ratify, the union would press for similar deals at GM and Chrysler, which have taken a harder public position on the need to cut labour costs significantly so they can compete with Japanese-based rivals.

The Ford deal could set the stage for a major confrontation. Hargrove, however, avoided using the word strike.

Analyst Dennis DesRosiers said the monetary terms with Ford put GM and Chrysler in a difficult position that could ultimately give an edge to the Japanese auto giants, which have no unions in North America.

"Both these companies (GM and Chrysler) were looking for the CAW to give back a lot more than this contract ended up giving up so they are going to be very disappointed," said DesRosiers. "They were looking for upwards of $30 per hour and this agreement doesn't even come close to that number."

The union has said this year's bargaining would be the most difficult round of negotiations in its 23 year-history because of the continuing slide in market share by the Big Three, competitive pressures and significant concessions in last year's deals by the United Auto Workers in the U.S.

The current contracts in Canada affect more than 30,000 workers and expire in mid-September. Production technicians currently earn about $33.90 an hour while skilled trades people receive about $40.30. They are among the highest paid industrial workers in the country.

Under the Ford deal, the starting wages of new employees would drop to 70 per cent of full rates but they would gradually increase to 100 per cent after three years. In the current contract, new workers start at 85 per cent and move to 100 per cent after three months.

Although the provision cuts starting rates, Hargrove stressed that the union had successfully beatenback the controversial two-tier wage and benefit system that the UAW accepted last fall in efforts to slash labour costs at U.S. operations.

But under terms of the Ford deal here, the union agreed to an immediate freeze in a cost-of-living allowance until September next year and a reduction in vacation pay by 40 hours or one week annually.

In exchange for the freeze, Ford would give workers a $2,300 bonus this fall and a $3,500 special payment the following year for the loss of vacation pay over three years.

The union said it had also gained a reprieve on any decision about the future of the company's sputtering assembly plant in St. Thomas until the fall of 2011. The plant operates on only one shift and Ford had committed to production only until 2010.

Union officials acknowledged that the monetary cuts won't match the labour savings in the UAW deals in the U.S. But CAW economist Jim Stanford emphasized that the Big Three operations in Canada are more productive so the deal shouldn't jeopardize future investment.

The union's main bargaining committee has endorsed Ford's offer, which followed secret negotiations during the last two weeks.

Hargrove explored early bargaining but found little interest from the automakers and indicated recently that chances of success were remote. But the union and Ford found common ground to spur full bargaining two weeks ago.

And thousands of retirees won't get an increase in their inflation-indexed pensions for a year as protection will resume in the second and third years.

The sides also negotiated a stricter limit on long-term care expenses for retirees plus a 10 per cent increase in prescription drug payments to a maximum of $250 annual per family.

                                  ********************************

GM cuts 900 in Oshawa

About 900 hourly and 70 salaried employees are expected to lose their jobs when one shift at GM's Oshawa truck assembly plant is eliminated in September. (April 28, 2008)

Apr 29, 2008 04:30 AM


Business Reporter

General Motors is cutting a second shift and more than 900 jobs at its once-mighty Oshawa truck assembly plant this fall in another body blow to Ontario's manufacturing sector.

GM of Canada Ltd., the country's biggest auto maker, told workers yesterday that it will slash between 900 and 1,000 jobs at the plant in early September because of falling demand for its full-size pickup trucks as economic conditions deteriorate and consumers react to soaring fuel prices.

The notice shocked workers still reeling from the loss of a shift and 1,000 jobs in January at the plant, which makes the Chevrolet Silverado and GMC Sierra models.

"It's one more kick in the gut for the most productive workers in the auto industry," said a demoralized Chris Buckley, president of the Canadian Auto Workers' Local 222. "It's another dark day for Oshawa."

For Franca Braccia, a former GM employee laid off in November, the news destroyed any hope of returning to work at the plant.

"With every new announcement of cancelled shifts, it reduces my chance of being called back," said Braccia, a single mother of two girls. At best, she said, she might be able to get summer work filling in for those on vacation – but nothing long-term. "I don't think my future will be there."

GM's move came only a few hours after the union and Ford Motor Co. of Canada stunned the industry by announcing a monetary agreement for a new three-year deal, five months before their current contract expires.

If the two sides resolve other issues and Ford workers ratify a tentative contract, it would mean wage freezes, cuts in vacation pay, reductions in benefits and a temporary loss of inflation protection for retirees.

Those changes could eventually also affect union members at GM and Chrysler later this year if the companies match a Ford deal.

GM's woes will also ripple through the region's beleaguered auto parts sector and eliminate hundreds of other jobs because there will be no demand for components.

"The impact will be severe on a lot of other workers besides GM," said Buckley.

A strike at American Axle & Manufacturing in the U.S. has also caused layoffs at the truck plant during the past two months because of a shortage of components.

The truck plant had been running flat out since 1993 when a three-shift schedule started. Annual production regularly surpassed 300,000 trucks. It also won several awards for top productivity among truck plants in North America.

"Our members were absolutely devastated today," said Keith Osborne, another top Local 222 official. "We never expected this after losing a shift only a few months ago."

Oshawa Mayor John Gray hopes the news won't be as dark as it seems. "One of our saving graces is that it doesn't happen till September," he said, stressing that the job cuts are the result of economic conditions in the U.S. "That gives us some time and if the market changes, we may not have to cut that many."

Local GM officials could not be reached for comment but the company's parent said in Detroit it is also cutting a shift at two other truck plants, in Pontiac and Flint, Mich.

Union officials said the casualties in the auto industry will continue to mount unless the federal government takes action to guarantee fair trade for Canada's exports.

The manufacturing sector, which includes the auto industry, has lost scores of companies and more than 300,000 jobs in the past four years, according to some estimates, because of a soaring dollar, pressure on prices, the decline of the Big Three domestic auto makers and tough international competition.

Federal Finance Minister Jim Flaherty agreed that the manufacturing sector is struggling, particularly in Ontario and Quebec.

He reiterated his call for the provincial government to reduce business taxes to improve conditions for manufacturers.

The province's decision not to budge on corporate taxes is "counter-productive," Flaherty said.

"Ontario, arguably, needs the stimulus the most and they (manufacturers) need it now," he added.

Meanwhile, in the Ontario legislature, the New Democrats said taxpayers should be outraged by the provincial government's financial assistance to GM in recent years.

"It's just simply wrong for the McGuinty government to have given General Motors hundreds of millions of dollars with no guarantee that jobs are going to be sustained," said NDP Leader Howard Hampton.

"General Motors is in trouble and my sense is General Motors' trouble is, in fact, deepening."

Hampton acknowledged job guarantees might not work in exchange for assistance but such provisions would give the government the upper hand in recouping some of its investment in GM.

"You've got leverage and you can at least demand that some of that money be returned. But simply to write a cheque ... is really irresponsible," he added. "If they're not prepared to sustain jobs then the money should come back."

Economic Development and Trade Minister Sandra Pupatello said there's not much the Ontario government can do about the layoffs because the slowing U.S. economy is the root cause.

Pupatello said she hopes the U.S. economy improves before the Oshawa layoffs take effect in September, perhaps with more stimulus packages from Washington.

The Progressive Conservatives accused the Liberal government of ignoring signs that economic troubles are mounting every day in Ontario.

"They seem to be almost in a permanent state of denial, they don't want to admit we are in a recession and heading toward have-not status," said veteran Tory MPP Bob Runciman, his party's interim leader in the Legislature.

With files from Rob Ferguson, Rita Trichur, Paola Loriggio and Carola Vyhnak

********************************************

 

Unprecedented CAW deal
Freezes Wages at Ford

Ford's assembly plant near St. Thomas, Ont., which was scheduled to be closed in 2010, will be kept open another year

Globe and Mail Update

The Canadian Auto Workers and Ford Motor Co. [F-N] have reached an unprecedented master agreement on a new contract — almost five months before the current deal expires — that freezes wages and reduces vacation pay, but which the union says beats back the two-tiered wage system introduced in the United States.

The union has agreed to the wage freeze, co-payments for prescription drugs and a system for newly hired employees that it says is not two-tiered, but calls for new employees to receive 70 per cent of regular base wages in the first three years of work as well as time-off provisions, cost of living adjustments and supplementary benefits that are phased in over three years. Wages for those employees will match those of existing employees after they have worked three years.

In addition, workers will have cost of living adjustments frozen from now until December, 2009, when those increases will resume.

Ford has agreed to pay each employee a $2,200 “productivity and quality” bonus when the agreement is ratified, compensate workers for reducing their vacation pay by 40 hours with a $3,500 cash payment in January, 2009, and index pensions to inflation for retirees in the second and third years of the agreement.

The auto maker's assembly plant near St. Thomas, Ont., which was scheduled to be closed in 2010, will be kept open another year and the company has agreed to work with the union to find a new product to replace the gas-guzzling Ford Crown Victoria, Mercury Grand Marquis and Lincoln Town Car full-sized cars produced there. The plant has been operating on one shift since last year.

The two sides reached agreement on the big-ticket items on a new three-year contract, but must now negotiate provisions on such local issues as health and safety provisions and clauses covering skilled trades workers before it becomes a tentative contract to be voted on by workers at all Ford's CAW-represented plants in Canada.

The master economics agreement “will now become the centrepiece of all-out collective bargaining aimed at reaching a tentative agreement between the two sides later this week,” the union said in a statement issued Monday.

If a tentative agreement is reached and approved, the union will move on to negotiate with the Canadian units of Chrysler LLC and General Motors Corp. in traditional pattern bargaining during which a deal with one company becomes a template for contracts with the other two.

The deal was reached after the union had early meetings this spring with all three of the Detroit auto makers ahead of the expiry of the current contract this September.

The union has never reached a deal or even chosen a target company with which to negotiate this early in the process.

It came about after CAW president Buzz Hargrove and the top union negotiators held separate meetings with representatives from all three companies in a bid to find which was most agreeable to make an early deal.

Talks with Ford broke off once, but resumed last week and the final deal was reached on the weekend.

The CAW has a major bargaining chip with Ford because the auto maker's Oakville, Ont., assembly plant is making two of the hottest-selling vehicles in the battered U.S. market, the Ford Edge and Lincoln MKX crossover utility vehicles.

Ford also plans to hire 500 workers to help assemble a new vehicle called the Ford Flex, which is another entry in the crossover segment, one of the few niches that is growing rapidly amid high gas prices.

*******************

CAW Beats Back Two-Tier Wages, Wins Reprieve for St. Thomas Plant

April 28, 2008, 2:21 p.m. EST

April 28, 2008 - Following early background negotiations, Ford Canada and the CAW have reached an agreement on a Master Economics Offer that will now become the centerpiece of all-out collective bargaining aimed at reaching a tentative agreement between the two sides later this week. For a full tentative agreement to be reached, agreement also must now be attained on all local agreements (skilled trades, health and safety, etc.). That tentative agreement must then be ratified by CAW members at all Canadian locations.

The current collective agreement expires at midnight September 16. The Master Economics Offer was endorsed unanimously by members of the CAW-Ford Master and local bargaining committees at a special meeting in Toronto on Monday.

Highlights of the Master Economics Offer:

- Three year contract, expiring midnight September 14, 2011;

- No changes in base wages;

- No two-tier system for wages, pensions or benefits;

- Extended the life of the St. Thomas assembly plant through life of agreement (to 2011) The product commitment was scheduled to end in 2010;

- COLA payments frozen for remainder of current contract, and first year of the new contract. Quarterly COLA wage adjustments resume under existing formula Dec. 2009;

- $2200 “productivity & quality” bonus to be paid upon ratification;

- Inflation-indexed pension increases for both existing and new retirees in second and third year;

- Significant savings in health costs (stricter cap on long-term care, 10% co-pay on drugs to $250 annual maximum per family);

- Modest improvements in health benefits and spousal insurance benefit;

- New-hire grow-in system, where wages, COLA, SUB benefits, and time-off provisions are phased in (starting at 70% of base wages) over the first three years of work; after three years, wages reach 100% of base wages;

- Reduction in vacation pay by 40 hours per year, compensated with special $3500 cash payment in January 2009;

- Improved restructuring benefits (“buy-outs”) and renewed income security funds.

- Commitment to explore Canadian opportunities to establish a pre-funded, off-balance-sheet Retiree Health Benefit Fund;

The offer includes a mixture of modest gains and cost savings that in the CAW’s judgment will ensure that Canadian facilities over the life of the agreement will remain in the ballpark for new investment opportunities.

 

 

Ford profit catches Wall Street off guard

The Associated Press

Tom Krisher

Apr 24, 2008

DEARBORN–Ford Motor Co. surprised Wall Street on Thursday with a $100 million profit in the first quarter as strong results from Europe and South America helped offset the impact of a slumping U.S. economy that cut car and truck sales in its main market. Its shares rose almost 5 percent in premarket trading.

The No. 2 U.S.-based automaker also said its latest round of early retirement and buyout offers netted 4,200 hourly workers, fewer than Ford had targeted.

It was Ford's first profitable quarter since the second quarter of 2007 when it made $750 million. Ford reported a full-year loss of $2.7 billion last year, and it cautioned that the rest of this year will be tough.

"The remainder of 2008 will be a challenge but we are cautiously optimistic despite the external challenges," CEO Alan Mulally said in a statement. "Our plan is working.''

Ford also lowered its industrywide U.S. vehicle sales forecast for the full year to a range of 15.3 million to 15.6 million. In January it had expected full-year sales of 16 million.

Ford says it earned 5 cents per share in the January-March period. Dearborn-based Ford lost $282 million, or 15 cents a share, in the same period last year.

Excluding special items, the company said it earned $525 million after taxes, or 20 cents per share. That beat Wall Street's expectations. Thirteen analysts surveyed by Thomson Financial had predicted a loss of 16 cents per share.

Its shares rose 36 cents, or 4.8 per cent, to $7.88 in morning trading Thursday.

The profit came despite a $45 million pretax loss in Ford's core North American automotive market. That was an improvement over a $613 million loss in the year-ago quarter, driven by $1.2 billion in cost reductions that helped buffer a U.S. sales decline.

Company spokesman Mark Truby said Ford may offer additional buyout and early retirement packages on a plant-by-plant basis to further reduce its blue-collar work force.

Ford reported first quarter revenue of $39.4 billion, down from $43 billion a year ago due to the sale of its Jaguar-Land Rover and Aston Martin units. Excluding the sale, revenue would have been up slightly, the company said.

Special items for the quarter totaled $416 million, including worker buyout and early retirement costs and the cost of reducing its dealer ranks.

Ford said it made $257 million pretax in South America, up from $113 million a year ago. In Europe, it made $739 million, compared with $219 million in the first quarter of last year.

Volvo had a pretax loss of $151 million, compared with a profit of $94 million a year ago. It was the first quarter the company broke out earnings for the Volvo unit.

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Canadians spending less on new cars

Apr 23, 2008 09:33 AM

THE CANADIAN PRESS

OTTAWA–A new report says the average amount spent on new motor vehicles sold in Canada fell in 2007, the first drop since 2001.

Statistics Canada says drivers spent an average $31,723 for each new motor vehicle in 2007, down two per cent from $32,386 in 2006 – a reflection of both changing tastes and prices.

The agency says the traditional Big Three automakers no longer controlled a majority of the market for North American-built passenger cars in 2007, as their Canadian market share fell to 49.1 per cent.

General Motors, Ford and Chrysler accounted for 67.9 per cent of North-American-built passenger cars sold in Canada in 2000.

Dealers sold 1,690,538 new vehicles in 2007, 1.5 per cent more than in 2006 and the second-highest level since data was first collected in 1946.

In 1992, passenger cars made up about two-thirds of new vehicle sales, while in 2007 they accounted for only 50.8 per cent.

Sales of passenger cars slipped 0.5 per cent to 859,003 in 2007, mostly among North American-built models, where sales fell for the fourth time in five years.

Dealers sold a record 831,535 new trucks – minivans, sport-utility vehicles, light and heavy trucks, vans and buses – 3.5 per cent more than in 2006.

In total, households and businesses spent $53.6 billion on new vehicles in 2007, a 0.6 per cent decline from 2006.

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Minivan sales may hit 23-year low,
Ford says

Apr 22, 2008 04:30 AM

Ford Motor Co. forecast that U.S. industry-wide sales of minivans may fall to a 23-year low this year while large pickups decline to the fewest in a decade as more consumers turn to smaller cars.

Minivan sales may drop below 600,000 for the first time since 1985 and large pickups may slide to fewer than 2 million, a level they have topped annually since 1998, George Pipas, sales analyst for Ford, said yesterday.

"In the 1980s, minivans were America's family car," Pipas wrote in an email.

"Today, this category is approaching niche segment status." Pickup sales have been hurt by a declining housing market and may rebound in 2009, he said.

The forecast by the third-largest automaker in U.S. annual sales underscores the difficulty Ford, General Motors Corp. and Chrysler LLC face as high gas prices damp demand for the larger pickups and sport-utility vehicles.

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GM Canada seeks big cuts to labor costs - source

By John McCrank

TORONTO, April 18 (Reuters) - General Motors of Canada will be seeking big changes to labor practices when it starts contract talks with its main union later this year, according to an industry source with access to a company document.

The source, who asked not to be identified, said the automaker is seeking to eliminate what it says is a C$30-an-hour labor cost disadvantage versus non-unionized U.S. plants operated by Japanese-based competitors,

Possible changes include the establishment of a two-tier wage system like that recently introduced in GM's U.S. plants, as well as the use of more temporary workers, less paid time off, and an end to retiree health benefits and cost of living protection for workers and pensioners.

GM Canada did not return calls seeking comment.

The Canadian Auto Workers union, which represents around 15,000 GM Canada workers, has said it will not allow a two-tier wage system like the one the United Auto Workers in the United States agreed to last year, and it would strike if pressed on the issue. Under the two-tier plan, new employees are hired at wages that are about half the regular union rates.

"We've already told General Motors that we don't agree with their numbers, but we're also not going to be pitted against the transplants," CAW President Buzz Hargrove said, referring to the Japanese plants in the United States.

"We don't represent the transplants and we're not going to compete with them in terms of their cost structure," Hargrove said.

GM's tough position comes as it and the rest of the Big Three Detroit-based automakers -- Chrysler and Ford Motor Co -- prepare for contract talks with the CAW in July. The union's current contract expires Sept. 17.

The strong Canadian dollar has made imported parts from the United States cheaper, but has made Canadian wage rates less competitive. Labor costs make up around 7 or 8 percent of the cost of manufacturing a car.

Hargrove acknowledged that Canadian labor costs are higher than those in unionized Big Three plants in the United States. But he said stronger productivity in Canada narrows the gap.

The CAW says it has a strike fund of C$70 million ($69 million), enough to cover a six-month walkout at GM.

The last CAW strike at a Big Three plant was in 1996 at GM, and it lasted three months.

GM Canada operates a car plant and a truck plant in Oshawa, Ontario, an engine and transmission plant in St. Catharines, Ontario, and a transmission plant in Windsor, Ontario.

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GM Canada targets the 'status quo'

Auto maker eyes time off, staffing and work rules in coming contract talks to better compete with Japanese companies' U.S. plants

From Friday's Globe and Mail

TORONTO General Motors of Canada Ltd. is seeking a “transformational” change in its operations by reducing paid time off, allowing temporary workers and eliminating strict work rules, moves that almost certainly put it on a collision course with its unions.

The changes are essential to slash a $30-an-hour labour cost disadvantage against U.S. plants operated by Japan-based competitors, the auto maker says.

Wages, benefits, pensions and other costs for one hour of labour at the Canadian plants operated by the Detroit Three amount to $77.75, says a company background paper on the coming talks with the Canadian Auto Workers union. The same costs with the Canadian dollar at par against the U.S. currency total $47.50 an hour for U.S. plants operated by Honda Motor Co. Ltd., Nissan Motor Co. Ltd. and Toyota Motor Corp.

“When you look at how uncompetitive we are, you can't say we'll do some things and $1 an hour will do,” said GM Canada spokesman Stew Low. “The status quo just won't do.”

The background paper outlines what will be a difficult challenge for the CAW and the Canadian units of the Detroit Three in an automotive environment that has changed dramatically since the last round of negotiations in 2005. Since then, the Canadian dollar has hit par with the U.S. currency – contributing to annual losses at the Canadian unit of General Motors Corp. – and a landmark labour agreement in the United States appears to have slashed the three companies' costs in that country.

If GM sticks to the position hourly labour costs must be slashed by $30, they risk a monumental clash with the union, which has already drawn a line in the sand, saying the two-tiered wage structure adopted at U.S. sites won't be permitted at CAW plants.

“They can't get there,” said CAW president Buzz Hargrove. “I've told [GM chairman] Rick Wagoner, I've told the head people at Ford and Chrysler – all of them – that there's absolutely no way in hell.”

The union will not agree to wage cuts, reductions in health care benefits or lower pensions, Mr. Hargrove said, but he acknowledged that Canadian workers have more time off the job and “that would be one we would have to look at, given the circumstances we face.”

Making the case for investment in the company's Canadian operations is already difficult given the dollar and the flat North American market, compared with strong growth in other markets such as China and Europe, said David Paterson, GM Canada's vice-president of corporate and environmental affairs.

Investment “becomes a lot harder to justify,” Mr. Paterson said. “We're trying to invest right now. We've just laid out $3-billion worth of investments.”

More than three-quarters of the $30 cost gap is generated by the labour costs for active employees, says the GM Canada paper, which argues that “we need to find a creative ‘Made in Canada' solution to our cost challenges – and the solution must be transformational.”

The paper notes that base wages and paid time off make up a significant slice of the gap, pointing out that CAW employees get 155 hours more time off annually than workers at the Japanese plants in the U.S.

CAW workers at GM Canada assembly plants get 46 minutes in breaks during an eight-hour shift, while U.S. workers at Toyota Motor Corp. plants get 30 minutes in breaks, the paper adds.

The GM officials also pointed to work rules, such as a ban on temporary workers. Such employees make up 10 to 15 per cent of the work forces at the Japanese plants, which gives them flexibility to adjust production quickly when the market changes.

Another area of concern is job responsibility. In some plants, a regular assembly line worker can change the welding tips on a robotic assembly arm, Mr. Low said. At GM's two Canadian assembly plants, that requires a skilled trades worker.

CAW economist Jim Stanford said GM Canada should compare hourly labour costs for active workers in Canada against those at Detroit Three U.S. plants represented by the United Auto Workers.

Such costs in Canada are $67 an hour and $60 in the United States, he said, and the $7 an hour difference is made up by the higher productivity of the company's Canadian operations.

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GM, Ford to cut pay for summer temps
Those workers will earn about $14 an hour instead of $18;
Chrysler won't hire any fill-ins.

Thursday, April 17, 2008
Sharon Terlep / The Detroit News

Taking a part-time summer job with one of Detroit's Big Three automakers has long meant good, quick money for thousands of workers. But the payoff just got smaller.

Workers hired by General Motors Corp. and Ford Motor Co. for temporary summer help will now make about $14 an hour -- not $18 -- as part of the automakers' new labor deals with the United Auto Workers. The temporary summer workers fill in for most jobs in the factories.

Chrysler LLC, struggling to pare back production to meet declining demand for its cars and trucks, doesn't plan to hire temps this summer, Chrysler spokesman Ed Saenz said Wednesday. It will be the automaker's third straight year of hiring few to no summer temps.

The pay cut is one more sign that Detroit's automakers aren't the haven of high wages they once were.
"It'd be nice to have those jobs be higher paying. But in the grand scheme of things, given the economy and the auto industry, having the jobs in the first place is most important," said Scott Watkins, a consultant at East Lansing-based Anderson Economic Group. "The good news is that those temporary jobs are there at any amount."

Detroit's automakers usually hire temps to take the place of vacationing factory workers. GM said it hires a few thousand workers across the country; Ford placed its number in the hundreds.
The tally of summer hires this year will depend on the carmakers' production schedules and, at GM, could be affected by the strike at parts maker American Axle & Manufacturing Inc. A parts shortage created by the stoppage has forced GM to idle or cut shifts at about two dozen factories.

Jobs filled by referrals
Temporary workers are typically hired through a referral process in which existing workers recommend a friend or relative for the job. Salaried and hourly employees are generally allowed one referral each.

"It's a way that GM and the UAW can work together to allow people to go on vacation but meet the production needs of the business," GM spokesman Dan Flores said. Traditionally, under UAW agreements with the automakers, those fill-in workers have earned 70 percent of the average assembly line hourly wage, which amounted to about $18.30.

But last fall's landmark labor deals between the UAW and the Big Three dramatically altered pay scales on the line. The UAW agreed to allow the companies to implement a two-tier wage system in the factories, with lower-paid workers making as little as $14, or about half the current hourly wage.

At GM, the second tier of workers comprises new hires assigned to jobs that aren't considered a core part of building cars. Chrysler's system is similar. At Ford, all new hires will be paid the lower wage until 20 percent of the work force falls into the lower tier.

All temporary summer hires will fall into the second-tier wage at Ford. The decision avoids a situation where a part-timer would be making more than a full-time, UAW-represented employee.

Hiring increases in summer
The automakers employ temporary workers year-round, but hiring generally spikes in the summer because of vacations. Many of the temps hired by the Big Three to replace workers who took buyouts in 2006 will become permanent hires under the labor deal. Summer help will not be eligible for full-time jobs.

GM worker Troy Miller, who has seen summer help come and go during a decade at the automaker's service parts operation in Columbus, Ohio, said the workers are at a disadvantage because they're not represented by the UAW. They often work longer hours and with less breaks than full-timers, he said. "I don't think it's fair they make less," he said. "They work 'em hard."

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Ford will add up to 500 Oakville jobs

Apr 16, 2008 04:30 AM

Ford of Canada said it will hire up to 500 workers at its Oakville assembly plant by July.

The automaker said it needs the staff to keep up with demand for its Ford Edge and Lincoln MKX crossover utility vehicles.

Those products will be joined in July by the new Ford Flex, a full-size crossover utility vehicle.

Ford spokesperson Lauren More said the jobs will be offered first to 700 laid-off workers in Windsor before applications are opened to others.

Canadian Auto Workers union president Buzz Hargrove hailed the announcement as a welcome bit of good news in a hard-hit industry.

The Oakville expansion is the second jobs boost Ford has delivered in Ontario in the past month after saying it would reopen a Windsor engine plant, bringing back 300 of almost 1,000 laid-off workers.

Ford also said it will increase production of its Focus small car by 30 per cent this year to meet higher demand.

Focus sales are up 23 per cent through March compared with the first quarter of last year. The redesigned car is taking 7.6 per cent of the U.S. small car market.

Dearborn-based Ford said yesterday it will raise production to build 245,000 of the cars this year, from 191,000 in 2007.

The Focus is made at the company's stamping and assembly complex in the Detroit suburb of Wayne, Mich.

The Focus can get up to 6.72 litres per 100 kilometres on the highway. Its increased sales are part of a market shift toward smaller, more fuel-efficient vehicles.

The Canadian Press, Associated Press

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FORD INCREASES PRODUCTION OF FOCUS AT WAYNE ASSEMBLY TO KEEP UP WITH RISING SALES

Focus


WAYNE, Mich., April 15, 2008 – Ford Motor Company said today that North American production of the Ford Focus will increase by nearly 30 percent in 2008 to keep pace with strong demand for the newly redesigned small car.

The new Focus – which delivers 35 miles per gallon and industry-first technology such as Ford SYNC™ – has been a hot seller since it began rolling off the assembly line at Ford’s Wayne Stamping and Assembly Plant in late 2007.

In the first three months of 2008, Ford sold 49,070 Focus units – an increase of 23 percent from the same time period last year.  Importantly, retail sales were up 35 percent, while fleet sales declined slightly.  The Focus now claims 7.6 percent of the U.S. small car market, 1.2 percentage points better than a year ago.

Based on the strong demand, Ford is increasing production in order to build a total of 245,000 Focus units in 2008, up from 191,000 in 2007.  The production plan means Wayne Stamping and Assembly’s 2,800 employees will work some overtime and Saturday shifts for the rest of the year to meet demand. 

“Our employees are determined to deliver high-quality vehicles to our customers,” said Wayne Stamping and Assembly Plant Manager Dale Wishnousky.  “Our work force understands the Focus is the gateway to Ford Motor Company and knows it is a great car and it’s great to see that our customers know it – and love it – too.” 

The 2008 model of the fun-to-drive Focus launched in October 2007 with industry-exclusive technology such as Ford SYNC™, the hands-free voice-activated in-car communications and entertainment technology that integrates Bluetooth-enabled mobile phones and digital music players. SYNC-equipped Focus accounted for 40 percent of the sales.

The new Focus also launched with improved quality – with 13 percent fewer Things Gone Wrong (TGW) over last year. This is according to the 2008 Q1 Global Quality Research System (GQRS) study conducted for Ford by RDA Group of Bloomfield Hills, Mich.

Ford invested $130 million in Wayne to build the new Focus.  The company installed new tooling and equipment, body shop upgrades and a new onsite “rough road” test track for the Focus.

J.D. Power sales data show that 30 percent of 2008 Focus year buyers are 16 to 35 years old.  That’s up from 26 percent of 2007 Focus buyers. 

Wayne Stamping and Assembly opened in 1952.  It currently employs 2,655 hourly and 145 salaried employees.

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Big 3 may start hiring in Sept.

Report finds carmakers to add 46K workers by 2016

Tuesday, April 15, 2008

LANSING -- A distant light amid Michigan's economic darkness: Detroit's Big Three automakers will start hiring as soon as September and will employ nearly 46,000 new workers in this state over the next eight years.

 

That's the somewhat upbeat conclusion of a new report issued by the Ann Arbor-based Center for Automotive Research and presented at Lansing Community College's auto tech center Monday. The study is based on interviews with Big Three officials and others in the auto industry.

"The bleeding will stop," said Kristin Dziczek, a project manager for the center and co-author of the report.

 

Overall employment by the domestic car companies will be down between now and 2016. In Michigan, the number of auto workers will drop from the current 129,000 to 114,254 by 2011 and 108,430 by 2016.

 

But due to buyouts and thousands of retirements of baby boomers and reduction of legacy costs, the auto companies will be in a hiring mode in the years to come, the report says. "It's easy to overlook that the buyouts are occurring so the Detroit three can hire," Dziczek said.

 

Of the 45,955 total new employees needed by 2016, the automakers will hire more than 24,000 hourly production workers and nearly 22,000 salaried employees including more than 8,800 engineering and technical workers and 1,200 skilled trades people, according to the report.

 

"Our automakers are clearly making the tough decisions that will make them stronger in the days to come," said Liz Boyd, spokeswoman for Gov. Jennifer Granholm. "And while that strength could result in thousands of area hires it doesn't detract from the need to diversify the state's economy."

 

Gary Olson, an economist and director of the Senate Fiscal Agency, said the auto companies are moving older employees out and bringing new workers in at much lower hourly wages. "If they're paying $14 an hour instead of $25, that will have a negative impact on income tax and sales tax revenue, even property tax revenue because somebody at that pay level can't buy as much house," Olson said. "But $14 an hour is better than no job.

 

"This is part of a transitioning into a new economy in Michigan."

The auto companies are concerned about the state's available labor supply.

"While the domestic manufacturers struggle with a current oversupply of trades workers in nearly all classifications, all of the automakers interviewed for this study expressed concern about the future pipeline of skilled workers," the report said. The new employees will need math, computer, technical reading, teamwork and communications skills, said Bernard Swiecki, a project manager and co-author of the report, titled "Beyond the Big Leave: The Future of U.S. Automotive Resources." At the same time, there will be less physical demand on the auto workers of the future.

'

Chuck Hadden, vice president of government affairs for the Michigan Manufacturing Association, said the center's figures on Big Three employment sounded realistic.

"The average age of a UAW worker is about 50. Not all of those who retire will be replaced. And the replacements will have to have a lot of skills that current workers don't have. In some cases, they'll have to replace two or three workers, they'll have a machine to help them and they'll need to know how to recalibrate that machine," Hadden said.

 

Because newly hired production workers will earn between $14 and $16 an hour under the recently negotiated UAW contracts, competition for those employees will be fierce from other employers paying similar wages, according to the study.

The companies are relatively comfortable about an adequate supply of engineers. Engineers will need a combination of expertise in mechanical, electronic and software engineering for vehicle design and manufacturing.

 

At this week's SAE International World Congress, a record number of employers are looking to hire engineers. Forty-one companies are interviewing, including Chrysler LLC, GE Transportation, General Motors Corp., Toyota Motor Corp., and Mercedes-Benz, and many tier one auto suppliers.

 

"There is still more automotive engineering talent in southeast Michigan and the upper Midwest than anywhere else," said David Amati, SAE's director of global automotive business.

 

Government agencies and military contractors, including the Missile Defense Agency and U.S. Army Contracting Command, also are recruiting, as are other companies such as Caterpillar Inc., consulting firm Booz Allen Hamilton and Cessna Aircraft Co.

Michael LaFaive, director of fiscal policy for the Midland-based Mackinac Center for Public Policy Research, said he's optimistic about the future hiring of engineers, technicians and other salaried workers in Michigan.

 

"This is about an entire industry reorganizing," LaFaive said. But LaFaive said he's concerned that auto manufacturing jobs will continue to move south because of an unfavorable tax climate and labor laws in Michigan.

 

The presentation of the report was made in Lansing partly because the area boasts North America's two newest General Motors auto plants. The study did not address whether future plants might be built in Michigan. The trend has been for those plants to go to southern states.

 

But Swiecki said Michigan remains the hub for the intellectual side of the industry.

"When it comes to research and development, engineering, and design, this area is safer," he said.

In the United States, auto employment will level off near 355,000 employees. But the mix between domestic and foreign automakers will change, according to the report. Foreign manufacturers employ 32 percent of auto workers today and that will increase to 43 percent by 2016.

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Ford's hiring boom
built on fuel efficiency

GREG KEENAN

Globe and Mail Update

April 14, 2008 at 1:11 AM EDT

Ford Motor Co. has a hot vehicle on its hands in Oakville, Ont., and high hopes for another one, which means it could hire a few hundred employees this spring, bucking the trend of downsizing and plant closings that has slashed employment at its Canadian operations.

 

The auto maker plans to add 500 jobs at its Oakville Assembly Complex to boost production of the hot-selling Ford Edge and Lincoln MKX crossover utility vehicles and to start building the Ford Flex, a larger CUV.

 

The jobs have been offered first to about 1,000 workers laid off from Ford's engine operations in Windsor, Ont., but probably only a few hundred people will agree to move to Oakville, one Canadian Auto Workers union official in Windsor said yesterday.

 

That means Ford is likely to be hiring new employees for the Oakville plant – one of the few times it has done so this decade – as production is scheduled to increase in the middle of July.

Ford Motor

Ford April 2008

 

 

The Edge and MKX are Ford's five-seat entries in the hottest segment of the market. Crossovers, which combine the height and utility of a traditional sport utility vehicle with the ride and handling of a car, are one of the few segments expanding amid the slump in vehicle sales in the U.S.

 

Most crossovers get better fuel economy than traditional SUVs because they don't have a full frame, so they're lighter.

 

Fuel economy has become more important to drivers as the price of gas moves toward $4 (U.S.) a gallon in the United States – an increase that has dented sales of such frame-based SUVs as Ford's Explorer.

 

Edge sales, on the other hand, soared 47 per cent in the first three months of 2008, while MKX deliveries rose 32 per cent. The Oakville plant cranked out 225,426 of the vehicles last year, the first full year of production.

 

The auto maker expects to sell 100,000 Flex models annually and Oakville will go to three full shifts of production, James Farley, Ford's vice-president of marketing and communications, told reporters in Las Vegas last week. Flex is a seven-seat crossover.

 

The Flex's Lincoln twin, based on the MKT concept vehicle unveiled in Detroit in January, is scheduled to go into production in Oakville late this year, industry sources said.

 

The boost in output means Oakville will be operating on three full shifts of production. About 3,800 people work three shifts now in the plant's body and paint shops, but the trim and chassis operations are operating on two shifts.

 

Ford has scaled back its manufacturing operations in Canada this decade as part of a major restructuring undertaken by the second-largest Detroit auto maker.

 

It closed a pickup truck assembly plant in Oakville and a casting plant in Windsor and eliminated one shift of production at a full-size sedan plant near St. Thomas, Ont.

The auto maker recently announced the partial reopening of its closed Essex Engine Plant in Windsor, which will mean the recall of about 300 employees.

 

The full reopening of that plant to assemble a new, more fuel-efficient V8 engine depends on the federal government providing $30-million (Canadian) in financial assistance to help backstop a $300-million investment.

 

The Ontario government has provided about $17-million to help get the plant back up and running.

 

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Ford makes plans to sell 100K hip Flex crossovers yearly

Shift added to build car that appeals to those
who never considered a Ford.

Bryce G. Hoffman / The Detroit News April 13, 2008

LAS VEGAS -- Ford Motor Co. plans to sell 100,000 Flex crossovers a year and is adding a third shift at its Oakville Assembly Plant in Ontario to make sure it has the vehicles to meet that demand, said Jim Farley, Ford's chief marketing officer.

Farley brought scores of the new full-size crossover with him to Ford's annual dealer conference here this week. As at the New York auto show last week, Ford used the opportunity to parade the Flex up and down the Vegas strip. The Flex attracted so much attention in Vegas that a Nevada state trooper pulled one over just to find out what kind of car it was and who made it. That made Farley's day.

"I always pay attention to what police officers and security guards think," he said, noting that they spend a lot of time looking at cars.

Ford designers told reporters that they set out to create a vehicle people could not ignore.

"That's what we want. We don't want a vanilla car," said Flex design chief Rich Gresens, who added that novel elements like the grooved sides and unequivocally boxy profile make the vehicle stand out. "We were looking for something contemporary, something that would set it off, something that would make it unique."

Flex marketing manager Kate Pearce said design is extremely important to crossover customers. She said her team knew they had a hit when only 2 percent of consumers surveyed by their research team thought it was a Ford. Most thought it was a high-end luxury crossover.

The interior is also important, she said, a sentiment echoed by Jim Hall of 2935 Analytics LLP in Birmingham.

"Anything you do on the interior is a gift that keeps on giving if you do it right because people live in it," Hall said. "That's how you build a customer that keeps coming back. Ford has done some real mediocre interiors. If they get it right this time it will be a big help."

That is why there is virtually no hard plastic in the interior of the Flex.

"We know that our quality is equal to Toyota and Honda," Pearce said. "Our customers need to be able to see the tangible evidence of that."

The Flex also caught the attention of the salespeople who will be selling the vehicle in Vegas when it launches this summer.

"I think it's pretty exciting," said John Bruchhagen, a salesman at the Ford Country dealership, as he eyeballed a dark silver model. "I could easily sell this. It's making Ford a more exciting company."

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Magna workers join CAW

Apr 11, 2008 04:30 AM


Business Reporter

Workers at a second Magna International Inc. plant have accepted a controversial agreement with the company and approved joining the Canadian Auto Workers union.

About 170 employees of Magna's Qualtech Seating Systems in London, Ont., voted 74 per cent in favour of a contract and the company's Framework of Fairness agreement this week.

Under the unique arrangement at Magna, employees at individual plants can vote for a company-union negotiated contract that would give them automatic CAW membership but take away their right to strike. Magna, in return, cannot lock out workers.

In the three-year contract, Qualtech workers will each receive a $900 signing bonus and wage increases in 2009 and 2010 based on inflation in Ontario.

They could also gain up to 1 per cent of their wages in each contract year based on quality, productivity and safety, plus a further 1 per cent depending on profits of the company division. Workers at the plant currently earn an average of about $24.50 an hour.

They will also receive seniority and recall rights, union representation in disputes and the company's current benefits.

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CAW tries for early auto talks

Buzz Hargrove doubts union will get head start on difficult bargaining

Apr 09, 2008 04:30 AM

Business Reporter

The Canadian Auto Workers are exploring the possibility of an early start on formal bargaining at the Big Three North American-based automakers, but union leader Buzz Hargrove says he doubts it will happen.

Hargrove confirmed yesterday he and other negotiators met top officials of General Motors, Ford and Chrysler separately during the last few weeks, but have not found any common ground to spark early negotiations.

"I can't imagine them starting early," he said in an interview. "I don't see that scenario unfolding, but I would never rule anything out."

The union, companies and auto-industry analysts agree this year's negotiations will be the most difficult round in the industry's history.

Hargrove noted early talks could help negotiators clarify issues in order to deal with problems before they become insurmountable under strike deadlines in a tough bargaining climate.

The CAW is also aware that forecasts call for market conditions to continue deteriorating throughout the year, so early talks could benefit the union.

Senior union leaders at the Big Three agreed recently to "explore opportunities" through exchanges of information that could initiate early bargaining, according to one source familiar with the CAW's internal workings.

The union and companies normally start bargaining in July for new contracts every three years. The current agreements covering more than 31,000 workers expire in mid-September.

"It's something we've never done this early before," Hargrove said. "I want to do everything possible to avoid a fight if we can this fall by making sure they know where we're coming from and what our positions are."

Hargrove said the union does not want a repeat of the situation in 1996, when miscommunications led to a 21-day strike at GM.

In that dispute, GM wouldn't match new contracts at Ford and Chrysler because of pressure from Wall Street and the belief the union would bend. GM eventually accepted the pattern. "GM got the wrong impression, and we don't want that to happen again," Hargrove said.

In late 2001, after the terrorist attacks in the United States, Hargrove wanted to start bargaining at the Big Three more than a half year early because of concerns about the economic fallout.

Senior union officials rejected the idea, arguing the economy would recover. Negotiations started at the normal time the following summer.

Hargrove has already indicated the union will not accept any reductions in wages, cost of living allowance, time off the job, benefits, pension indexing and health care for workers and retirees.

The CAW, however, is under pressure to accept concessions because of deteriorating business conditions at the Big Three.

Last fall, the United Auto Workers in the United States accepted concessions that cut labour costs. The Big Three say those reductions will give U.S. operations a competitive edge.

The CAW argues operations here have better productivity and quality and lower health-care costs.

Union leaders have not discussed a strike target, but sources say Hargrove is leaning toward Ford because of his personal perception that the company has the best labour climate in which to forge an acceptable deal. In traditional Big Three bargaining, the union would press the other two companies to accept the "pattern contract" reached with the initial target.

Hargrove, however, denied he is already eyeing Ford. "We won't pick the target until after Labour Day. I'm talking to all of them."

*******************************************

New Quality Study Shows
Ford Is Second to None

Monday April 7, 11:00 am ET  

- Ford catches Honda in initial quality, putting it in statistical tie at the top with Toyota and Honda.

- Ford's vehicle quality improved 8 percent versus last year.

- Every new car and truck, including the 2008 Ford Focus, launched with improved quality versus its predecessor.

DEARBORN, Mich., April 7, 2008 /PRNewswire-FirstCall/ -- When it comes to initial vehicle quality, no automaker performs better than Ford.

The quality of Ford, Lincoln and Mercury brand vehicles soared to the top of the charts equalling that of Toyota and Honda, according to the first quarter 2008 U.S. Global Quality Research System (GQRS) study conducted by RDA Group of Bloomfield Hills, Mich.

The study shows Ford's domestic brands improved 8 percent versus last year with a combined average of 1,284 things-gone-wrong (TGW) per 1,000 vehicles during the first three months of ownership. This performance is statistically equivalent to the 1,250 TGW level of Honda and Toyota.

"Last year we tied with Toyota, and this year our quality performance is as good as industry-leading Honda's too," said Mark Fields, Ford's president of The Americas. "Our world-class quality is one of the most important aspects of our turnaround in North America. This consistently strong quality improvement should offer today's customer renewed confidence, setting the stage for important new products like Ford Flex, which is launching this summer."

Ford's dramatically improved vehicle quality will be highlighted in a sweeping new marketing campaign called "Drive One" that officially debuts Tuesday. The campaign tells the story behind Ford's rise to the top of the industry in initial vehicle quality as well as underscoring safety, smart technology and improved fuel efficiency.

The company earned best-in-class honours in two important engineering functions: interiors, which includes such areas as trim, seats and instrument panel appearance; and electrical, which includes entertainment systems. Ford tied for best-in-class in two other functions, paint and vehicle engineering, which includes such areas as ride and handling and cabin quietness.

Additionally, Ford's domestic brands pushed customer satisfaction up one point to 77 percent.

"There is an unprecedented level of teamwork at Ford. Everyone from the top floor to the plant floor is working together to deliver the highest quality vehicles for our customers," said Bennie Fowler, Ford's group vice president of Global Quality. "We are extremely proud to be among the industry's quality leaders. But that's not why we're in the game. We want sole possession of first place, and we will keep working to earn it."

A total for 15 Ford, Lincoln, Mercury vehicles are ranked in the top three of their respective segments for either TGW performance, customer satisfaction or both.

The new 2008 Ford Taurus and Mercury Sable both recorded quality levels that equate to less than one problem per vehicle, as did the Volvo S80 (947). The Ford Fusion and Lincoln MKZ were close, with 1,030 TGW and 1,065 TGW, respectively.

The Taurus also led a string of impressive new vehicles launched in 2007. Taurus showed a 33 percent quality improvement compared with the product it replaced. The new Ford Escape improved 16 percent over the out-going model, and the new Ford Focus improved 13 percent.

In fact, 36 of 40 Ford, Lincoln, Mercury, Volvo and Mazda nameplates improved this year versus 2007.

The 2008 first quarter U.S. GQRS study, which RDA Group conducts for Ford, asks customers of all major makes and models to comment on troubles and rate their overall satisfaction with their three-month-old vehicles. The survey includes vehicles registered from September 2007 through November 2007.

              ****************************************************

UAW blasts Ford's bonuses

Gettelfinger upset with $60 million in higher compensation given to five senior executives.

United Auto Workers union President Ron Gettelfinger lashed out at Ford Motor Co. Friday, calling the pay packages of its top executives "excessive and unjustified."

"Our members at Ford agreed to substantial sacrifices in 2007 to help Ford survive so the company can rebuild and reinvest in the United States," Gettelfinger said in a statement. "We did not sacrifice so that management could find a way to reward themselves with higher compensation."

 

The union leader's comments came hours after Ford filed its annual proxy statement with the U.S. Securities and Exchange Commission, revealing that five senior executives received combined compensation of more than $60 million in 2007.

 

CEO Alan Mulally received $21.7 million last year, including a $2 million base salary, $7 million in bonuses and more than $11 million in stock and stock option awards. That was 24 percent less than he took home in 2006, when he received $28.2 million, including $11 million to offset compensation he forfeited at his previous employer, Boeing Co.

 

Mulally's bonuses were based on the progress the company has made on its turnaround plan, a plan Executive Chairman Bill Ford Jr. said remains on track, despite the automaker's $2.7 billion loss last year. Ford lost $12.6 billion in 2006.

"The year 2007 marked a major turning point for Ford Motor Co.," he said in a statement. "We made significant progress toward our plan to return to profitability in North America and in our total operations in 2009."

 

Bill Ford received no compensation. He pledged in 2005 to forgo pay until his company returns to sustained profitability.

 

Other executives saw their compensation increase:

• Don Leclair, chief financial officer, earned $1 million in salary and received incentive bonus awards of $3 million. His 2007 compensation totaled $11.7 million up from $4.4 million in 2006.

 

• Mark Fields, president of the Americas, earned $1.3 million in salary and received incentive bonuses of $2.9 million. His 2007 compensation totaled $8.4 million up from $5.6 million in 2006.

 

• Lewis Booth, head of Ford of Europe and the Premier Automotive Group, earned $868,133 in salary and received incentive bonus awards of $2.3 million. His 2007 compensation totaled $10.3 million, up from $4.3 million in 2006.

 

• Mike Bannister, CEO of Ford Credit, earned $708,700 in salary and received incentive bonus awards of $2.2 million. His 2007 compensation totaled $8.7 million, up from $2.7 million in 2006.

 

Gettelfinger said executives at Ford's Asian rivals receive more modest compensation packages.

 

"By all accounts, our 2007 auto agreements closed the so-called competitive gap in labor costs between domestic manufacturers and their foreign-nameplate competitors," he said. "But the competitive gap between U.S. auto executives and their Japanese counterparts remains huge -- and it will become even larger as a result of the increases in executive compensation announced today."

 

Ford would not respond to the comments, but said the rewards were due to the progress Ford is making on its restructuring. It also noted that hourly workers in the United States and Canada received $1,000 bonuses based on those same gains. Ford was not obligated to pay those under the terms of its union contracts.

UAW Vice President Bob King, who heads the union's national Ford department, said any sort of self-congratulation is premature.

 

"The company has a long way to go to regain sales, market share and the confidence of American consumers. There is no performance-based measure that can justify the huge monetary rewards announced today," he said. "An increase in executive compensation is exactly the wrong message at a time our members and our communities are suffering from the impact of restructuring, downsizing, plant closings and job loss in the auto industry."

************************************************************

FORD MOTOR COMPANY DETAILS 2007 PERFORMANCE AND EXECUTIVE COMPENSATION IN ANNUAL
REPORT AND PROXY

 

DEARBORN, Mich., April 4, 2008 – Ford Motor Company [NYSE: F] today reiterated the significant progress it is making on its plan to transform and position the company to grow profitably around the world with the release of its 2007 Annual Report and notice of its 2008 Annual Meeting of Shareholders and Proxy Statement.

The Annual Report and Proxy Statement were mailed today to approximately 730,000 shareholders and the Proxy Statement was filed with the U.S. Securities and Exchange Commission. The documents outline the company’s performance in 2007, announce information about the company’s Annual Meeting to be held on May 8, 2008, and proposals to be presented there, as well as provide details of compensation for select corporate officers.

“The year 2007 marked a major turning point for Ford Motor Company,” Ford Executive Chairman Bill Ford writes in the Annual Report. “We made significant progress toward our plan to return to profitability in North America and in our total operations in 2009. At the same time, we laid the foundation for future growth.”

“To achieve profitable growth, we need to take advantage of every potential economy of scale and best practice we can find,” President and CEO Alan Mulally added. “In the months ahead, you will see more of the building blocks of the new Ford Motor Company start to emerge – as we work together to create a dynamic global enterprise growing profitably around the world.”

During 2007, Ford made significant progress toward its transformation plan. All Ford automotive operations were profitable outside of North America, excluding special items, as was the company’s Financial Services sector. Specifically, the company achieved a $10 billion year-over-year improvement in overall financial performance before taxes, positive total automotive operating-related cash flow, significant improvements in vehicle quality, further cost reductions and successful introductions of new products and innovative technologies around the world.

The improved performance and results also will be discussed during Ford’s Annual Meeting of Shareholders, which will begin at 8:30 a.m. Eastern Time, Thursday, May 8, at the Hotel du Pont, 11th and Market Streets, Wilmington, Del.

In addition to information about the Annual Meeting, the 2008 proxy provides a detailed review of total 2007 compensation provided, granted to or received by five named executive officers during the year – based on the company’s 2007 performance. Details include:

  • Alan Mulally, Ford president and chief executive officer, earned $2,000,000 in salary and received incentive bonus awards of $7 million. Total 2007 compensation was $21,670,674, which includes salary, bonuses, the Company-recognized expense for stock options and other stock-based awards, as well as all other compensation.
  • Don Leclair, Ford executive vice president and chief financial officer, earned $1,005,633 in salary and received incentive bonus awards of $3 million. His 2007 compensation totalled $11,703,127.
  • Mark Fields, Ford executive vice president and president, The Americas, earned $1,255,634 in salary and received incentive bonus awards of $2,850,000. His 2007 compensation totalled $8,389,898.
  • Lewis Booth, Ford executive vice president, Ford of Europe and Premier Automotive Group, earned $868,133 in salary and received incentive bonus awards of $2,250,000. His 2007 compensation totalled $10,264,463.
  • Mike Bannister, Ford executive vice president and CEO, Ford Motor Credit Company earned $708,700 in salary and received incentive bonus awards of $2,150,000. His 2007 compensation totalled $8,677,747.

(Lucky they dropped the new hourly wages down to $14
so they can afford to pay these executives)

**********************************************

March a low point for Chrysler, Ford and GM as Japanese giants gain

Apr 02, 2008 04:30 AM

Business Reporter

The Big Three North American-based automakers slipped to their lowest share of the market in Canadian history last month.

Sales of General Motors, Ford and Chrysler vehicles dropped to 47.7 per cent during March while business for offshore-based producers including Japanese giants Toyota and Honda climbed to 52.3 per cent, manufacturers revealed yesterday.

March's low point for the Big Three shows their difficulty in reversing a downtrend over the past generation, despite their improvements in quality and design.

Analyst Dennis DesRosiers said he is surprised the trend has not changed, but he added the offshore companies are now countering the Big Three's better quality with lower prices.

In the first three months of this year, the Big Three's market share fell to 50.6 per cent from almost 53 per cent in the same 2007 period, while the offshore companies increased their level to 49.4 per cent from 47.1 per cent.

Meanwhile, over-all sales and leases of new cars and light trucks remained almost flat in March from the corresponding 2007 period. Business dipped less than 800 vehicles or 0.5 per cent to 150,023 which is still the second best March on record.

Despite the flat month, sales for the first quarter climbed 7.3 per cent to 363,805 vehicles because of an extremely strong January and a record February.

The Big Three experienced their lowest level in market share primarily because of a poor month at GM, the industry leader, and a strong performance by Toyota. GM sales plunged 16.4 per cent or almost 6,000 vehicles to 30,208 in March.

Marc Comeau, GM's vice-president of sales, said his company is "holding its own," with an overall increase in the first quarter.

Chrysler Canada posted its 20th consecutive month of gains from the same period a year earlier as March sales improved 2.8 per cent to 21,602.

Toyota Canada said its sales, including the Lexus luxury brand, shot up to a March record after it became the first major automaker to reduce suggested retail prices on many models because of the higher value of the Canadian dollar.

Fuelled by business for the new Corolla compact and Matrix crossover vehicles, Toyota's sales jumped 13.1 per cent to 20,649 in March. It also sold more cars in Canada than GM.

Ford Motor Co. of Canada Ltd. said its sales dipped 1.3 per cent to 20,083 primarily because of decline in car volumes.

Sales at Honda Canada Inc., including the Acura luxury brand, climbed 7.4 per cent to 16,285.

Among other players, Mazda, Nissan and Hyundai reported increases in March.

In the U.S., where Canada exports most of its auto production, sales tumbled 12 per cent to 1.36 million vehicles in March. Chrysler's sales plunged almost 20 per cent; GM's volumes dropped 18.7 per cent; Ford's business fell 14.1 per cent and Toyota's deliveries slid 10.3 per cent.

     *********************************************************

Chrysler Retirees lose life insurance

April 1, 2008 Eric Morath / The Detroit News

Chrysler LLC's white-collar retirees are losing free life insurance benefits but are eligible for a one-time pension boost of up to $4,000, according to a letter retirees should receive this week.

Previously retirees were covered by a life insurance policy at no charge, with a death benefit equal to their last year of pay, for those who retired before 2003, or $50,000 for those who retired after that.

Chrysler is allowing affected retirees a one-time opportunity to buy into a voluntary plan through MetLife at a reduced, group rate.

Chrysler is the first of Detroit's Big Three automakers to cut the benefit. Eliminating life insurance is the latest in a series of cost-cutting moves for Chrysler under the private ownership of Cerberus Capital Management LP.

The carmaker significantly cut production in the first three months of this year, and has scaled back discounts for friends and family of Chrysler workers.

"We made this choice (to cut life insurance) after looking at the competitive landscape," Thomas Hadrych, Chrysler's vice president of compensation, benefits and corporate services, said in an interview Monday.

Hadrych said about two-thirds of America's 1,000 largest companies don't offer life insurance to retirees. Union-represented workers and retirees, as well as Chrysler's current professional and managerial workers, will continue to get company-paid insurance. The retiree cut is effective June 1.

Ending the benefit shows that Chrysler is looking at every option to cut costs, said Jim McTevia, who heads McTevia & Associates, a turnaround firm in Bingham Farms. He said retirees often are the "innocent victims" of cost-cutting companies, since decisions affecting former employees have no effect on operations.

"To make Chrysler profitable, Cerberus either needs to cut costs or increase revenue, and in this market it's unlikely they'll increase revenue," McTevia said. "It's clear Cerberus is running the business differently than the previous management."

Chrysler has about 14,000 white-collar retirees. Now, regardless of retirement date, the benefit is canceled.

Chrysler wouldn't say how much ending the insurance benefit will save the company.

The premiums for white-collar retirees likely cost Chrysler several millions of dollars per year -- especially since older retirees are more likely to be paid the benefit than younger, current workers, said Marc Wise, an employee benefits attorney and partner at Southfield-based law firm Maddin Hauser.

On one hand, retirees' families are less likely to need the life insurance payout to support a family or pay off a mortgage, Wise said. On the other, the cost of a 65-year old obtaining even a 20-year term plan is steep -- $1,600 a year or more, he said.

"I don't think it will dramatically change how retirees live their lives," Wise said. "But if they feel they need the coverage, I'd urge them to consider buying into the group plan."

A boost in the pension payout, however is likely welcomed by retirees, Wise said.

White-collar retirees will receive from $1,000 to $4,000, depending on their years of service and years since retirement. They may choose to take the payment as a one-time lump sum, roll it into an Individual Retirement Account, or have it paid as part of their monthly benefit.

The increased pension payout, set to take effect June 1, is intended to keep white-collar benefits in step with those for United Auto Workers union retirees. UAW retirees are scheduled to receive a bump of up to $2,800 in their payouts over four years under the contract Chrysler negotiation last year with the UAW.

Retirees did not receive a pension increase last year.

"We are pleased to offer the increased benefit," Hadrych said. "Obviously a retiree could use the payment to buy life insurance, if they choose, but they are not related."

      ************************************************************

Ford seeks federal cash
to expand engine plant

Mar 31, 2008 02:47 PM


THE CANADIAN PRESS

WINDSOR, ONT.–Ford of Canada will use a $17-million investment from the Ontario government as part of a $168-million plan to reopen the Essex engine plant in southwestern Ontario, but the company warned Monday it will not expand the project further without direct participation from the federal government.

"This is the first phase of the project," Ford Motor Co. Group Vice-President Joe Hinrichs said as he announced the plans to build new V8 engines in Windsor.

"We are not able – or willing – to move forward with the second phase of the project until we can find resolution to all the issues we have outstanding with the governments."

Ford originally planned a $300-million investment at the Essex plant, which threw 900 people out of work when it shut last November, but scaled back when the federal Conservatives balked at the automakers' request for $30 million apiece from Ottawa and Ontario.

The plant became a political football as federal Finance Minister Jim Flaherty insisted tax cuts – not direct government investments – are the best way to encourage investment and create new jobs. Premier Dalton McGuinty countered that governments must do their part to secure large projects by multinationals like Ford.

"We think the auto sector is key to growing our economy," McGuinty said Monday.

The province's participation and the Canadian Auto Workers agreement to let Ford "do things differently" at the Essex plant, including contracting out some services such as janitorial, convinced Ford to reopen the Windsor facility, said Hinrichs.

"This project wasn't on our radar screen even 18 months ago, and when we idled the Essex engine plant in November we didn't anticipate that this was going to be our plan," he said.

"We've been in good, constructive conversations at both the federal and provincial level about what it means to possibly enlarge the investment here and make it an even bigger project. That's still left undone."

McGuinty joined Hinrichs and CAW president Buzz Hargrove for Monday's announcement at the sprawling engine plant and said he too was hopeful about federal participation in the Ford project.

"I remain very optimistic about the federal government and their commitment for the auto sector," said McGuinty.

"I look forward to another opportunity in the not too distant future for us to be here together with our colleagues in the federal government."

CAW local 200 president Mike Vince said he had "dreamt of this day, many, many times," while Hargrove said the announcement that even 300 jobs would be returning to Windsor felt like he had "won a lottery."

But Hargrove went on to say the Ford project in Windsor would have been much bigger – with even more jobs – if Prime Minister Stephen Harper's minority Conservative government would have agreed to participate.

He accused the Tories of writing off the troubled auto sector.

"We've got Mr. Flaherty and Mr. Harper saying 'we're not doing anything, we don't do those things,' and it's just so frustrating, it angers me," said Hargrove.

"You have to deal with the cards you have. Hopefully there'll be an election and that will change."

McGuinty called the announcement "great news for Windsor families," but Ford would not say exactly when the Essex plant will reopen to build new energy-efficient V8 engines, or where those engines will end up being used.

"We're not providing details of the engine program for competitive reasons today, and we also look forward to the opportunity to possibly expand this conversation," said Hinrichs.

                *************************************************

Ford to reopen shuttered plant in Windsor, Ontario

TORONTO, March 31 (Reuters) - About 300 employees of Ford Motor Co are set to return to work in Windsor, Ontario, after the company announced on Monday it would reopen an engine plant shuttered in November.

The announcement comes on the back of a deal between Ford and the government of Ontario province, which will chip in C$17 million ($16.6 million) toward Ford's C$170 million investment in a new engine program.

Ford didn't say what kind of engine would be produced or when production would begin, but media reports say the Essex Engine Plant will assemble a new generation of fuel-efficient V8 engines.

The plant employed as many as 2,000 workers in its heyday, making V-6 and V-8 engines at one time, but that number had dwindled to about 500 when Ford shut it down in November.

        **********************************************************

Ford to Reopen Windsor
Engine plant

TORONTO, March 28 (Reuters) - Ford Motor Co of Canada will announce the reopening of an engine plant in Windsor, Ontario, on Monday, according to media reports on Friday.

A spokeswoman for Ontario Premier Dalton McGuinty confirmed on Friday that the premier would be at the plant on Monday to make an announcement, alongside Ford and union officials, but said she could not give further details.

The Essex Engine Plant will assemble a new generation of fuel-efficient V8 engines, restoring about 300 jobs, the Globe and Mail newspaper reported on its Web site.

The paper, citing unnamed sources, said the Ontario government will chip in about C$17 million ($16.7 million) to boost an initial investment of C$168 million by Ford.

The plant employed as many as 2,000 workers making V-6 and V-8 engines at one time, but that number had dwindled to about 500 when Ford shut it down in November.

Buzz Hargrove, president of the Canadian Auto Workers union , said he was invited to the announcement, and was waiting to hear from McGuinty's office. He said that similar announcements have been planned and then cancelled three or four times in the recent past.

"I've spent the last seven months of my life working on this ... so I hope it's accurate and I'm planning on going to Windsor unless I hear differently on the weekend."

        *************************************************************

Steelworkers halt drive at Dofasco

Union organizers conclude there is not enough support among firm's workers

United Steelworkers director Wayne Fraser, at his office in Etobicoke, claims “fear mongering” by anti-union staff

Mar 28, 2008 04:30 AM

Business Reporter

The United Steelworkers union has abruptly pulled back on a major effort to organize about 3,500 employees at ArcelorMittal Dofasco, a non-union bastion for almost a century.

Less than a week after the steel maker's unprecedented welcome of union organizers at its Hamilton operations, the Steelworkers announced yesterday they are "stepping back" because of insufficient support at meetings involving most employees.

"It's not the right time yet," said Wayne Fraser, the Steelworkers director for Ontario and Atlantic Canada.

Fraser said the Steelworkers will keep in close touch with Dofasco employees who expressed an interest in the hope of eventually forming a union.

European-based ArcelorMittal and the Steelworkers had agreed recently to a unique process whereby the union would gauge support for a union without management interference.

If there was significant interest, the union would then form a bargaining committee to negotiate a first contract. Voting on that deal would determine whether workers would accept the union.

The move raised the possibility that Dofasco could have a union presence for the first time since the Sherman brothers began making steel in Hamilton in 1912.

Since that time, the company has resisted labour representation despite heavy unionization elsewhere in the steel industry, including at its Hamilton rival, Stelco.

But the Steelworkers' "engagement team" said it became clear after only a few days that workers had serious reservations about unionization and concerns that it could possibly undermine the company's business and their welfare.

Fraser said in an interview the union also faced a lot of "fear mongering" from anti-union employees who spread misinformation that acceptance of the Steelworkers would reduce wages and benefits.

He would not reveal what level of support would have prompted the Steelworkers to pursue bargaining and ratification of a contract that would trigger certification.

But Fraser argued that if the Steelworkers had taken the process to the next step and workers had been able to see what a union had done for them in a first contract, they would have favoured certification "by a comfortable majority."

People familiar with labour organizing said support at Dofasco was likely low enough that the Steelworkers felt they could not overcome the gap to a necessary majority in a vote regardless of noticeable improvements in a contract.

"It probably was just too risky," one source said. "Their position of not going forward is then understandable to some extent."

The Steelworkers, who represent about 20,000 ArcelorMittal employees elsewhere on the continent, had started a new drive last fall, but the process changed when the union and company reached a "neutrality agreement" that opened the door without any management interference.

Andrew Sloan, a spokesperson for ArcelorMittal Dofasco, said the company encouraged an open and transparent process where workers could decide for themselves. "However, the support wasn't there."

Dofasco, which ArcelorMittal acquired in 2006, has thwarted numerous drives by the Steelworkers since the 1940s.

Management resisted unions and reduced employees' interest in them by paying extra fringe benefits and introducing a profit-sharing plan that boosted morale and productivity. Workers would receive about the same wages as their union counterparts at Stelco.

             *******************************************************

Letter to Buzz Hargrove for his
Position on Retiree Benefits

March 26, 2008

 

Hi Buzz:

 

There have been a few articles posted in the last two days regarding the CAW’s position regarding this year’s bargaining.

 

As CAW retirees, we are obviously are very concerned about our benefit coverages and would like to know exactly where you stand going into negotiations on this topic.

 

An article yesterday, (Reuters) March 25, 2008 states:

“While the CAW indicated it would go on strike rather than accept the kind of two-level wage deal the United Auto Workers union accepted in the United States, the Canadian union did say it would seek ways to save the struggling Detroit-based automakers money, such as finding more efficient ways of delivering retirees' benefits.”

 

While today’s article in the Toronto Star states:
“Hargrove said the union will not accept any reductions in wages, cost of living allowance, time off the job or benefits for workers or in pension indexing and health care for retirees.”

 

These two articles can be viewed in their entirety on our website at: http://www.cawlocal584.com/news.html

 

The retiree’s all realize that this set of negations will probably be the toughest ever particularly after the UAW’s agreement signed last fall. We also realize that there will have to be some savings negotiated to the corporations in order from them to carry on business and be competitive here in Canada but when we see conflicting reports we would prefer to hear it directly from you then from the media.

 

A clarification on these two articles would be appreciated as the Reuters’ article specifically mentions ‘retirees benefits’.

 

Thanks in advance for your attention in this matter.

 

Yours in solidarity.

 

CAW Local 584 Retirees Chapter

 

                                 ******* Buzz Hargrove's Response *******

March 27, 2008

CAW Local 584 Retirees Chapter   

 

Please be assured our union will not give up any retiree benefits in our bargaining this year.  We always try to find more efficient and cost effective wages to provide health care benefits for our retirees, surviving spouses and active workers.

 

Thanks for continuing support.

 

In solidarity,

 

Buzz Hargrove, President

CAW - Canada

416-495-6555

fax 416-495-6552

**************************************************

CAW talks tough on Bay Street

Mar 26, 2008 04:30 AM


Business Reporter STAR

Union leader Buzz Hargrove visited Bay Street yesterday, trying to eliminate any impressions that Canadian workers will accept the same wage and benefit cuts as their American counterparts at the Big Three automakers.

Hargrove, president of the Canadian Auto Workers, and union economist Jim Stanford told about 20 investment analysts and institutional shareholders that workers here won't take the same steep reductions in compensation that U.S. employees took at General Motors, Ford and Chrysler last fall.

"We're not going to take less money for our workers," Hargrove said after the two-hour session.

Contracts for more than 31,000 Canadian workers expire in mid-September, and the union is under pressure to match cuts, including a two-tier wage structure, that the United Auto Workers has accepted.

"We're very concerned that investors would place their bets on the assumption that Canadian contracts will follow the UAW deal," Stanford told reporters later.

Company officials have said Canadian auto workers are at a distinct cost disadvantage. But CAW leaders counter that, although U.S. workers have a slight labour-cost edge, union members here are more productive.

Furthermore, the automakers in Canada have been profitable in recent years, in contrast to heavy losses in the U.S., Stanford noted.

Hargrove said the union will not accept any reductions in wages, cost of living allowance, time off the job or benefits for workers or in pension indexing and health care for retirees.

However, Hargrove said, the union is open to finding ways to deliver benefits more efficiently and improve productivity even more to save money for the auto makers.

"There are other ways of squeezing savings out," he said.

Hargrove and Stanford are meeting analysts in New York today to underline the union's position against cuts in Canada. Last week, the two talked in Detroit, and they will visit Montreal soon.

"We want them to see how we view the world," said Stanford. "They can adjust their expectations and outlook accordingly."

The union has organized the meetings every three years, ahead of major auto talks, to avoid a situation that led to a 21-day walkout at GM here in 1996.

GM wouldn't match the contract reached at Ford and Chrysler, as traditional bargaining called for. The union attributed GM's hard line to pressure from Wall Street over too-expensive a deal.

             ******************************************************

 

 

Canada auto union says
won't accept two-tier wages

By John McCrank March 25, 2008

TORONTO, March 25 (Reuters) - The Canadian Auto Workers union will not accept a U.S.-style two-tier wage deal when it meets with the "Big Three" automakers this summer for contract negotiations, union President Buzz Hargrove said on Tuesday.

"We are not accepting second-class workers in our workplaces," Hargrove told reporters in Toronto.

"It's my last set of negotiations and my legacy is not going to be that the sons and daughters of current workers that were hired over 20 years ago are going to come in at the same rate in 2008 as their parents did in '86 or '87."

While the CAW indicated it would go on strike rather than accept the kind of two-level wage deal the United Auto Workers union accepted in the United States, the Canadian union did say it would seek ways to save the struggling Detroit-based automakers money, such as finding more efficient ways of delivering retirees' benefits.

The CAW is scheduled to start negotiations with Chrysler, Ford Motor Co and General Motors Corp in July. The union's current contract expires Sept. 17.

Hargrove and CAW Economist Jim Stanford are in the midst of a "road show" making presentations to auto industry investors and analysts to try to play down expectations that the union will accept the kinds of concessions granted by the UAW last November.

The U.S. union will allow new workers to be hired at wages as low as $14 an hour, compared with a regular rate of $28 per hour, and it will help establish a massive healthcare trust fund to take over retiree health-care liabilities.

Hargrove said Canada's publicly funded healthcare system and a more productive workforce offset many of the gains made by automakers in the UAW deal.

Still, with the Canadian dollar at par with the greenback, Hargrove admitted the cost advantage enjoyed by CAW workers has eroded. But he said cutting wages would not address bigger issues such as the Big Three's dwindling market share, the high price of oil or a slowing U.S. economy.

"We had up to a $20 an hour advantage, or $15 on average, for 10 years (when the Canadian dollar was well below parity with the U.S. dollar) and they never once asked the UAW to meet the costs that we have in Canada. That just wasn't in the cards and they know that isn't in the cards here."

Hargrove argued that if wages were the main driver of where auto companies base production, everything would be Mexico.

The CAW has already made its presentation to investors in Detroit, and is heading to New York next and then to Montreal.

The CAW represents around 27,000 active auto sector workers in Canada.

           ****************************************************

Ford agrees to sell
Euro brands for $2 bln

LONDON, March 25 (Reuters) - U.S. automaker Ford has agreed to sell its UK-based Jaguar and Land Rover brands to India's Tata Motors for more than $2 billion, said a source familiar with the matter on Tuesday.

Ford, which signed the deal on Tuesday, plans to publicly announce the transaction, which will also see it pay about 300 million pounds ($597.7 million) into the European units' pension fund, on Wednesday, said the source.

Ford declined to comment on the deal, adding "our first responsibility is to communicate with our employees."

             *******************************************************************

Ford CEO has `other options'
if buyouts fail

 

Mar 20, 2008 04:30 AM

Ford Motor Co. has other options to cut costs if a just-completed round of buyouts for its U.S. blue-collar workforce comes up short of its targets, the automaker's chief executive said yesterday.

"We have a lot of other options to keep right-sizing the place," Ford CEO Alan Mulally said in a presentation to analysts in New York.

Mulally said he would not elaborate on what the other options were, though. Ford's more than 50,000 U.S. factory workers represented by the United Auto Workers union had until midnight Tuesday to decide whether to take one of a range of buyout offers that included one-time payouts of up to $140,000 (U.S.).

The automaker has not set a public target for how many workers it intends to reduce, but UAW workers have said they expect only several thousand to accept the buyouts, far fewer than took offers in 2006

                               ****************************************************

 

Dofasco invites union to
gauge worker interest

European owner brings 'new thinking' to plant

 

Mar 20, 2008 04:30 AM


Business Reporter

Dofasco, a Canadian industrial icon, is opening the door to a labour union for the first time.

In a dramatic change in corporate thinking, ArcelorMittal Dofasco Inc. revealed yesterday that the company has invited the United Steelworkers to meet about 3,500 employees during the next few weeks to gauge their interest in a union.

It marks the first time since Dofasco began making steel in Hamilton in 1912 that the owners have welcomed a union. The Steelworkers organized Hamilton rival Stelco in 1946 but Dofasco, Canada's biggest steel maker, has consistently thwarted the union despite several organizing drives over the years.

"This is a very significant development," said Anil Verma, a professor of industrial relations at the University of Toronto's Rotman School of Management.

If the Steelworkers see sufficient interest, the union would form a bargaining committee and attempt to negotiate a tentative first contract.

And if employees accept a contract, the company said it would recognize the union as the workers' bargaining agent.

"In the spirit of neutrality and recognizing the uniqueness of our culture at ArcelorMittal Dofasco, we will ask our employees to participate in a transparent and democratic process to allow them to decide whether or not to be part of this partnership," Andrew Harshaw, the company's vice-president of manufacturing, said yesterday.

Insiders said the takeover of Dofasco by European interests in the past few years has resulted in a new perspective on the union's presence in Hamilton.

Arcelor of Luxembourg bought Dofasco, a North American industry jewel, in 2006. Mittal Steel of Rotterdam purchased Arcelor a few months later in the worldwide consolidation that swept the steel industry.

The Steelworkers union already represents workers at most of ArcelorMittal operations across the continent and has been actively trying to organize the Dofasco operations in Hamilton for several months.

Wayne Fraser, the Steelworkers director for Ontario and Atlantic Canada, said a "new understanding" with ArcelorMittal Dofasco will allow employees to openly discuss what the union can offer without any opposition from the company.

"If there is support for moving forward, they will then be able to democratically elect a bargaining committee and negotiate with the company," he added.

The arrangement is unusual in Canadian labour relations and is a form of a "neutrality agreement," where a company allows a union to freely organize a workplace.

Without a voluntary agreement, a union needs to sign 40 per cent of eligible workers to force a certification vote under Ontario labour law. If more than 50 per cent support the union, it gains formal bargaining rights.

But in the Dofasco case, the Steelworkers won't have to sign workers to cards. It will need to correctly ascertain whether a majority of workers favour a union at the meetings and would vote for a first contract.

Verma said the change in the company's position reflects a new way of thinking in labour relations under the European owners, in contrast to generations of Dofasco managers who were more paternalistic in their treatment of employees.

However, Verma noted that it's not certain the Steelworkers can gain bargaining rights because the work environment and employee demographics have changed so much since the struggles and hard labour of decades ago.

"Younger people enter the plants these days with a lot more knowledge and skills," he said. "They're more likely to be working in a control room than a dirty shop floor. The union will have to find a way to get some traction."

Furthermore, Dofasco has always offered workers equal or more compensation than their counterparts at Stelco, without union dues.

"I think Dofasco would be comfortable with either outcome," Verma said.

In meetings, the union will have to present itself in less of an adversarial role and emphasize its ability to get fair treatment for workers and provisions such as seniority rights, Verma noted.

Fraser said the union and ArcelorMittal have already developed a good labour relationship because of mutual respect and their experiences in collective bargaining elsewhere, which is helping the company cope with industry changes.

The Dofasco situation is different from the controversial agreement between the Canadian Auto Workers and Magna International. The CAW can gain access to freely organize individual plants, but must sign up more than 50 per cent of workers who must ratify a first contract before the union gains recognition.

The CAW also gave up the right to strike. Steelworkers spokesperson Pat Van Horne said the union will maintain its strike right at Dofasco.

Verma said the new approaches at Magna and Dofasco signal that employers and unions are now looking at mutually beneficial labour relations.

         **********************************************************

 

Machinists file for union vote at Toyota Canada

Mar 14, 2008 04:30 AM


Business Reporter

The International Association of Machinists says it has enough support to represent workers and gain union recognition for the first time at Toyota in Canada.

The union announced yesterday that it had signed up enough workers and applied to the Ontario Labour Relations Board for a formal certification vote at the sprawling Toyota Motor Manufacturing Canada assembly plant in Cambridge, which employs about 4,000 production and administrative staff.

Under Ontario labour law, a union needs signatures of 40 per cent of employees in a bargaining unit to request an immediate vote which the government would supervise. More than 50 per cent of the plant's workers would need to vote in favour of the union for formal recognition as their bargaining agent.

"I'm very confident we have the support to win the vote," said Ian Morland, the union's lead organizer. "It will be in the next week."

If the machinists group is successful, it would mark the first time that a union has cracked a major Japanese automaker in North America.

The machinists union started an organizing drive about five months ago after the 2007 pullout of the Canadian Auto Workers which had made several unsuccessful attempts during the last 15 years.

Morland said support for his union has improved steadily and began gaining significant momentum in January.

"Toyota is a great company but workers are looking for protection because of the uncertainties in the industry," Morland said. "The timing was also right for a union."

He added the machinists union took a softer approach than the CAW in trying to convince workers to sign cards.

A Toyota spokesperson could not be reached for comment.

But in response to previous union attempts, Toyota has said outside groups have their own agenda while the company works to create prosperity and accompanying job security for workers.

Morland said the machinists union estimates there are about 3,100 production workers and skilled tradespeople in the bargaining unit where it is seeking representation.

Industry insiders say Toyota could ask the labour board to stop any tabulation of votes until it decides whether the union had the necessary 40 per cent to trigger one. A board hearing would determine how many workers are in the unit and if the votes should then be counted.

Toyota won a challenge to a CAW application about seven years ago when the board ruled the union fell short of the 40 per cent threshold to force a vote.

Meanwhile, CAW president Buzz Hargrove said organizing the Toyota plant would be beneficial for the whole labour movement.

"I hope they (machinists union) have the horses to get a vote and recognition," he said. "I wish them well. The important thing for me is for the workers to have a union."

The CAW represents more than 35,000 workers at General Motors, Ford and Chrysler in Canada. It also has another 2,000 members at CAMI Automotive in Ingersoll, Ont., a joint venture between GM and Suzuki of Japan.

However, the CAW has been unable to establish itself at the Toyota and Honda assembly plants since their arrival in Ontario more than two decades ago.

The United Steelworkers union is currently trying to organize Honda's assembly operations in Alliston after the CAW could not make inroads.

The UAW in the United States has also failed organizing big offshore-based vehicle companies. However, it represents employees at Nummi Inc., a joint venture between Toyota and GM in California.

          *****************************************************

CAW trying to secure project to build more efficient motor

 

Mar 13, 2008 04:30 AM

The Canadian Auto Workers is trying to secure a new engine project from Ford Motor Co. for Canada, the union's chief said yesterday.

"The next few days will determine if we get new investment from Ford," CAW president Buzz Hargrove said yesterday in a speech in Windsor. Company spokesperson Said Deep, contacted by email, wasn't immediately able to comment.

The project involves a five-litre engine that would be more fuel-efficient than current Ford engines, Hargrove said in an interview. He said he didn't have a precise timetable for a decision by the Dearborn, Mich.-based automaker.

The Canadian union has lost about a fourth of its membership at Ford, General Motors and Chrysler since it last negotiated contracts in 2005.

 

**************************************

Weekend Interview With Ford President Barry Engle

by Steve Arnold

Barry Engle (pictured) has taken the helm at Ford of Canada at a troubling time for the company. Long seen as the second of the Big 3 North American automakers, the company has seen its market share erode, profits evaporate, plants close and employees laid off by the hundreds. Most humiliating, Japan-based Toyota has by most estimations become the second highest selling nameplate and may soon overtake General Motors as number one. As president of Ford's wholly-owned Canadian arm, Engle is serving a senior management apprenticeship before moving on to a more responsible position in the global company. As long as he's in Canada, however, he'll be responsible for decisions affecting thousands of Ontario families and their communities.

Q: In broad strokes, where does Canada fit into Ford's plan for the future?

A: First, in terms of the local market, we're very bullish about the performance that we've achieved over the last couple of years.

I think the other component is Canada's manufacturing base. We've got a lot of plant and utility and infrastructure that we've invested in and we've got a wonderful pool of labour, employees that are talented and skilled and those are all valuable assets that we're not anxious to redeploy. Of course the key to the future all hinges on our ability to be competitive globally and we believe that we can in fact do that.

Q: The Canadian Auto Workers (CAW) has always shown itself to be very flexible in terms of working with the companies. How crucial is that going to be in the future?

A: I believe that spirit of co-operation and working together will be as important, if not more so, than in the past because the business is becoming ever more global and ever more complicated. If you look at the history of the relationship we've always found a way to get together and come up with a solution that's right for everyone and I have every reason to believe we can continue to do that.

Q: Can we look for any expansion of the company's employment and investment in Canada or are we looking at just hanging on to what we've got?

A: We've been pretty public about some projects that are being considered right now in the Windsor area. That represents real investment so we're certainly prepared to invest additional resources into the market. We stand prepared to continue to invest in Canada given the proper conditions. We talked about the labour component of it. The other piece is the government incentives. Jurisdictions around the world believe that the auto industry is one that is worth investing in because of the multiplier effect and the number of jobs that it creates, not just directly, but indirectly through the supply chain and all the other associated efforts that become part of an automobile plant. And so Canada ends up competing on a global basis against those other jurisdictions. It's not a hand out, it's not a bail out. It's an economic investment which pays out and makes good business sense to the local economies that are involved.

Q: The current Canadian federal government seems to be stuck in the old idea of incentives being corporate welfare. Are you going to be involved in the efforts to change that mindset?

A: We have had a wonderful relationship with the provincial government. It has been very supportive and is always looking for ways to grow their own local economy in a co-operative way. We continue to have dialogue with the federal government. To date we've not come forward with a solution, but I am encouraged by the conversations.

Q: In terms of your own stay here -- which if you stay the average length will be two to three years -- what are your particular targets for Canada?

A: Without making a specific prognosis there is opportunity for us here in Canada to continue to build our business. In the short term, I'm looking forward to listening to our customers, to our dealers and our employees and understanding where are the opportunities and what can we do? Having done that then we'll come forward with a specific plan.

Q: A lot of people are drafting the obituaries for what they now call the Detroit Three. Is there a future for them?

A: It is true that as an industry we all have challenges that we're confronting. At Ford Motor Company it's interesting to look at our business globally because outside of the U. S. without exception every one of our markets is profitable and most are growing. Our challenges in the short term are pretty much in the U.S. I can tell you we are making good progress in terms of stabilizing our market share and shoring up the financial health of the company. If you look at our financial results for '07, we're actually ahead of the plan, we're on track for '08 and by '09 will be profitable again in the U. S. There are headwinds economically in the U. S. that make the task more challenging

***************************************

 

Ford CEO paid $4.1 mln in stock, 3.5 mln options

By Kevin Krolicki

DETROIT, March 7 (Reuters) - Ford Motor Co on Friday said it had awarded Chief Executive Alan Mulally restricted stock worth $4.1 million and 3.56 million stock options after a year in which the No. 2 U.S. automaker lost $2.7 billion.

The compensation, which was detailed in a filing with securities regulators, came just two days after Mulally announced that all Ford employees in the United States and Canada would be paid bonuses for 2007.

Ford's larger rival in the U.S. market, General Motors Corp , on Thursday said it had approved a 33 percent hike in the base salary of Chief Executive Rick Wagoner to $2.2 million and would give him a bonus for $2.43 million if GM hits its performance targets. GM lost a record $39 billion last year.

The issue of executive compensation in the struggling U.S. auto industry has become something of a hot-button issue because of the United Auto Workers union.

The UAW agreed to allow GM, Ford and privately held Chrysler LLC to buy out higher-cost older workers and bring in thousands of new hires at half of the industry's current prevailing wage, or about $14 per hour.

But UAW President Ron Gettelfinger has said that the executive pay issue deserves scrutiny with all three of the Detroit-based automakers in the midst of cost-cutting turnaround efforts intended to restore profitability.

UAW workers will be paid a $1,000 bonus for 2007, Mulally said this week.

A UAW spokesman was not immediately available for comment.

Ford did not assign a value to Mulally's stock options, which carried an exercise price of $6.14, the closing price of Ford stock on the day the payout was approved by Ford's board.

Mulally, who joined Ford from Boeing Co in late 2006, was paid $37.5 million during his first 14 months in the top job at the automaker and had the potential to earn a bonus of an additional $3.1 million.

Ford plans to provide m ore detail on compensation for Mulally and other senior executives when it files its proxy statement for investors in April.

Shares in Ford closed down 2.7 percent to $5.78 on Friday. The stock has lost over 80 percent since 2000 and fallen by 30 percent since Mulally became chief executive.

In a memo this week announcing the company-wide bonuses, Mulally said the company's board had decided to make the payouts because of the progress that Ford had made toward its goal of restoring profitability by 2009.

*************************************

Ford to pay bonuses despite
$2.7 bln loss last year

DETROIT, March 5 (Reuters) - Ford Motor Co on Wednesday said it would pay out bonuses to all of its employees in North America -- including $1,000 payouts to hourly workers -- despite posting a $2.7 billion loss last year.

In a memo to employees at the automaker, Ford Chief Executive Alan Mulally said the board had decided to pay the bonuses because of the progress the company had made in a turnaround effort aimed at restoring profitability by 2009.

"While we fell short of our market share goals in the Americas and Asia, we fully met or exceeded our objectives in every other category, namely cost performance, quality, automotive cash flow and financial results," Mulally said in his note to staff.

In addition, Ford said that it would delay planned merit raises for salaried workers until July 1 from April 1 because of the tough market conditions it faces this year.

"While 2007 was a year of progress, the economic and business environment will be tougher than ever in 2008," Mulally said.

Ford said most employees would receive their bonus payments on March 13.

Hourly workers, including about 54,000 represented by the United Auto Workers union will receive a lump-sum amount of $1,000, the automaker said.

The bonuses come at a time when all of Ford's U.S. factory workers are considering buyout and early retirement incentives, including one-time payouts of up to $140,000.

An earlier round of buyouts cut almost 34,000 workers from Ford's payroll in 2006.

Dearborn, Michigan-based Ford was the only one of the three Detroit-based automakers to clinch a cost-saving contract with the UAW last year without a strike, and it is widely considered to have a more collaborative relationship with the union than its direct rivals.

In the last round of contract talks, Ford won the right to hire new workers at about $14 an hour, or roughly half the current hourly rate. The automaker has said it does not expect to hire any factory workers at the lower wage rate until next year

              *****************************************************************

Budget's double blow to jobless

Mar 03, 2008 04:30 AM


For more than 1 million laid-off workers in this country, the federal government's budget is a real slap in the face.

Federal Finance Minister Jim Flaherty talks about a "prudent" budget that helps us "weather any sudden economic storms" but his government rejects Employment Insurance reforms that would actually help families and communities reeling from the aftershocks of unemployment. In key regions of Ontario and sectors like manufacturing, job loss is reaching crisis levels.

Where are the improvements to EI's harsh qualifying rules, to the historically low benefit rates, to the clawback of severance pay and to the inadequate benefit weeks? My union and others have called for a new 360-hour qualifying rule for all regions of Canada, a benefit rate of at least 60 per cent of previous earnings and a five-week extension for all 58 regions (only 21 qualify right now).

Instead, the government indulges its obsession with lowering premiums. The budget pronounces: "Canadians have grown tired of paying premium rates that are higher than required to pay for the EI program." But for working Canadians, the real issue is fixing EI so it delivers what it's supposed to deliver, not cutting premiums further so there's nothing left to repair the system.

Ironically, a Statistics Canada study that reinforces the need for EI changes was released on budget day. It shows that 458,900 Canadians received EI layoff benefits in December. This means that only 43 per cent of 1,072,400 officially unemployed Canadians received EI that month. Some couldn't meet the qualifying rules. Others had claims that had ended. These coverage rates are way below the 70 per cent coverage we used to have.

But these low numbers seem to sit just fine with the government. When it set its 2008 EI premiums, it assumed only 46.8 per cent of the unemployed would be getting benefits in any given month. The diminishing coverage has in part to do with employers' growing use of temporary, part-time and contract work. That means we have to fix the EI hours system so that more workers qualify and there's a longer benefit period..

If premium cuts rather than benefit improvements become the only driver for our EI system, there are consequences for our access to training, too. It's very hard to get income or tuition for training that runs longer than your EI benefit period. EI benefit periods currently vary from 14 to 45 weeks.

But there's a double whammy in this budget for the unemployed.

The Conservatives plan to establish a Canada Employment Insurance Financing Board that will set premium rates and manage a separate EI bank account. The government says it will "provide" a $2 billion reserve for the account.

Under cover of this seemingly innocuous measure, the budget may be setting the stage for the government to take possession of about $52 billion of the EI account's accumulated $54 billion surplus. Ominously, the budget makes no mention of the other $52 billion.

This plan places the EI system in considerable jeopardy. It deprives us of the funds to accomplish two important goals – immediate improvements in EI benefits for unemployed Canadians and a "rainy day" reserve of at least $15 billion, as previously recommended by the EI Chief Actuary.

With increasing evidence of economic downturn on the horizon, this government seems to be headed down a very dangerous path. We have an economic disaster in the making if the EI system cannot provide the income support that it's supposed to – a disaster for the unemployed, their families and their communities.

Buzz Hargrove is the president of the Canadian Auto Workers union.

 

**********************************************

STRONG SALES CONTINUE AT FORD OF CANADA

 February Highlights:

  • Ford Edge sales increase 98%, for its best February on record
  • Ford Escape sales rise 86%, marking its best February on record
  • Ford Escape Hybrid up 66%, making this its best February ever
  • Ford Fusion up 11%, for its best February ever
  • Ford Mustang sales increase 65%
  • Ford Ranger saw a 33% sales jump
  • Lincoln MKX up 59%, marking its best February sales on record
  • Lincoln MKZ sales increase 9%, for its best February ever

OAKVILLE, Ontario, March 3, 2008 – February's heavy precipitation has not dampened the pace of sales at Ford Motor Company of Canada, Limited, with many vehicles seeing significant double-digit increases compared to last February. In fact, six models hit February sales records, including Canadian-built crossovers Ford Edge and Lincoln MKX.

"Canadians love the design and functionality of crossover utility vehicles. Last year, sales of crossovers grew more quickly than any other segment in the automotive industry, and in that hot market, Ford sold more crossovers than any other manufacturer," said Barry Engle, president and CEO, Ford of Canada. "We expect the rapid growth in crossovers to continue this year, and we offer consumers a lot of choice with Ford Edge, Ford Taurus X and Lincoln MKX, and coming soon, Ford Flex."

In February, Ford of Canada's overall sales increased 4.1 per cent to 14,054 units. Total truck sales were up 6.1 per cent at 10,813 units and total car sales of 3,241 units mark a 2.1 per cent decline compared to last February.

Ford Motor Company of Canada, Limited
February 2008 Vehicle Sales

2008

2007

% Change

Total Vehicles

February

14,054

13,502

4.1%

January - February

26,787

25,116

6.7%

Total Cars

February

3,241

3,311

-2.1%

January - February

6,103

6,326

-3.5%

Total Trucks

February

10,813

10,191

6.1%

January - February

20,684

18,790

10.1%

**********************************************

Windsor plant closed by parts-supplier strike

Feb 29, 2008 04:30 AM

 

A strike by 175 workers at a suspension-parts plant in Windsor has shut down Chrysler's minivan plant.

The plant that assembles the automaker's top-selling pair of minivans, the Chrysler Town & Country and the Dodge Caravan, was forced to close around 6:30 p.m. yesterday because of a lack of parts.

Workers walked off the job at TRW Automotive Holdings Corp. in the afternoon, after negotiations failed to produce a contract.

The TRW operation makes brake and suspension systems, mostly for the Chrysler plant.

The CAW says wages are the big issues, with workers making an average of $11.25 an hour.

Negotiations were continuing between the company at the CAW into the night.

Chrysler's Windsor plant employed about 4,475 hourly workers as of the end of 2007, a Chrysler spokesperson said.

********************************************

Mustangs recalled
to cut air bag force

Feb 28, 2008 04:30 AM

Ford says it is recalling 470,000 Ford Mustangs from the 2005-2008 model years to recalibrate how forcefully the air bag deploys on the front passenger side of the car.

Ford spokesperson Wesley Sherwood says internal testing showed the air bag could injure a small, unbelted passenger. The recall was posted yesterday on the website of the U.S. National Highway Traffic Safety Administration.

Sherwood says there were no reports of injuries or accidents tied to the recall.

The automaker will notify customers by mail in early March. Owners can take their vehicle to a dealer to have the air bag recalibrated to deploy at a lower force.

***********************************************

Steelworkers' campaign
targets Honda workers

Feb 26, 2008 04:30 AM

Business Reporter

 

The United Steelworkers are quietly trying to organize the Honda assembly complex in Alliston after the failure of two other unions in recent years.

Wayne Fraser, Ontario and Atlantic director, acknowledged yesterday that his union has started an organizing drive for about 4,600 workers at the two booming operations northwest of Toronto.

"Our campaign is building and it has engaged a lot of workers about the process, their objectives and concerns that they have about current conditions of employment," Fraser said in an interview.

Sources say the union began talking to Honda workers last fall but organizers have deliberately maintained a low profile in efforts to build a strong network before management could counter it.

"We're not really ready yet to go public," said one union official, who requested anonymity.

Fraser did not want to reveal details of the recruitment drive but said the USW is taking a different approach to those of the Canadian Auto Workers and United Auto Workers unions.

"To be successful, a union can't take an approach where it tells workers what they need," he said. "This campaign is about engaging workers and the issues that are paramount to them."

Colin Fisher, a spokesperson for Honda of Canada Manufacturing, said management is not aware of any union drive.

"Personally, I'm not," Fisher added. "Honda of Canada Manufacturing associates are free to join or not to join a union. Although it is for our associates to decide, the company believes associates don't need a union."

The Canadian Auto Workers made several attempts at organizing Honda's operations in Alliston during the last two decades. But the CAW could never generate enough interest among employees to mount a serious bid for certification, according to union officials, and it stopped efforts earlier this decade.

A drive by the U.S.-based United Auto Workers that started in 2004 did not gain much traction beyond an initial push and ended unsuccessfully in 2006.

The UAW was trying to organize four other Honda plants at the same time, but those drives also never produced union recognition.

Honda, which opened its first Canadian plant in Alliston in 1986, now produces about 390,000 Civic and Acura cars and Ridgeline trucks annually on two shifts. The company is also building an engine plant nearby that will open later this year and employ about 340 workers.

Union officials say Japanese automakers generally pay workers at their non-unionized plants in North America close to the same wages and major benefits as employees in union assembly operations.

However, pockets of dissension in some plants have emerged over the years concerning alleged unfair treatment of workers.

The International Association of Machinists is continuing an organizing drive of about 4,000 workers at the Toyota Motor Manufacturing Canada assembly operations in Cambridge.

That campaign began last fall with considerable optimism after the CAW suspended organizing efforts earlier in the year.

The CAW made the move following four separate attempts and millions of dollars in expenses over 15 years.

**********************************************

New marketing campaign features
wide-ranging website chats between clients and the car maker

Feb 26, 2008 04:30 AM

Business Reporter

Ford is asking consumers for more input as the central part of a new marketing campaign to increase business here.

Oakville-based Ford Motor Co. of Canada Ltd. announced yesterday a marketing strategy that features a social media website where consumers can share views with the company and discuss what it is doing to meet customer needs in making vehicles and how they are sold.

A team of Ford experts will manage and moderate views and suggestions from consumers about design, technology and the environment.

"We're trying to kick the door open to people who have not considered us before," said David Greenberg, Ford's vice-president of general marketing.

"We want to connect emotionally and create a conversation with our customers and prospective customers about our brand in the marketplace. In many ways, we've had one-way conversations in the past."

Chrysler overtook Ford for second place in sales in Canada last year. General Motors remains the industry leader in sales and production.

Ford, which is not using the same strategy in the United States, has also launched a related advertising campaign with the theme "powered by you." It emphasizes that consumers are "the inspiration" for Ford's models. The ads replace the six-year-old "Built for Life in Canada" campaign.

Some print and television ads show the Pilobolus dance troupe transforming itself into the shape of various Ford models.

Greenberg confirmed that long-time celebrity spokesperson and hockey icon Wayne Gretzky will play a part in the advertising campaign.

*****************************************************

Douglas A. Fraser, 1916 - 2008
Former United Auto Workers president Douglas Fraser is interviewed in his office at Wayne State University in Detroit, in this Nov. 6, 2007, file photo. Fraser died late Saturday, Feb. 23, 2008, at Providence Hospital in Southfield, Mich., his wife, Winnie, said Sunday. She said he had emphysema and went into the hospital with breathing problems. He was 91.

UAW champion guided union through tough times
Fraser helped engineer federal bailout of Chrysler

Feb 25, 2008

With a disarming mix of charm, toughness and innate political savvy, former United Auto Workers President Douglas Fraser ushered the union through some of the U.S. auto industry's bleakest years in the 1970s and '80s and helped save a sinking Chrysler Corp. from bankruptcy.

Frasier died over the weekend at Providence Hospital in Southfield, the union said Sunday. He was 91.

Respected for being both an artful politician and impassioned activist, Fraser was one of the first labor leaders to take on many of the thorny issues facing the auto industry today, from global competition to soaring health costs.

Without Fraser's aggressive lobbying on Capitol Hill and among the UAW rank-and-file, Chrysler would not have been able to secure $1.5 billion in federal loan guarantees in 1979, which saved the automaker from bankruptcy, according to several labor historians and top UAW officials.

"He was one of the great labor leaders in the last half of the 20th century," said former Michigan Gov. James Blanchard, who, as a member of the U.S. House of Representatives, worked with Fraser to help secure the federal loans. "He had this combination of substance, politics and charm. He was a realist and he knew that changes had to be made in order to survive."

With his quick wit and impish grin, Fraser was known for being both easy-going and sometimes bitingly harsh. Many of the UAW's rank-and-file members felt a personal connection with Fraser, who liked to chat with workers one-on-one during visits to the factory floor. They valued his sincerity and openness, even when he was delivering tough news.

At the same time, Fraser was quick to skewer politicians and auto executives he tangled with. He once quipped that people view auto workers as overweight, foul-mouthed smokers, but "I tell 'em they've just described Lee Iacocca."

Fraser worked closely with then-Chrysler CEO Iacocca to secure the loan guarantees, and later said he felt the high-profile executive got more than his share of credit for the deal. Even though Fraser could be a tough adversary, he won respect from auto executives for his pragmatism and openness.

"Doug was a man of great vision and was always a strong supporter of the union and employees in Canada," Chrysler LLC President Tom LaSorda said in a statement Sunday. "He was a great leader."

An immigrant from Glasgow, Scotland, Fraser came up through the UAW ranks during the labor movement's rough-and-tumble days, when workers fought life-threatening factory conditions and sit-down strikers faced smoke bombs.

He was elected president of UAW Local 227 in Detroit in 1944. His negotiating and leadership skills led pioneering UAW President Walter Reuther to appoint Fraser his administrative assistant in 1950, launching his trajectory up the UAW leadership.

During Fraser's tenure as UAW president from 1977 to 1983, the union accepted deep concessions as the industry struggled with the oil crisis and declining economy.
"It's a huge loss," UAW President Ron Gettelfinger said in a statement. "Doug was a friend, a mentor and a counselor to so many within the UAW and the larger labor movement. His integrity and his enduring commitment to protecting the rights of workers will continue to inspire us."

In many ways, Fraser challenged the rank-and-file by asking them to approve unprecedented concessions to help save the automakers, said Owen Bieber, who succeeded Fraser as UAW president in 1983, and was a UAW executive at the time of the Chrysler bailout. Saving Chrysler became a personal mission for Fraser, who went to work at the automaker's DeSoto plant after coming to the United States.

"Chrysler would not exist without him," Bieber said. "I don't really know if he ever doubted that Chrysler would get the loan guarantees. But I sense if they didn't, it would have been a tremendous blow to him because it would have been such a devastating blow to so many our members and their families."

Fraser's decisions to award contract concessions to Chrysler in 1979 and to Ford Motor Co. and General Motors Corp. in 1982 were bitterly opposed by many UAW members. "There were some close votes and some tough, bitter words during those days," Bieber said. "But, as always, he stood his ground."

But Fraser also won significant improvements in working conditions at the plants and landmark benefits such as comprehensive health care and uncapped cost-of-living allowances.

As part of the bailout agreement, in exchange for concessions, Chrysler gave Fraser a board seat, making him the first major union chief on the board of a large corporation. He donated his board salary to Wayne State University.

"He was real eloquent in the way he talked, and when he gave a speech you knew what he was talking about," said Chris "Tiny" Sherwood, a UAW leader in Lansing and a shop committeeman when Fraser was president. "He did things to help out the company and worked on a lot of things that are part of everyday life now."
Fraser was the first UAW president who dealt with the turbulent themes of globalization, said Harley Shaiken, labor professor at the University of California, Berkeley, who knew Fraser for more than 30 years.

"All of these themes that every UAW president has had to deal with is something that Fraser first had to take on," Shaiken said. "He was the first UAW president that had to deal with the success of the Japanese imports, a severe recession, an automaker who was on the verge of financial doom."

Ford Executive Chairman Bill Ford Jr. called Fraser "one of America's great labor leaders.""Ford Motor Co. will always owe Doug a debt of gratitude for the courage he showed during the 1982 contract negotiations in structuring an agreement that helped preserve the U.S. auto industry during tough economic times."

GM Chairman and CEO Rick Wagoner said Fraser's "creative problem-solving and partnership" were important to the UAW and the industry. "His legacy lives on through his innovative thinking, teachings and dedication to the UAW, the U.S. auto industry and the labor movement."

After Fraser retired as UAW president, he became a professor of labor studies at Wayne State and began a second significant career that spanned 25 years. He continued to work up until a few weeks ago. His office was at the Walter P. Reuther Library, home of the largest collection of labor archives in North America. In 1997, Wayne State, with the support of the UAW, created the Douglas A. Fraser Center for Workplace Issues.

Throughout his life, Fraser championed social causes. He joined the civil rights movement in the 1960s and later pushed the Big Three to hire more women and minorities.

A lifelong Democrat, he stayed active in political and social causes after he retired, serving on the boards of several organizations and as an AFL-CIO arbitrator helping to resolve disputes between other unions.

Fraser and his and wife, Winnie, were to be honored in April by the Mental Health Association in Michigan. Blanchard said when he last spoke with Fraser about three weeks ago, Fraser said he was looking forward to the November election. "He said, 'I hope I live long enough to see the first African-American president or the first woman president.'

Mike Smith, director of the Reuther Library, said Fraser had a great sense of humor and a knack for telling stories. After his retirement, Fraser understood the tremendous role he played in the auto industry, but was "as modest as they come," Smith said. He insisted people call him 'Doug.' Smith said he could sit down and enjoy a cup of coffee with anyone, talk politics and listen attentively to their views.

Fraser often said Gettelfinger has a much tougher time than he did.
In an interview with The Detroit News in 1990, Fraser reflected on his time at the helm of the UAW. "When you're going through it, it's agonizing," he said. "But when you accomplish something, find solutions to terribly complex problems, you get a great feeling of satisfaction. And it is the best of feelings because you did it for others;you didn't do it for yourself."

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Cost gap a myth, CAW says

Union launches early campaign against U.S.-style wage cuts
Feb 21, 2008 04:30 AM

Business Reporter

 

The Big Three vehicle makers in Canada are not operating at a huge labour cost disadvantage compared to the United States, the Canadian Auto Workers insists.

That means there is no disincentive to further plant investment here, the union concludes.

In an early volley in the war of words before pivotal contract bargaining this summer, the union is telling members that claims about a $25-an-hour labour cost advantage for U.S. plants are "nonsense."

CAW economist Jim Stanford said yesterday that even if the union negotiated annual wage increases of 3 per cent, labour costs for workers at General Motors, Ford and Chrysler would still be less here than the average amount – including restructuring expenses – south of the border during the next three years. "You've got to take a big, big grain of salt to the argument that we are somehow priced out of the playing field," he told a CAW convention.

Some industry pundits and executives say that last fall's historic concession contracts in the U.S. at the money-losing Big Three will put heavy pressure on the CAW to accept a two-tier wage structure with lower pay for new workers.

Contracts for more than 31,000 workers at the Big Three expire in mid-September.

"The gap is not as large as people are saying," CAW president Buzz Hargrove told reporters, "Most of it is smoke and mirrors."

Stanford said the CAW's internal analysis shows 2006 labour costs at the Big Three here were about $5 more than the $70 to $75 an hour in the U.S.

Furthermore, the Big Three's U.S. costs will increase because of restructuring costs and retiree health care payments that will jack up the labour expense to more than $100 an hour during the next few years, he said.

Stanford also said Canada's auto plants have other competitive advantages in productivity, quality and lower health care costs.

"This overall claim ... `You guys are too expensive. Now, you're going to lose you jobs,' is not credible," he said. "The gun they have has no bullets."

Stanford did acknowledge that increases in U.S. labour costs at the Big Three should slow down in their new contracts and give plants south of the border an edge after several years.

He noted the competitiveness of Big Three plants here have declined because of the soaring value of the Canadian dollar, which has shot up 60 per cent against the U.S. greenback in four years, the quickest ascent in history.

Stanford also said a significant Canadian labour cost advantage during the past decade didn't necessarily translate into more jobs or investment.

He pointed to the loss of six Big Three plants here during that period due to declining demand and market share.

Hargrove said the union can't buy job security in bargaining when politicians allow the dollar to remain so high while doing nothing to stop unfair access to Canada's auto market.

Under those circumstances and loss of market share, employees could work for nothing and still not have saved plants or shifts at several Ontario plants, he said.

Hargrove said direct labour expenses represent only 8 per cent of an assembly plant's cost structure.

"It's not a labour cost issue," he said in reference to the industry's problems.

The CAW usually starts preparing for Big Three bargaining and educating its members on the issues in the spring of a contract year, but the union has begun that exercise three months early this time.

"We're not going to allow the analysts, media commentators or the companies to set the stage for the mood in our workplaces through misinformation," said Hargrove. "We're going to make the case."

The union's auto council voted unanimously at one meeting this week against both any wage cuts and the two-tier system that the United Auto Workers accepted in the U.S. last year.

CAW officials lower wage rates and benefits for new workers than existing staff trigger dissension and declining morale and productivity.

"Two tier plans go against some of the most fundamental principles of trade unionism," added one report. "Some of the earliest battles in the history of unions were fought around eliminating favouritism and unequal treatment in the workplace."

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Auto sector help should be job one

Star Editorial Feb 17, 2008 04:30 AM

In the run-up to the Feb. 26 budget, Canada's beleaguered manufacturers have been urging Finance Minister Jim Flaherty to give them all the help he can. Already hit hard by the soaring dollar and increasingly fierce competition from emerging countries like India and China, Canadian manufacturers are desperate for government assistance to enable them to make the investments they need to compete. The prospect of a U.S. recession adds urgency to their need for help.

Nowhere is that more evident than in the Ontario auto sector, where the outlook is especially bleak.

Long the backbone of southern Ontario's manufacturing sector, the auto industry has played a major role in creating the prosperity the province enjoyed for decades. In addition to its high wages, the industry has spawned a large network of parts suppliers and feeds the demand for materials such as steel, glass and plastics.

Representing a riding only a stone's throw from General Motors' Canadian headquarters in Oshawa, Flaherty knows first-hand how important the industry is to the province and his region.

He also knows that the industry is hurting badly.

Rocked by plant closings that have already cost more than 10,000 jobs in assembly and 15,000 in parts, Ontario's auto sector has lost its big competitive advantage over U.S. jurisdictions due to the 60 per cent rise in the Canadian dollar. At the same time, global competition for these high value-added jobs is becoming increasingly intense.

Adding to the seemingly endless stream of bad news, Canada's third-largest parts producer, Martinrea International Inc., last week announced plans to close its largest facility, a frame plant in Kitchener, and the loss of 1,200 jobs.

But there is more to this story than straight free-market economics. Governments are also competing for this lucrative business. U.S. states, for example, offer big incentives for companies to locate new plants in their jurisdiction. Washington is now in the game, too. Claiming the aid is essential to enable the retooling needed to meet new fuel efficiency regulations, the U.S. government is offering loan guarantees and other incentives for new auto investments.

Even though Canadian productivity in autos exceeds the U.S. level, our governments have had to compete for the more than $7 billion in investments that Ontario has secured since 2004: the $1 billion Ford redevelopment in Oakville; the $2.5 billion GM Beacon project; the new Toyota plant in Woodstock; the new Honda engine plant in Alliston; the redevelopment of the Navistar truck plant in Chatham; and the Chrysler investments in Windsor and Brampton.

Just imagine where we would be had Ottawa and Queen's Park not partnered in securing these new investments. Autos and trucks account for $75 billion a year in Canadian exports – more than oil and gas. And despite the job losses in recent years, the industry still employs more than 140,000 Ontarians, and through supply chain spinoffs, it generates an additional 360,000 jobs.

But some of these jobs are sure to go this year, just as a result of plant closings that have been announced but not yet taken place. And with a downturn in the U.S., more are on their way out.

That's why Ottawa needs to match the money Queen's Park is putting up to attract new investment, as it has in the past. Without federal support, Ontario won't get the new investments it needs, including a Ford proposal to rebuild its Essex engine assembly plant in Windsor, a city hit harder than any other in the province. Queen's Park has already promised to help fund the new plant, which would employ the kind of flexible technology that would allow it to produce a variety of engines on one assembly line and thereby protect it from closing or downsizing over its entire lifespan.

If Flaherty wants to make sure that Ontario continues to reap the benefits of a healthy auto industry, he will set aside enough money in his budget to help the province bid on viable job-creating projects like the Windsor engine plant.

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Try harder to sell cars overseas: Emerson

Trade minister rejects Hargrove's demand for restrictions on imports

Feb 14, 2008 04:30 AM

OTTAWA BUREAU

OTTAWA–The Big Three automakers should try harder to sell their vehicles to other countries rather than expect the federal government to put up protectionist trade barriers, International Trade Minister David Emerson says.

"But the reality is the industry has not focused on non-North American markets, whether it's Korea or any other non-North American market," Emerson said yesterday, reacting to suggestions from Canadian Auto Workers president Buzz Hargrove that Ottawa put trade restrictions on imported vehicles.

"Buzz always kind of speaks the rhetoric of free trade but when it comes right down to it, I'm not convinced he's a true free trader," Emerson told reporters.

Hargrove told a news conference on Tuesday that if reciprocal trade measures are not introduced soon, General Motors Corp. and Ford Motor Co. Ltd., particularly, could go belly up within a decade.

"What he is saying is that he wants us to negotiate access into the Korean and Japanese market for vehicles and parts and obviously that's what a free-trade negotiation is about," Emerson said. "And yet they seem to want us to walk away from the free-trade negotiations. So I'm a little puzzled by it.

"I don't think modern trade negotiations are about those kinds of deals. I don't think major economies like Japan and Korea would be interested in that kind of a deal."

Canada and the United States signed in 1965 the Automotive Products Trade Agreement, which kept Canada's auto industry healthy for 35 years. But the World Trade Organization determined in February 2000 that the Auto Pact violated international trading rules and the agreement formally came to an end in February 2001.

While Hargrove still talks about the days of the North American Auto Pact, Emerson said those days are gone.

"The Auto Pact was a very tender small step, a careful step toward North American free trade and it had built into it all kinds of production safeguards that kept it from actually being a free-trade agreement," Emerson said.

"We eventually went to free trade but that was after many, many years of people reducing their nervousness about our ability to compete in a North American market."

Emerson said North American industry exports only about one-third of 1 per cent of production, but Hargrove said that's because there is no political pressure on countries like Korea and Japan to buy vehicles made by GM, Ford and Chrysler.

"They're not exporting to any significant markets outside of North America. The Canadian auto industry is fundamentally focused on the North American market," he said.

***********************************************

CAW affirms `rogue union'

Auto workers help finance new construction group

Feb 13, 2008 04:30 AM

Business Reporter

The Canadian Auto Workers says it has no intention of pulling back on millions of dollars in loan pledges to a new construction union that is allegedly undermining other unions.

CAW president Buzz Hargrove said yesterday the CAW will continue providing periodic non-interest loans totalling a maximum $5 million until 2010 to the Canadian Construction Workers Union despite criticism from other labour leaders.

The CAW has approved about $1.6 million since 2006 in support of the new union's efforts in organizing construction workers into a Canadian union instead of being under international control.

"We're lending them about $1 million a year," Hargrove said. "They're responsible for paying it back. There are no other conditions or tie-downs. The CCWU is also not an arm of the CAW."

The CAW broke away from the United Auto Workers in 1985 in a high-profile dispute over autonomy and bargaining direction.

Tony Dionisio, a controversial labour organizer and former political power broker in Toronto, is running the construction union after the Laborers' International Union of North America ousted him in an internal battle at its Local 183 in Toronto two years ago.

The international union put the local under trusteeship and an arbitrator in the dispute later agreed there was justification.

A labour arbitrator also concluded Local 183 under Dionisio did not enforce contracts and failed to tabulate benefit and pension entitlements to members.

The arbitrator also found Dionisio had participated in a scheme to forge several contracts, and Local 183 had spent more than $340,000 for surveillance of international union officers, local officials and members. Another arbitrator found Local 183's former board had improperly transferred $5 million to the control of Dionisio and another individual.

Dionisio has dismissed most of the findings as misunderstandings or simply wrong. For example, he said the former board moved the money for safekeeping after receiving legal advice and later returned the funds.

The CAW's support of Dionisio's union has outraged other labour leaders who charge his construction group is trying to raid other unions and is interfering in organizing drives.

"The CAW should reconsider its funding of this rogue union," said Wayne Fraser, Ontario/Atlantic director for the United Steelworkers.

Fraser pointed to the recent case where the Service Employees International Union had made progress in an organizing campaign for cleaners at Hallmark Housekeeping Services. But the construction union undercut the drive by reaching a "voluntary recognition" deal with management to represent workers. Dionisio defended the move and challenged the SEIU to a free vote by workers on their union preference.

Dionisio's union, which won't disclose its membership size, suffered a setback last month when the Ontario Labour Relations Board ruled the group did not have status as a trade union in a dispute regarding bargaining recognition at several small building contractors.

********************************************

Auto industry is death-bound: CAW

Hargrove tells Harper makers will fold without help
through trade rules, government investment

Feb 13, 2008 04:30 AM

OTTAWA BUREAU

OTTAWA–North America's traditional automotive industry will effectively disappear within a decade if Ottawa doesn't put trade restrictions on imported vehicles, CAW president Buzz Hargrove says.

Hargrove delivered that stark message at a meeting yesterday with Conservative Prime Minister Stephen Harper. Hargrove urged the federal government to bring in a reciprocal trade arrangement.

"I said to the Prime Minister that it wouldn't surprise me (that), within a decade, General Motors and Ford both would declare bankruptcy in North America," he told reporters after the meeting.

A spokesperson for the Prime Minister said Harper "appreciates the challenges" facing the auto industry.

Meanwhile, Martinrea International Inc. announced plans this week to close its major automotive-parts plant in Kitchener, formerly known as Budd Automotive, by the spring of 2010, with 1,200 jobs lost.

"We raised our concern about the lack of response by our government as we've gone from one of the most successful auto-producing nations in the world, and now we've moved down the ladder to No. 9, and almost daily we get another announcement of a closure," Hargrove said.

The long-time president of the Canadian Auto Workers said he explained to Harper that a combination of trade restrictions similar to the old North American Auto Pact and an automotive investment fund would go a long way toward breathing life into the moribund industry.

"We told him that, if he doesn't deal with the trade issue, then there is absolutely no way our industry can survive and ... that we should look at an auto pact type arrangement with Asia," Hargrove said.

"The auto pact, which was signed with the U.S. in 1965, recognized that we were not getting our fair share of production and jobs in Canada from the American producers, and now we have a similar problem with Japan and South Korea. Any agreement would have to ensure that trade is reciprocal: whatever they sell to us in dollar terms, they would have buy from us."

Hargrove said these foreign auto manufacturers flood North America with their vehicles – from offshore and from plants in Canada and the United States – and then buy virtually nothing in return.

Hargrove made a pitch to Harper to commit $30 million to reopen the Ford Essex Engine Plant in Windsor, a city that has been devastated by plant closings.

"We told him you can't delay those things ... and that on every opportunity that arises to say, `The federal government will partner with you under certain conditions.'"

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GM offers all US union workers buyouts, retirement

By David Bailey

DETROIT, Feb 12 (Reuters) - General Motors Corp will offer buyouts or early retirements to all 74,000 U.S. hourly workers represented by the United Auto Workers in a sweeping deal with the union intended to clear the way for GM to hire lower-cost replacements.

The cost-saving agreement follows a program launched in January for about 5,200 workers at GM's service parts and operations facilities across the United States and five other facilities, and comes with better terms than GM offered to UAW workers in 2006.

GM representatives said it would take weeks to introduce the complicated buyout offers to its workers, who will have 45 days to consider them and then seven days to reconsider. It expects to complete the voluntary program by July 1.

The benefits of the workforce transformation plan will start to hit GM "later this year and into '09," Chief Financial Officer Fritz Henderson told reporter s on Tuesday.

The costs of the buyout program will begin to accrue to GM in the first half of 2008 as the workers opt for one of the programs, Henderson said.

GM's agreement with the UAW follows similar deals the union reached with Ford Motor Co and Chrysler LLC following the 2007 contracts that allow U.S. car makers to hire many workers at lower wages and benefits, while guaranteeing some jobs.

GM executives have said the automaker will take advantage of a ground-breaking contract provision that will allow the automaker to hire workers at second-tier wages, but they have declined to say how many of the current workers who take the offers will be replaced.

GM said it would offer better terms and more choices for its already-retirement-eligible UAW workers, including increasing payouts to $45,000 for production workers and $62,500 for skilled trades workers.

The automaker had offered $35,000 cash across the board in 2006 for its retirement- eligible workers, but Ford and Chrysler recently increased their retirement incentives for hourly workers and the U.S. economy has weakened since 2006.

Workers may choose a lump-sum payment, an annuity, or roll part or all of it into an individual retirement account or a 401K to postpone the tax hit and potentially make the offer worth much more than those on offer for UAW workers at Ford.

GM factory workers who retire after 30 years currently have pensions of about $3,100 per month, plus health benefits.

The company also has lowered the eligibility for an enhanced retirement program for workers with 26 years experience who will be allowed to take what amounts to a reduced pension for four years before entering full retirement.

GM workers who are over 50 with at least 10 years experience may retire with reduced pensions, plus benefits.

UAW workers with more than 10 years experience also could opt for a $140,000 lump-sum buyout to leave with only their accrued pensions, or $70,000 if they have less than 10 years.

GM does not plan to release a target for the number of workers it expects to participate. It plans to release a final figure when the program is completed, possibly in July, representatives said.

The deals for GM's workers differ from Ford's and Chrysler's in part because of the differing ages of the work forces and company objectives. More than 34,000 workers left GM after accepting buyout packages that ranged from $35,000 to as much as $140,000 in 2006.

The buyout offers from the U.S.-based automakers come amid concerns about the strength of the U.S. economy and the possibility that U.S. industry light vehicle sales could slump more in 2008, after a drop in 2007.

Top executives of GM, Ford and Chrysler all have said in recent weeks that they would take further restructuring actions if necessary because of economic conditions.

All three automakers reached agreements with the UAW that would allow them to hire new workers for some jobs starting at $14 per hour, or about half the current average hourly wage.

U.S. automakers have been cutting capacity to match their declines in market share and their new UAW contracts allow them to shift their union retiree health-care obligations to union-controlled trusts

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Chrysler reorganization
worries CAW president

Feb 08, 2008 09:51 AM


staff reporter

The head of the Canadian Auto Workers union is calling Chrysler’s decision to cut back its product lineup and reduce its dealership base cause for concern.

“Our minivan plant in Windsor won’t be impacted but we have the Brampton facility where we are producing the 300 series,” said Buzz Hargrove, national president.

That facility produces the 300C, the Charger and the Challenger, he said.

“It’s just not clear if they will be impacted by this decision,” he said. “It does not say what they are cutting or where.”

Even though Canadian dealerships are not a target at this point, news like this is always cause for concern in times of uncertainty within the industry, Hargrove said.

According to story in today’s Wall St. Journal, the company plans to cut its product line of around 30 different trucks, cars and sports utility vehicles across the Chrysler, Dodge and Jeep brands to 15 or more within a few years to cut costs and create a leaner, more profitable company.

It was also reported that efforts were being made to reduce the number of dealerships nationwide.

In a statement, Chrysler vice chairman and president Jim Press said, “At this point, we have not made any final decisions regarding our dealer optimization or future product plans, nor has the company set any firm timelines. Our dealers are and will continue to be an integral part of this process moving forward."

Hargrove said he does know that legally it’s a far less complicated process to shut down a plant than a dealership.

“They have a challenge ahead of them,” he said.

Chrysler earlier this month said it was launching a new ad campaign that includes lower prices on 12 of its vehicles. The campaign aims to cast the automaker as a company that’s listening to consumers and responding with new features.

Chrysler, which is in the midst of a restructuring after a majority stake in the automaker was sold last summer to private equity firm Cerberus Capital Management LP, announced in November it planned to cut up to 11,000 jobs, including 8,000 to 10,000 hourly and 1,000 salaried positions.

The cuts came in addition to 13,000 reductions Chrysler announced last February, including 11,000 hourly and 2,000 salaried workers in the U.S. and Canada.

With files from The Associated Press

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Ford eyes changes for
fading Mercury brand

Feb 08, 2008 04:30 AM

Ford Motor Co.'s Mercury brand, which has seen sales dwindle to less than a third of their 1978 peak, has a "changing" role as the automaker concentrates more on its Ford and Lincoln lines, the company's marketing chief said.

"Its role is changing, but we're not going to compromise Mercury," group vice-president Jim Farley said at the Chicago Auto Show. The automaker, seeking to revive U.S. sales to help end losses, plans to expand Lincoln as it sells European-based luxury units.

Ford is trying to stabilize its U.S. market share for the Ford, Lincoln and Mercury brands after a dozen years of decline.

They held 14.8 per cent last year, a drop of 1.6 percentage points from 2006, as the Dearborn, Mich.-based company's total sales fell 12 per cent and it lost the second rank to Toyota Motor Corp.

Mercury sold 168,422 cars and light trucks in the U.S. last year, a 6.9 per cent decline from 2006. The brand peaked at 579,498 in 1978.

But Mercury still outsells Lincoln, which increased its total 9.1 per cent last year to 131,498.

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Nemak dips into auto aid millions

Premier is powerless to stop factory closing

HAMILTON–Premier Dalton McGuinty says he is powerless to stop a Windsor auto-parts factory from closing while a sister plant takes millions in government aid.

"There's certain things over which we have control and certain things over which we have no control," McGuinty said at Mohawk College.

That has the opposition parties charging the Liberals' $500 million auto-industry assistance package is turning into a "take the money and run" fund as the high dollar, a slumping American economy and cut-throat global competition take an increasing toll on Ontario's manufacturing sector.

"The McGuinty government just didn't think things through in the first place," said NDP Leader Howard Hampton, calling for tighter controls.

The case suggests corporate welfare doesn't work, said Ted Chudleigh, the Progressive Conservatives' economic development critic.

"When the building comes crumbling down around your ears ... you don't necessarily hold the door open for someone."

The Nemak Essex aluminum plant, a joint venture of Ford Canada and Nemak, is slated to close in spring 2009, eliminating 600 jobs. But a nearby Nemak engine parts plant has been cleared for $6 million from the auto fund and has received half that so far.

The doomed plant, which makes aluminum cylinder heads, is shifting production to low-wage Mexico, said the Canadian Auto Workers union, although Ford said nothing has been decided.

"We don't have control over the price of the dollar. ... I don't have control over the continuing evolution of globalization," McGuinty said, calling the auto industry a mainstay of Ontario's economy.

He added that the government's economic development and trade ministry will be "taking a look at this (aid deal) to make sure they are abiding by the agreement. ... I don't know if it extended beyond that particular operation."

McGuinty and the Liberals boast that the $500 million auto aid fund lured $7 billion in new automotive investment in the last four years, including a new Toyota plant in Woodstock and Honda factory in Alliston, helping to make Ontario the leading auto-producing jurisdiction in North America.

Critics wonder how long those bragging rights are going to last with production falling from the Big Three domestic automakers, and note the entire manufacturing sector has lost over 200,000 jobs since 2004.

The Liberals are now touting a $1.15 billion "next generation" jobs fund to help industry, but Economic Development Minister Sandra Pupatello has said the Ford-Nemak plant wasn't interested.

 

                       **********************************************

Auto sector hit by new shutdown

Citing stiff global competition, the joint-venture partners say they'll close Windsor's Nemak Essex plant next year.

Ford, Nemak plan to close Windsor engine-parts plant, eliminate 600 jobs

Feb 07, 2008 04:30 AM


Staff Reporters

Ontario's auto industry took another hit yesterday when Ford and Nemak announced they will close a major engine-parts plant in Windsor and eliminate about 600 jobs next year.

The two companies, which run the operation as a joint venture, said they will shut down the Nemak Essex aluminum plant in the spring of 2009 because of stiff global competition.

The move would push up the number of job losses at Ford alone in the beleaguered southwestern Ontario city to about 3,600 since the fall of 2005.

"We're virtually hemorrhaging jobs here now," said Mike Vince, president of Canadian Auto Workers Local 200, which represents Nemak production employees.

A Ford spokesperson said the two companies have not decided where they will move production of aluminum cylinder heads, but union sources indicated output will likely shift to Mexico.

Ford also hinted that Canada needs to be more competitive to win future auto investment. "All companies have to be globally competitive," said Kerry Stoakley, communications manager for Ford Motor Co. of Canada. "There is incredible competition around the world. That's why countries aggressively pursue auto investments. It's why it is critical that Canada offer a competitive business environment."

The company is currently lobbying for aid from the federal government to reopen an engine plant elsewhere in the city that has sat idle since November because of a lack of product.

Nemak received about $6 million from the Ontario government for a project relating to engine production processes at another Windsor operation in 2006. The company has collected about $3 million in conjunction with the firm's investments to date.

Vince and other union officials attributed the latest closing to the soaring value of the Canadian dollar and a lack of action by the federal government in trying to help Ontario's struggling manufacturing sector.

"We desperately need a manufacturing policy for this country because the devastation that is going on in this sector around here and the province is just awful," he added.

The union also wants Ottawa to use tariffs against offshore automakers because their countries don't offer the same access to Canadian autos.

The Ontario government estimates the province's manufacturing sector has lost more than 200,000 jobs since 2004.

Auto-parts makers have absorbed the brunt of the impact because the much higher dollar makes their exports more expensive. Furthermore, they are experiencing a decline in business from key customers such as struggling General Motors Corp., Ford and Chrysler.

The provincial government has pumped hundreds of millions of dollars into the sector in recent years with an emphasis on research, technology and engineering projects.

Economic Development and Trade Minister Sandra Pupatello, who represents a Windsor riding in the Legislature, said she was aware that Nemak had doubled its production capacity in Mexico while overcapacity existed at other operations. That made the Windsor factory vulnerable, she said.

She revealed the government approached Nemak about tapping into the government's $1.15 billion Next Generation jobs fund, but the company showed no interest.

"I have been worried; I have been reaching out to them," Pupatello said.

The downturn and shakeup in the auto industry has hammered Windsor in recent years. A Chrysler assembly plant closed in 2002 and numerous parts makers have also shut down.

The city's unemployment rate is 8.2 per cent, one of the highest levels for a major urban area in the country.

In the past two years at Ford's operations, almost 1,200 workers have taken early retirement incentives and more than 800 left the company after accepting buyouts. Another 940 workers are on layoff and can receive benefits representing up to 60 per cent of gross pay, depending on years of service.

Ford opened the plant in 1981 and Nemak became a partner in 2000. Ford's share is now less than 10 per cent.

The plant, which employs 490 production workers and 106 salaried staff, makes engine cylinder heads for several Ford models, including Mustang sports cars.

 

**************************************************

Windsor Essex aluminum
plant slated for 2009 closure

Feb 6, 2008

Almost 600 workers at the Nemak Essex aluminum plant in Windsor, which makes engine parts for Ford Motor Co., will be out of work when their plant closes in the spring of 2009.

About 500 of the workers are unionized staff. Another 100 salaried workers will also lose their jobs.

The Canadian Auto Workers said members were informed of the decision on Wednesday.

"This is a crushing blow to Ford/Nemak workers and the Windsor area, which has one of the highest unemployment rates of any large city across the country," said CAW president Buzz Hargrove.

Hargrove called on the Harper government to develop a long-term automotive policy to stop the job losses in what he called "Canada's most important industry."

"This is extremely frustrating and disappointing news for our members, who have already been living under the weight of job insecurity for many months," said Mike Vince, the president of CAW Local 200, which represents the unionized plant workers.

Opened in 1981 by Ford, the Essex aluminum plant is now a joint venture between the automaker and Mexican firm Nemak.

***************************

Ford recalls 225,000
vehicles already repaired

 

Feb 02, 2008 11:27 AM

The Associated Press

DEARBORN–Ford Motor Co. said Saturday it is recalling about 225,000 vehicles that were already repaired as part of an earlier recall to address concerns about a cruise control deactivation switch.

Dearborn-based Ford says the affected vehicles represent a small portion of the about 10 million vehicles that have been recalled since 1999 related to the cruise control switch problem.

Ford spokesman Wesley Sherwood said the automaker plans to notify the National Highway Traffic Safety Administration next week about the latest recall, which was reported Saturday by The Detroit News.

Ford dealt with cruise control switch problem by installing new wiring harnesses in the recalled vehicles. Now, the automaker says some of those wiring harnesses appear to be defective.

Ford, which discovered the wiring harnesses problem while repairing a vehicle in its own fleet, said no accidents or injuries have been caused by that problem.

The cruise control switch recall was due to engine fires linked to the cruise control systems in trucks, sport utility vehicles and vans.

The vehicles in the new recall include 185,000 E-Series vans with model years ranging from 1992 to 2003.

Other affected vehicles include 1993-95 Ford Taurus SHO; 1992-98 Ford Crown Victoria and Mercury Grand Marquis; 1992-95 Lincoln Town Car; 1993 Ford Bronco; 1993 gas powered Ford Super Duty; and 1995-97 gas-powered Ford Super Duty stripped chassis.

Ford said not all vehicles in those model years had the faulty wiring harness installed, and it will contact affected owners.

***********************************************

UAW to fight Chrysler designers' layoff

Feb 1, 2008

A UAW leader is promising to fight Chrysler LLC's abrupt layoff of 119 union-represented designers Thursday -- many of whom were escorted out of the Auburn Hills headquarters with less than one hour's notice.

 

Jeff Hagler, president of United Auto Workers Local 412, who represents the affected workers, said Chrysler failed to follow protocol by not giving union leaders proper notice of the layoffs and by pink-slipping workers selectively, rather than by seniority. Hagler met Thursday with other union leaders at the local in Warren to determine the best approach to filing a grievance.

 

Management disagrees. Chrysler spokeswoman Michele Tinson said the automaker followed the procedures outlined in its contract with the union.

 

It's still possible, she said, that those pink-slipped Thursday could be offered a choice between typical layoff benefits and the $100,000 voluntary separation packages the automaker has offered to other groups of workers. The buyout packages also come with six months of health coverage. Typically, laid-off workers receive nearly full pay for 48 weeks and then can spend up to two years in a job bank.

 

"We are working closely with the UAW and are having ongoing discussion about special programs," Tinson said. She said the layoffs are part of Chrysler's Nov. 1 plan to eliminate 8,500 to 10,000 union jobs as it pares down its work force in response to lower production levels.

 

UAW officials, however, suspect the layoffs will allow more work to flow to non-union contract workers and possibly to the overseas engineering centers Chrysler announced it would open in four developing countries last week.

 

"Chrysler seems to be taking a very anti-union attitude," Hagler said. "I sent a letter to senior management two weeks ago very sincerely saying we want to work with them to have the best engineering work force in the world. But they don't seem interested in that."

 

Hagler said if the cuts were truly related to declining sales, the union would not protest. These, he said, are an attempt to shift work to non-union contract workers. "They have 250 contractors working in the same department as those who were laid off," he said.

Chrysler has also pared its contract staff, dismissing 1,100 such workers in November.

Thursday's events provide the latest chapter in a bizarre story of on-again, off-again layoffs affecting Local 412 members -- about 2,000 salaried, UAW-represented designers, modelers and engineers at Chrysler headquarters and elsewhere in Metro Detroit.

Late last year, members expected to join their white-collar counterparts in being offered early retirement and buyout packages. But those offers never came. Instead, the week before Christmas, word spread that up to 200 workers would be laid off, but then those plans were nixed.

 

On Monday, 110 members of Local 412 were offered early retirement programs, but unlike other locals, they were not offered the $100,000 buyout packages. Those who were offered the retirement packages are in a different segment of the local than the designers in Units 1 and 80 who were laid off Thursday.

 

Although their formal termination date is Saturday, many of those designers were quickly escorted out of their offices because they had access to sensitive company information.

Since Chrysler outlined plans in November to reduce its production, and therefore its UAW-represented staff, the automaker has offered buyout and retirement packages on a facility-by-facility basis.

 

Richard Block, professor at the Michigan State University School of Labor and Industrial Relations, said that strategy differs from the typical approach where an automaker offers packages to the widest group of employees as possible. A broad approach reduces headcounts more quickly and can lessen the need to lay off workers.

 

"You don't see this at GM and Ford," he said. "Chrysler is still working through new management, and when you see that that these announcements catch the union off guard, it suggests that management-UAW communications is not as tight as it could be."

 

 

*********************************

Tata to get full stake
in Jaguar, Land Rover


MUMBAI, Jan 30 (Reuters) - India's Tata Motors Ltd is preparing for "an outright purchase" of Ford Motor Co's Jaguar and Land Rover luxury brands, against an earlier plan for a majority stake, the Economic Times said on Wednesday.
"Ford has decided not to retain a minority stake, as it is convinced about the future development of these two brands in the hands of the Tatas,", the newspaper said, citing sources close to the development.


Ford earlier this month picked Tata Motors as the front-runner to the purchase of the two brands and said it would proceed with "focused negotiations at a more detailed level".


The deal, which is expected to be completed early this year, has been pegged at $1.5-$2.0 billion by analysts, and media reports had indicated Ford would hold a small stake in the two brands to ensure that supply contracts and jobs are protected.
"We are still in detailed and focused discussions with Tata Motors, and these discussions are confidential," a spokesman for Ford Motor told the paper. A spokesman for Tata Motors declined comment.


Ford has shown Tata Motors officials new model lines and planned products, the paper said. Ford officials and union members were expected to visit Tata Motors' plant in western India in a fortnight, the paper said.

***************************************************************

Chrysler agrees to incentive package

Early retirement payout could reach $70,000 as plant layoffs loom

Jan 29, 2008
Tony Van Alphen
Business Reporter

Chrysler Canada and the Canadian Auto Workers have negotiated new financial packages of up to $70,000 for eligible employees in efforts to reduce layoffs because of the elimination of a shift at the company's Brampton assembly plant.

Sym Gill, director of the CAW's pension and benefits department, confirmed yesterday the union and Chrysler had reached agreement on an early retirement incentive, more severance pay for employees who voluntarily quit and putting company cash into a benefit plan for laid-off workers.

In November, Chrysler announced the elimination of five plant shifts and four models at its North American operations, including about 1,100 jobs and the Magnum wagon in Brampton, during the first quarter of this year.

The union pressed for financial incentives to ease the blow for workers but Chrysler did not make any offers until recently, Gill said.

He noted there will likely be some layoffs because the number of eligible employees would be less than in packages last year, when Chrysler announced incentives to reduce layoffs under a restructuring plan.

"There will be less people eligible because of the take-up by workers in the earlier," Gill said.

"Unfortunately, that means there will be more layoffs."

Under the latest package, employees eligible for retirement could get an incentive of $70,000.

Chrysler workers with five or more years of service who don't qualify for the retirement incentive could take a voluntary payment of anywhere from $27,500 to $67,500, Gill added.

And he said Chrysler is replenishing a supplementary unemployment benefit fund for laid-off workers. The fund's benefits have been unavailable for about 240 laid-off workers with less than five years service for several months.

*****************************************

Bankrupt plant workers
denied Severance

Jan 29, 2008 04:30 AM
Canada's "outrageous" bankruptcy laws are leaving veteran workers who occupied an insolvent Kitchener plant without any severance pay, says a senior union official.

Jerry Dias, assistant to Canadian Auto Workers president Buzz Hargrove, said yesterday creditors of tool-and-die makers Ledco Ltd. will end up with money, but more than 60 employees won't.

"Workers with 40 years here won't be getting a dime under our laws," Dias said.

Under federal bankruptcy legislation, secured creditors would have standing ahead of workers during any liquidation of company assets.

In bankruptcy filings, Ledco has reported liabilities of $14.5 million and assets of $7 million. Workers are entitled to about $1.2 million in severance pay, the union said.

"These workers could be paid if Ledco had simply applied for court protection under the Companies' Creditors Arrangement Act, which would give it a chance to reorganize," Dias said.

More than 30 workers left the plant on Sunday after a judge issued a second injunction ordering them to end a three-day occupation.

*******************************************

Chrysler offers $100,000 buyouts to UAW plant workers in Metro Detroit

All UAW-represented Chrysler LLC workers at Metro Detroit plants are expected to be offered buyouts and early retirement as the automaker works to eliminate the announced 8,500 to 10,000 hourly jobs.

 

Workers at eight area factories, including Sterling Heights Assembly, received offers today, said Chrysler spokeswoman Michelle Tinson.

 

Employees at Chrysler's Jefferson North plant in Detroit already have received paperwork and are deciding whether or not to accept the packages. Offers have not yet been extended to employees at Warren Truck because the plant is on temporary shutdown this week.

 

CHYRSLER

Chrysler employs about 12,000 United Auto Workers members at its 10 Metro Detroit manufacturing sites. Any worker with more than 1 year experience -- and very few Chrysler factory workers are of that short tenure -- is eligible to accept a $100,000 buyout.

 

Some 4,600 of those workers are eligible for early retirement, which would include retiree health care and benefits as opposed to the buyout packages, which don't.

"In an effort to be socially responsible, together the company and the UAW are offering these special programs to the Detroit labor market," Tinson said. "In this difficult market, we need to get the company right sized for success."

 

In addition, 110 salaried UAW employees, who work as designers and engineers at headquarters and other locations, were today offered early retirement packages.

The latest buyouts are all part of Chrysler's effort to reach its Nov. 1 downsizing targets. Tinson said the company is not planning for additional staff cuts at this time.

The facilities receiving buyout offers today are: Sterling Heights Assembly, Trenton Engine, Mack Engine I & II, Detroit Axle, Warren Stamping, Sterling Stamping and Mt. Elliot Tool & Die.

 

Workers at Mopar parts distribution centers and hourly UAW employees at headquarters and other office locations in Metro Detroit have not yet received offers.

With the exception Newark (Del.) Assembly, workers at all Chrysler assembly plants nationwide have been offered buyouts. Workers at other non-assemlby sites outside of Metro Detroit have not been offered buyouts, but negotiations between the union and company are ongoing, Tinson said.

 

**********************************

 

Workers occupy shut plant over severance

30 CAW members demand Ledco
fulfill its legal obligations

Workers took over a tool-and-die operation in Kitchener yesterday in another fight over severance pay.

Members of the Canadian Auto Workers union Local 1524 at struggling Ledco Ltd. began the occupation and barricade of the plant after the owners shut it down earlier this week and immediately declared bankruptcy.

Jerry Dias, assistant to CAW president Buzz Hargrove, said workers will remain in the plant and block any movement of production or equipment until Ledco meets its "obligations" under the law.

"It's a disgrace what this company is trying to get away with," Dias said as about 30 workers remained inside with him.

This is the third time in the past year that the CAW and Steelworkers unions have occupied the operations of companies in disputes over severance pay and other contract provisions.

Ledco, a mainstay of the region's industrial sector for about 75 years, said it could no longer operate because the rise in the Canadian dollar had made it impossible to remain competitive.

The dollar has climbed more than 60 per cent in value during the past four years, which is making Canadian products much more expensive.

Ledco, which employed about 70 workers, sought cuts of 25 per cent in wages and 20 per cent in benefits in early bargaining, but the union rejected the demands. Workers earned an average of about $26 an hour under their contract, which expires in May.

Dias said wage cuts would have not made much difference in resolving the company's plight.

He blamed the federal government for not acting to keep the dollar down so parts suppliers can compete and blamed bankers for calling in a Ledco loan.

  ************************************************************

CAW warns it will strike GM

GM OSHAWA

Worker unrest increases but Hargrove says General Motors is committed to Oshawa


Business Reporter
Jan 25, 2008


Worker unrest is increasing in Oshawa about whether General Motors of Canada Ltd. will build more than just one sports car at a new billion dollar assembly plant.

The Canadian Auto Workers said today that the auto giant will face a strike this fall unless it keeps 2006 promises on models for production.

In a controversial move during an existing contract, union members ratified concessions in 2006 to save the company money in efforts to assure products for production at the new assembly plant next year.

“Live up to the commitment given to us in the (2006) shelf agreement or you will not be getting a collective agreement this fall,” CAW Local 222 said in a leaflet this morning.

The local also confirmed that a senior GM labour relations official informed the union that it still needs to negotiate “a competitive agreement” to assure the new models.

GM’s position follows major concessions by its workers in the U.S. that have made Canadian operations less competitive, according to the company.

“The company wants more and workers are getting mad,” said Keith Osborne, CAW chairman for GM’s Oshawa complex.

A spokesperson for General Motors of Canada Ltd. would not comment about any further company requests for cost relief.

“It’s too early to talk about upcoming negotiations with the CAW,” the spokesperson said.

Concerns have increased in recent weeks in Oshawa about why GM has not announced other models beyond the Chevrolet Camaro sports car for the new flexible manufacturing plant. The project has received millions of dollars in government assistance. In the past, auto makers have revealed their product plans and location more than a year in advance of start-up.

The lack of an announcement has led to speculation that GM is either delaying a decision to use it as leverage in bargaining or it has no other plans for the new operation. Insiders say the latter scenerio doesn't make much business sense.

Published reports today suggested that General Motors has scrapped plans to build new rear-wheel-drive sedans in Oshawa, which could reduce planned output by 250,000 units per year.

This resulted in CAW President Buzz Hargrove issuing a statement in support of GM. Hargrove noted that GM is spending $2.5 billion in Oshawa – including $435 million from the Ontario and federal governments – under its Beacon project announced in 2005.

"We anticipated that (production of the Camaro) would be followed by other rear-wheel-drive vehicles, but the money they spent on the plant makes it a flex plant, so you can build both front-drive and rear-wheel-drive in the facility," Hargrove said today.

"We're going to be meeting with GM some time late next month, but I'm confident that they not only want to build there, they're obligated to: Mr. McGuinty's government put $235 million into the Beacon, Paul Martin's government put $200 million in, and our local union bargained a new agreement," he said.

"So they're obligated to put something in there. The only question is what, and when they're going to announce it."

The issue arises when the auto industry as a whole is in flux as requirements escalate for more fuel-efficient and less polluting vehicles. Rear-wheel-drive cars, generally heavier than front-drive models, are under a cloud following passage of U.S. legislation requiring automakers' fleets to average 35 miles per gallon (6.7 litres per 100 kilometres) by 2020.

"That means that all the companies are reviewing their fleet now in terms of what combination of vehicles they can build and still meet that act," Hargrove observed.

Nevertheless, "our position today is that they (GM) are already obligated and committed, to both the federal and provincial governments and to our union."

Crude oil cost US$53 per barrel when the Beacon project was announced in March 2005, compared with about $88 now after touching $100 early this month.

******************************************************

Ford US Buyout facts

Jan 25, 2008 04:30 AM

Details of buyout offers being made to 54,000 hourly U.S. Ford workers represented by the United Auto Workers union.

First round:

Made to 1,000 remaining hourly workers at already closed plants in Atlanta, St. Louis, Edison, N.J., and Norfolk, Va.

Offer made immediately, and closes the week of Feb. 28. Workers would leave by March 1.

Second round:

Offer to hourly workers opens Feb. 18 and closes the week of March 17. Workers would leave beginning April 1.

Offers:

Eight different packages are being offered. Non-skilled workers with 30-plus years of service, or whose age and years of service equal 85, or who are 65 or older with one year of service can get a $50,000 (U.S.) payment to retire early; skilled workers can get $70,000. Workers near retirement age can take paid leave until they retire. Three packages will pay for either a four-year education and 50 per cent of salary; two-year education and 70 per cent of salary; or $100,000 for a family member's college education.

Workers can also take $100,000 or $140,000, depending on service, to leave Ford and forego future benefits.

Associated Press

                    **********************************************

Ford Motor to offer buyouts
to all US hourly workers

January 24, 2008

Ford Motor Co. is expected to offer a new round of buyouts to all of its 54,000 U.S. hourly workers, a move that could trim thousands of jobs and pave the way for lower-wage replacements.

Ford spokeswoman Marcey Evans confirmed Wednesday that the company and the United Auto Workers have reached an agreement under which the automaker could offer buyouts to UAW-represented hourly workers, but she wouldn't give details. Earlier this month, however, Ford's vice president of North American manufacturing Joe Hinrichs said any buyout offers would be extended to all of Ford's hourly workers.

Details of the buyouts were expected as early as Thursday, when Ford releases its 2007 results. Chief Executive Alan Mulally said this week that the company would discuss buyout details that day.

Jim Stoufer, president of UAW Local 249, which represents 4,300 workers at Ford's Kansas City Assembly Plant in Claycomo, Missouri, said he was told the buyout terms would be similar to those offered in 2006. Under that program, hourly workers were offered eight packages ranging from $35,000 to $140,000, including one that offered up to $15,000 per year for four years of college tuition. Approximately 33,600 hourly workers left under the 2006 buyout program.

This time, the buyouts will usher in a lower-paid work force. Under Ford's new contract with the UAW, which was reached in November, the company can replace employees taking the buyouts with workers who would be paid $14.20 per hour, or about half the wages of a current worker. Under the contract, up to 20 percent of Ford's U.S. hourly work force can be paid at the lower wages.

Detroit's other automakers are also trying to trim their hourly work forces. General Motors Corp. has begun offering early retirement packages and buyouts to 5,200 UAW hourly workers at service and parts operations, but has yet to make similar offers to workers in assembly and parts plants. GM is close to agreeing with the UAW on the second round of buyouts and hopes to announce details in February, GM spokesman Dan Flores said Wednesday.

Flores said the offers would be similar to those made in 2006, when workers were given between $35,000 and $140,000 to leave and were also presented with several early retirement options. Flores said 34,410 workers opted to leave under that program, but GM still has 21,500 workers with 30 or more years of service.

Chrysler LLC announced late last year that it would lay off up to 10,000 hourly workers, largely due to shift cuts at plants. Four of those plants already have received details of Chrysler's benefit packages, which include early retirement incentive payments of up to $70,000, spokeswoman Michelle Tinson said Wednesday.

                                                                                                                                                                                                                                                                                            
****************************************************

 

Ford can weather downturn: CEO

Jan 22, 2008 11:53 AM

The Associated Press

DETROIT–Ford Motor Co. has sufficient liquidity to weather an economic downturn, even if the economy worsens this year, Chief Executive Alan Mulally said Tuesday.

Mulally said the automaker initially believed it would need $17 billion for restructuring and to cover losses, but was able to raise $23 billion, giving it enough of a cushion.

Mulally said he doesn't know if he has enough time to fix Ford, although he is confident in its restructuring plan that calls for a return to profitability in 2009.

"The plan we put in place is absolutely the right plan," he said during an appearance at the Automotive News World Congress in Detroit. "We're going to create an exciting and viable company.''

Mulally called the Federal Reserve's three-quarters of a percentage point cut in the federal funds rate a decisive and positive action.

"I think that it's going to be a positive," he said. "But I also like the continued dialogue to work all of the pieces in the economy because there's just a lot of elements that can be worked. But to move decisively like this, I think is a very positive thing for all of us.''

The surprise reduction in the federal funds rate from 4.25 down to 3.5 percent marked the biggest funds rate cut on record going back to 1990.

Mulally also said Ford's plan for a potential recession is to adjust its current restructuring plan, matching factory capacity with consumer demand and continuing to invest in new products.

He wouldn't talk about any further plant closings or other reductions that might be in the works.

"We really don't know how it's going to turn out, and we have such a range, as you know, in forecasts on the volume," he said. ``We're just going to watch it carefully like we have been and then move decisively and not end up building up excess inventory.''

Mulally also likes the possibility of an economic stimulus package and said he trusts the federal government to come up with the right solution.

Also during the speech, Mulally said a new Ford Taurus, once the best-selling car in the U.S., is coming in 2009, although when asked about it later he said: "I probably said too much.''

Ford's car sales plummeted 24 percent for all of 2007 as some models like the Ford Mustang aged and a new Taurus sedan was unable to match the volumes of the older version. Ford also cut rental-car sales by 32 percent over the year.

Ford stopped making the Taurus in October 2006 after 21 years and sales of nearly 7 million cars, but brought it back last fall by renaming the Five Hundred sedan and the Freestyle crossover vehicle. Taurus sales were down 19 percent last year compared with sales in 2006.

Mulally also said the company on Thursday would announce the details of another round of buyout and early retirement packages for hourly workers when it releases its 2007 earnings and projections for the future.

************************************************

Ford Apologizes for Ad Campaign

Canwest News Service


Saturday, January 19, 2008

 

WINNIPEG -- Ford Motor Company of Canada has issued a public apology and cancelled a newspaper advertising campaign which left some readers believing it was encouraging vehicle theft.

A full-page ad that appeared in the second section of the Winnipeg Free Press, and many major daily papers across western Canada, contained a picture of a Ford SUV with a bumper sticker that reads: "DRIVE IT LIKE YOU STOLE IT."

"You look at that and you think, 'What were they thinking?' " said John Douglas, Manitoba Public Insurance Inc.'s vice-president of public relations and corporate affairs.

"Auto theft is a high-profile public issue in Winnipeg and in every major city across Canada. We've all had issues with vehicle thieves driving recklessly and endangering people."

A Ford spokeswoman said the company apologizes to anyone who was offended by the advertisement and said the campaign had been cancelled.

"It was never our intent to offend anyone with this ad," said Jina Gehlert, public affairs manager for Ford. "We'd like to apologize. We made a decision to pull the ad."

Douglas said he was disappointed and surprised to see the advertisement, particularly because Ford has played a leading role in deterring auto theft among North American auto manufacturers. Douglas said Ford was the first automaker to install ignition immobilizers in 1998, and the company put them in all its cars before government forced manufacturers to do so.

"That ad showed there is a disconnect between the advertising arm at Ford and the dedicated engineers and others who build the product," Douglas said. "Ten years of hard work went down the drain because someone thought it was witty to put a flashy slogan on a bumper."

The ads struck a nerve in Winnipeg, where vehicle theft has been grabbing headlines all year long.

A 16-year-old boy was sentenced to 21 months in custody Thursday for his role in the death of James Duane, 58, who was struck and killed by a stolen GMC truck last July. The boy received a 21-month sentence after he pleaded guilty to criminal negligence causing death.

Duane was the second innocent Winnipegger to be killed by a car thief last year. Rachelle Leost, 39, was killed on her way to work when the van she was driving was struck by a speeding stolen car. Two men, aged 31 and 20, have been charged.

***********************************************

Philosophies clash over Ford plant 


The Canadian Press

TORONTO (Jan 18, 2008)

The future, if any, of Ford of Canada's Essex engine plant in Windsor could depend less on manufacturing fundamentals than on a clash of economic philosophy and practical politics.

Federal Finance Minister Jim Flaherty stressed yesterday that Ottawa will not provide a subsidy seen as essential to get the factory running again.

The Essex issue -- with the provincial Liberal government promising assistance and the federal Conservatives insisting that broad tax cuts are more effective -- crystallizes a public policy question:

Should governments assist specific companies and, if so, by how much?

The factory had 2,000 workers at its peak and about 500 when it shut in November after almost three decades of making V-6 and V-8 engines.

Reports suggest reopening it would cost $300 million and might recreate 300 jobs.

Ford has lined up a pledge of $30 million in provincial assistance and is said to have sought a similar contribution from Ottawa.

"Once again we have (Premier) Dalton McGuinty running a government with the highest taxes on business investment in Canada, and taxing all businesses, as I say, at the highest rate and then selecting which businesses, which corporations, he wants to subsidize," Flaherty said.

"That is certainly not our approach federally."

The federal minister is "rejecting further discussion based on an ideological opposition to something that virtually every government that wants automotive investment does," responded Ontario Finance Minister Dwight Duncan, who represents Windsor.

"I actually worked in that plant for two summers," Duncan said yesterday.

Duncan noted it was built in the late 1970s with help from the provincial Conservative government of William Davis and the federal Liberal administration of Pierre Trudeau.

Now, Duncan said, "with a relatively modest investment by both governments, it would mean probably a very quick payback in terms of taxes."

Canadian Auto Workers president Buzz Hargrove sent an angry letter to Flaherty and Prime Minister Stephen Harper.

Hargrove said Flaherty's contention that tax breaks are all that is required to assist the industry "is not credible."

***********************************************************

China major threat to auto industry: CAW

Jan 17, 2008 11:00 AM

THE CANADIAN PRESS

OTTAWA–North America's Big Three automakers would be pummelled ``like boxers with one arm tied behind their backs" if Chinese companies flood the market with low-priced cars and trucks, says the head of the Canadian Auto Workers union.

CAW president Buzz Hargrove said General Motors, Ford and Chrysler will have a tough go against Chinese automakers since Beijing places strict trade restrictions on foreign companies selling cars in China.

That puts the Big Three at a disadvantage, he said, since Canadian and American trade rules are more lax than China's.

"We're getting beat up," Hargrove said.

"GM, Ford and Chrysler are just like boxers with one arm tied behind their backs, where these countries that are protecting their market and shipping in here, it's just so unfair and so one-sided."

Industry Minister Jim Prentice defended the Conservative government's international trade policy in an interview with The Canadian Press.

"It would be in the interest of Canadian consumers to be able to purchase products that are available on the market resulting from free and fair trade," Prentice said.

However, he conceded Canada's automotive industry has been pinched by a softening U.S. economy and the strengthened loonie, which reached parity with the greenback in late September en route to a record high of $1.10 in November.

If the number of display booths at the annual auto show are any indication, it appears more and more Chinese companies are poised to get into the North American automotive game.

Chinese automakers had their biggest turnout to date at the recent North American International Auto Show in Detroit, with displays by four automakers and one importer.

Two years ago, a single Geely Automobile Co. sedan was the first Chinese automaker on display at the auto show. Geely was absent last year but China's Changfeng Motor Group had on display a pair of small sport utility vehicles and two pickup trucks.

China America Co-operative Automobile Inc. – known as Chamco – said it plans to enter the lucrative North American market this year. The company is to enter the U.S. market later this year, followed by the Canadian market in 2009.

Chamco's sales target is 15,000 vehicles – the company will sell a pickup truck and SUV – when it comes to Canada, chairman and CEO William Pollack told reporters at the Detroit auto show.

The starting price is pegged at about $13,500 US.

There's worry an influx of cheaply-priced Chinese vehicles hitting Canadian streets could undercut domestic automakers in the market.

"It certainly can be a cause for concern," said Chrysler Canada spokesman Ed Saenz.

"We attempted to weather the introduction of a large number of Japan-based products 30, 40 years ago, Korean products in the last 10 or so, and at some point in the future, probably China and after that, maybe even India."

Chinese automakers entering the North American market is but one of a number of hurdles facing the auto industry as a whole.

North American-based automakers must also contend with long-term market share loss to other Asian and European competitors, the strengthening of the Canadian dollar that's hurting most manufacturers that export to the United States, and a new round of labour negotiations with the CAW later this year.

"The danger is we're going to move to simply a consumer market without any production of vehicles. And it's that serious," Hargrove said.

"(Foreign automakers) are killing us and throwing a lot of people out of work and we can't get the government to do anything about it, unfortunately."

The federal government imposes tariffs and trade restrictions on foreign manufacturers importing vehicles into Canada. Chinese vehicles would also have to meet federal transport standards before being sold in Canada.

Francois Jubinville, a spokesman for Trade Minister David Emerson, said Ottawa doesn't have a specific tool to limit the entry into Canada of vehicles made by Chinese companies.

"I don't think there's anything dramatically specific with respect to Chinese automobiles. You'd have the same tools at our disposal that we have with respect to any import," he said.

Some say it's just a matter of when, not if, Chinese automakers will get the green light to sell vehicles in Canada.

When that happens, Chinese automakers would be well-advised to look at South Korean company Hyundai's first forays into the North American market, said Tony Krajewski, a consultant in the automotive practice at Deloitte.

The small, rear-wheel drive Pony was a hit in the 1980s when Hyundai introduced it to the Canadian market. But Krajewski said Hyundai's best move was pairing an inexpensive car with one of the strongest warranties in the business.

The move allowed Hyundai to bypass the perception its vehicles aren't as reliable as their North American counterparts.

"That was a terrific stroke of brilliance on Hyundai's part," Krajewski said.

Geely said at the auto show it also plans to sell vehicles in Canada starting in 2009.

Chinese automaker BYD, which is also one of the world's top battery suppliers, said it will begin selling a plug-in hybrid sedan in China by the end of this year and wants to bring the vehicle to North America in three to five years.

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Ford to review dealer network again

Jan 16, 2008 10:09 AM
Reuters

DETROIT–Ford Motor Co. said today it is planning to review its vast dealer network in North America again and slash its spending on building vehicle prototypes in half over three years.

Ford, in materials for a presentation to analysts in Detroit, also said it plans to decentralize its North American marketing and sales spending.

Ford has already cut more than a 120 Ford, Lincoln-Mercury dealers in the past couple of years.

The U.S. automaker had 4,300 U.S. dealers when it announced plans in 2006 to shrink the network. It did not set a specific target at the time.

Ford has lost nearly 1 percentage point of U.S. market share every year since 2000, and is slashing production capacity by closing over a dozen plants.

Last year the automaker's sales fell 12 percent and ended 2007 with a U.S. market share of 16 per cent.

 

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FORD OF CANADA NAMES NEW PRESIDENT AND CEO


Barry Engle

  • OAKVILLE, Ontario, January 15, 2008 – Ford Motor Company of Canada, Limited, today announced the appointment of Barry Engle (above) as president and CEO, effective February 1, 2008.  He replaces Bill Osborne, 47, who has been named president, Ford Australia. 

Since joining Ford in 1992, Engle, 44, has held a variety of roles in sales and marketing, dealer services and product strategy in South America, Mexico, Japan and the United States.  In 2005, he was appointed president of Ford Brazil, and later president of Ford Mercosul, with responsibility for Ford’s operations in seven South American countries including Brazil.  He was named to his current position as general manager, marketing, for Ford Division at Ford Motor Company in Dearborn, Mich. in January 2007.

“Barry’s been a key player in our efforts to help improve Ford’s reputation among American customers, growing awareness of our product strengths – especially quality and driving performance,” said Mark Fields, president of The Americas.  “This success and his strong track record of strengthening brands, driving sales and growing market share in Brazil will help Ford of Canada continue to build on its strong momentum in the marketplace.”

In Canada, in 2007, Ford once again captured the “best-selling vehicle” title with the Ford F-Series, a distinction the company has now held for five consecutive years.  F-Series was also named the top-selling pickup truck in the country for the 42nd straight year.  The company was a leader in the burgeoning crossover segment with hot sales of the Canadian-built Ford Edge and Lincoln MKX.

“I want to sincerely thank Bill for his commitment and leadership at Ford of Canada.  The results in Canada have been a bright spot in our North American operations,” Fields added.  “During the past few years in Canada, the company has increased retail sales, worked to stabilize market share and strengthened dealer relations, which ultimately means a better showroom experience for our customers.”

Engle is a 15-year auto industry veteran.  Before serving as president of Ford Brazil, he held a variety of leadership roles including general manager of Worldwide Direct Marketing Operations; director of North American Product Strategy and Planning; general marketing manager, Ford Customer Service Division within Marketing, Sales and Service in North America; director of Marketing, Sales and Service for Ford Brazil and director of E-Dealer Services, ConsumerConnect within Marketing, Sales and Service.  At Ford of Mexico, Engle specialized in strategic planning and merchandising.

In the U.S., Engle championed new marketing directions that focused on the quality, safety and fuel economy of Ford vehicles, especially the Fusion, Focus and Edge, in campaigns that included the “Fusion Challenge,” “Ford Challenge” and “Swap Your Ride.”   Ford F-Series also achieved its 31st consecutive year of full-size pickup truck sales leadership in the U.S. on his watch.

Engle oversaw the highly successful launch of SYNC, the Ford- and Microsoft-developed in-car communications system for controlling mobile phones and MP3 players using voice commands.

“I wish Barry all the best in his role as president and CEO of Ford of Canada.  It certainly has been one of the most rewarding experiences of my career,” said Osborne, who joined Ford of Canada in November 2005. “Canadians have welcomed me with open arms, both personally and professionally. I am proud of the many accomplishments the Ford of Canada team has achieved.”

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CAW, Ontario Government and Auto Industry
Push for Federal Action

A day prior to a January 11 meeting with Prime Minister Harper, Ontario Premier Dalton McGuinty met with top auto industry officials including CAW President Buzz Hargrove to discuss the challenges facing Canada’s auto industry. The meeting was attended by GM President Arturo Elias, Ford President Bill Osborne and Chrysler President Reid Bigland and Mark Nantais from the Canadian Vehicle Manufacturers’ Association and representatives from the Japanese manufacturers Toyota and Honda.

The three major stakeholders – the CAW, the provincial government and Canada’s auto assemblers –all agreed that the federal government must live up to its responsibility to support Canadian manufacturers and the workers it employs. There was consensus on the negative impact of the soaring Canadian dollar, the establishment of an auto development fund and incentives for Canada’s ailing auto industry. Hargrove said the incentives are extremely important but must be tied to new products and jobs.

“If the largest private sector union in the country, the major industry players and the provincial government can all agree on a plan of action, the federal government has an obligation and a responsibility to follow this lead,” said Hargrove.

The issue of unfair trade with Asian economies such as Korea concerned all three groups. Chrysler’s Bigland highlighted that in 2007, South Korea only allowed 5 per cent of vehicles to be imported into the country, which translated to a mere 500 Canadian-made vehicles sold there, compared to the 100,000 South Korean made vehicles sold in Canada last year.

Hargrove stressed the need for the federal government to move quickly on continental environment standards for the auto industry and eliminate the uncertainty facing workers, their families and the industry.

Hargrove also voiced support for the development of a potential high-speed rail corridor between Windsor and Quebec City, which the McGuinty government has proposed for a feasibility study. He urged that any purchase of new equipment for the project must follow a domestic procurement policy ensuring investment and jobs for Canada.

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Ottawa 'actively involved'
in Ford talks

Jan 11, 2008 05:09 PM

Gary Norris
THE CANADIAN PRESS

The federal Conservative government faces a test of its economic strategy as it considers providing millions of dollars to help revive a recently closed Ford of Canada factory in Windsor, Ont.

Ford refused to comment Friday on a report it has lined up $30 million from Ontario and is seeking a similar amount from Ottawa to build new and more environmentally friendly V-8 truck engines at the Essex plant.

"We continue to explore product opportunities for Essex engine plant," said Ford spokeswoman Kerri Stoakley, declining to say any more.

"For competitive reasons we can't discuss future product plans."

Finance Minister Jim Flaherty said he was "aware of the issues that have been raised about the engine plant in Essex" and that Industry Minister Jim Prentice has been "actively involved."

"The auto sector is a high tech sector today and it's important that they are in a position to be more productive, to be more competitive, so those discussions are ongoing including the discussion about the Ford situation."

Canadian Auto Workers economist Jim Stanford said the union knows nothing formally about any Ford proposal for the plant, closed in November after 27 years of producing V-6 and V-8 power plants.

However, he said, "This decision will be an important litmus test to see whether under (Prime Minister Stephen) Harper's leadership the federal government is still part of the picture when it comes to building our industry."

Stanford said providing matching contributions from Ottawa and Queen's Park "has been the practice in recent major auto investments in Canada – all of the major ones that have occurred: Ford Oakville, the GM Beacon plant, the Toyota plant, the Chrysler operations and so on."

Kam Hon, an industry analyst at DBRS, noted that Ford has indicated it is investigating the possibility of building its own truck engines after falling out with Navistar, which has been providing diesel engines for large Ford pickups.

"However, Ford still has a supply contract with Navistar and it is uncertain how Ford wants to address that issue," Hon said in an e-mail.

"Ford will likely build its own engine in the long term but Ford's intention is tough to call in the short term."

A large taxpayer subsidy "should help support the financial case in reopening the plant," he added.

"However, the number of jobs will depend on Ford's decision regarding the Navistar contract. One more wild card is that, with the new CAFE (U.S. fuel-economy) regulation, all auto companies are shying away from V8 engines."

The CAW's Stanford said he did not know the amount of money being sought from government or how many jobs might be involved.

However, "We would view it as very important for Ottawa to be at the table as the industry restructures," he said.

"This type of new-phase investment is incredibly important to the future of the industry."

The Essex plant in the hard-hit industrial city in southwestern Ontario had about 500 workers by the time it closed, down from more than triple that number in recent years.

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Ford fires warning shot at CAW

GREG KEENAN

Globe and Mail Update

January 9, 2008 at 6:42 PM EST

DEARBORN, Mich. — — North American car buyers don't care where vehicles are built, so the Canadian operations of Ford Motor Co.]must become more competitive if the company is going to continue manufacturing in Canada, senior company executives warn.

 

"The most important conversation we're having in Canada is about competitiveness," Ford chief executive officer Alan Mulally said during a dinner at the company's headquarters on Tuesday.

 

"It's the competitiveness of Ford, it's the competitiveness of operating in Canada."

The new contracts Ford and its Detroit rivals have signed with the United Auto Workers union have substantially reduced the three companies' U.S. labour costs. Those reductions, combined with the surge in the value of the Canadian dollar against the U.S. currency, have changed the competitive landscape and turned Canada into what is believed to be the highest cost jurisdiction in the world to manufacture vehicles.

 

Ford's St. Thomas Assembly Plant near London, Ont., makes full-sized sedans that are sold mainly to taxi operators and police forces

 

Ford's St. Thomas Assembly Plant near London, Ont., makes full-sized sedans that are sold mainly to taxi operators and police forces.

Ford Motor

Global

"The Canadian business from a manufacturing standpoint has to be competitive with what we do in the rest of the world," said Joe Hinrichs, group vice-president of global manufacturing, one of five senior Ford executives at the dinner.

 

"The marketplace doesn't look at a vehicle built in Canada versus a vehicle built in the U.S. and see it differently, so we have to have a manufacturing model and a business model that works if we're going to sell vehicles made in Canada in North America," Mr. Hinrichs said.

The Ford executives made their comments at the design studios of the company's Lincoln luxury division near the company's world headquarters in Dearborn on the eve of the North American International Auto Show, which begins Sunday in Detroit.

 

They mark the first statements by any senior Detroit Three executives about the coming negotiations with the Canadian Auto Workers union.

 

CAW president Buzz Hargrove has already indicated that he expects this year's set of negotiations to be the toughest yet, given the Detroit Three's market share declines, the rise in the value of the Canadian dollar against the U.S. currency and the new UAW deals.

Mr. Hargrove has publicly stated, however, that key elements of the UAW deal are non-starters when it comes to the CAW talks, including a new, two-tiered wage system that allows the companies to pay newly hired workers $14 (U.S.) an hour, less than half what they're paying existing workers.

 

Another key change is that the Ford, Chrysler LLC and General Motors Corp. offloaded massive health care costs to a trust, wiping several billion dollars of liabilities off their balance sheets.

 

Mr. Hinrichs said labour costs in Canada and the United States had been diverging for several contracts even before the recent UAW deal, but mainly in benefits. He noted for example that Canadian workers get more time off the job than their U.S. counterparts.

Some union officials have noted privately that the extra time off in Canada — called SPA weeks for special paid absences — irritates company management and acknowledge that may be one benefit the CAW will have to surrender during this year's talks.

 

The biggest question mark at Ford Canada is the future of the St. Thomas Assembly Plant near London, Ont., which makes full-sized sedans that are sold mainly to taxi operators and police forces. The plant's work force was reduced to one shift last year. Mr. Hinrichs was asked at the dinner on Tuesday what Ford's plans are for the cars and whether the auto maker plans to announce any more assembly plant closings in Canada or the United States between now and the year 2010. He did not directly answer either question.

 

*****************************************************

Canadian Auto Workers President Buzz Hargrove leaves a news conference in Toronto in this Nov. 1, 2007 file photo. Ford Motor Co. wants to make its Canadian factories competitive with its U.S. operations in upcoming contract talks with the Canadian Auto Workers. But CAW President Buzz Hargrove says the union won't agree to two-tier wages and other changes in new contracts with Detroit's Three automakers. (AP Photo/The Canadian Press, Adrian Wyld, file)Ford: Canadian Plants Must Compete

Wednesday January 9, 6:18 pm ET
By Tom Krisher, AP Auto Writer

Ford Seeks More Competitive Canadian Factories; Union Says It Won't Accept Two-Tier Wages

DETROIT (AP) -- Ford Motor Co. wants to make its Canadian factories more competitive with its U.S. and other operations in upcoming contract talks with the Canadian Auto Workers, but the union says it won't agree to two-tier wages and other changes that were ratified by the United Auto Workers in the U.S.

The UAW agreed with all three Detroit automakers to a lower-tier pay and benefits schedule for some new hires, and the automakers say they expect significant cost savings. The new hires would make around $14 per hour, less than half of what current assembly workers make. New hires also would get less-generous health and pension benefits than current workers.

Up to 20 percent of Ford's hourly work force can be paid the lower wages, plus all the workers at two parts-making plants.

"We have challenges in front of us, but as we did with the UAW, we're going to focus on what it takes to be competitive, what it means to be competitive, and then start from that basis and then try to find solutions that work for both parties," Joe Hinrichs, Ford's group vice president of global manufacturing, told reporters this week.

Among those challenges is the strength of the Canadian dollar, which now is about even with the U.S. dollar but historically had been worth far less.

Known as the "loonie" because of the bird pictured on the one-dollar coin, the Canadian dollar has gained ground on its American counterpart since hitting an all-time low of 61.79 U.S. cents on Jan. 21, 2002.

"Clearly, the recent challenges associated with currency add to already what were pre-existing issues, which were competitiveness of our operations and our agreements in Canada," Hinrichs said.

But CAW President Buzz Hargrove said the exchange rate shouldn't be an issue in the talks, which are scheduled to begin in July. Three-year contracts between Ford, General Motors Corp. and Chrysler LLC and around 37,000 CAW members expire on Sept. 16.

Hargrove said that during the years the Canadian dollar was low compared with the U.S. dollar, there was no pressure on the UAW to bring its wages down to Canadian costs.

"We don't anticipate it will be any different for us. We have no control over our currency," he said.

Hargrove also said the CAW would not agree to a two-tier wage structure.

"That's out of the question," he said, adding that the lower wages and benefits affect quality, productivity and relationships between the union and its membership and between workers and the company.

But he said the CAW would be willing to look at other ways to reduce costs, such as work rule changes, or ways plants can raise quality and become more productive.

CAW hourly workers at Ford made an average wage of $34 per hour in 2006, compared with $32.38 in the U.S., according to the company.

Ford has a key operation in Oakville, Ontario, which makes hot-selling crossover vehicles for Ford and Lincoln and also is to manufacture the new Flex larger crossover, which will come to showrooms this fall.

Hinrichs said historically contracts between the company and the Canadian and U.S. unions have differed, but such costs are meaningless to car buyers.

"The marketplace doesn't look at a vehicle built in Canada versus a vehicle built in the U.S. as being different, and so we have to have a manufacturing model and a business model that works if we're going to sell vehicles made in Canada in North America," he said. "And that's our challenge."

***********************************************

 

FORD MOTOR CHINA SALES RISE 30 PERCENT IN 2007, OUTPACING INDUSTRY IN GROWING MARKET

 China Map

  • For full-year 2007, Ford Motor Company retail sales in China totalled 216,324 units, a 30 percent year-over-year increase that outpaced the overall auto industry.
  • Ford's passenger car joint-venture, Changan Ford Mazda Automobile Co., Ltd., increased wholesale volume by 60 percent.
  • Ford Focus is the fastest growing mid-size car in the market and one of the top 10 selling vehicles in the Chinese market.

SHANGHAI, Jan. 9 -- Ford Motor Company took a major step forward in China in 2007, posting a 30 percent year-over-year sales increase and outpacing the industry in the fast-growing market.

Overall, Ford-owned brands -- Ford, Lincoln, Volvo, Jaguar and Land Rover -- sold 216,324 units for the year, a record for Ford Motor (China) Ltd. Ford's strong performance in China in 2007 was highlighted by strong sales of the Ford Focus and the introduction of the new S-MAX in March and Mondeo in November.

Ford's passenger car joint-venture, Changan Ford Mazda Automobile Co., Ltd. (CFMA), also posted a record year with wholesale deliveries rising 60 percent to 217,100 vehicles. CFMA produces Ford, Volvo and Mazda vehicles for the Chinese market.

“We are pleased with our growth in China," said Mei-Wei Cheng, Chairman and CEO of Ford Motor (China) Ltd. “What is more satisfying is that the growth is built on a sustainable base.”

Ford and its joint-venture partners operate three vehicle assembly plants and one engine manufacturing plant in China. Ford operations in China also include an automotive financing company, a Nanjing-based sourcing and R&D center and extensive sales and service operations. The first Chinese-built Ford passenger car, the Ford Fiesta, was introduced in China in 2003. 

“We will continue to invest in China and expand our operations to prepare for the next phase of our strategic growth program,” Cheng said. “We plan to continue to grow at a fast pace to further strengthen our position in China’s auto market."

Ford’s lineup in China

Focus
The Ford Focus was the fastest growing mid-sized car in China in 2007 and one of the 10 best selling cars in the market. Focus sales rose 57 percent in 2007 to 124,972 units. The Focus is also one of the safest cars in the market, earning a five-star rating in the C-NCAP collision test.

S-MAX
Ford launched the S-MAX SAV in March. To improve the value for customers, the S-Max with flexible seating for seven received a significant upgrade in standard features in December.

Mondeo
The all-new Mondeo sedan entered the Chinese mid-size premium segment in early November and has already established itself with customers. Lauded for its design and driving dynamics, the Mondeo reached 14,845 sales in China in just six weeks on the market.

 

**********************************************

Ford stock falls to
lowest level since 1986

Ford

Jan 05, 2008 04:30 AM

Detroit–Ford Motor Co. stock dropped to the lowest price since 1986 in New York trading yesterday after the company lost its status as the No. 2 seller of autos in the United States for the first time in three-quarters of a century.

Ford slid 32 cents (U.S.), or 5 per cent, to close at $6.13 on the New York Stock Exchange. The day before, Ford had forecast a 12 per cent drop in U.S. sales and a "challenging" 2008. Toyota Motor Corp., which modelled itself on Ford after World War II, has now overtaken the Michigan-based automaker on its home turf.

The market value of the 104-year-old company has tumbled to $13 billion from $68 billion in 1998, when Ford sold one of every four new vehicles in the U.S. Three restructuring plans since 2001 have failed to stem 12 years of plunging market U.S. share.

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Toyota passes Ford as No. 2 in U.S.

Toyota Ford

Toyota Ford

Ends Ford's 75-year lock on success of new products; GM still tops
Jan 03, 2008 02:57 PM
DEE-ANN DURBIN
The Associated Press

DETROIT – Toyota Motor Corp. overtook Ford Motor Co. to become the No. 2 automaker by U.S. sales in 2007, using new products and relentless strategy to break Ford's 75-year lock on the position.

Toyota sold 2.62 million cars and trucks in 2007, which amounted to 48,226 more than Ford, according to sales figures released Thursday. Toyota's sales were up 3 per cent for the year, buoyed by new products like the Toyota Tundra pickup, which saw sales jump 57 per cent. Ford's sales fell 12 per cent to 2.572 million vehicles.

General Motors Corp. remained the U.S. sales leader, selling 3.82 million vehicles in 2007. But that was down 6 per cent from the previous year as customers turned away from some large sedans and sport utility vehicles and GM cut low-profit sales to employees and rental car agencies. GM's car sales fell 8 per cent for the year while truck sales were down 4 percent.

Overall, the year was expected to be the worst for the auto industry since 1998 as consumers fretted over high gas prices, falling home prices and the economy.

Ford's car sales plummeted 24 per cent for all of 2007 as some models like the Ford Mustang aged and a new Ford Taurus sedan was unable to match the volumes of the older version. Ford also cut rental-car sales by 32 per cent over the year. Truck sales were down 5 per cent.

Ford corporate historian Bob Kreipke said it was the first time since 1931 that Ford wasn't second behind GM in U.S. sales.

Jim Farley, who recently became Ford's global marketing chief after a career at Toyota, said the new numbers won't change Ford's recovery plan.

"In fact, it actually accelerates the way we're running the business," Farley told The Associated Press in an interview Thursday morning. "It accentuates the difference between how we're running the business and how our competitors are running the business. It requires us to stick to the plan, no doubt, but it also requires us to really accelerate the development of new products.''

Farley pointed out that Ford had some hits in 2007, particularly its Ford Edge and Lincoln MKX crossover vehicles. Ford crossovers grew 62 per cent over the year, far outpacing the industry-wide average of 17 per cent, the company said.

Ford shares fell 12 cents to $6.48 (all figures U.S.) in afternoon trading after sinking to a new 52-week low of $6.45 earlier in the session. GM shares lost 46 cents to $23.95 after dropping to a 52-week low of $23.34 earlier in the day. Toyota's U.S. shares rose 39 cents to $106.85 in trading in New York.

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Chrysler surges to No. 2 in Canada

Automaker's sales up 5.6 per cent; GM down 4.2 per cent

Jan 03, 2008 03:02 PM

THE CANADIAN PRESS

Chrysler Canada hauled in a 5.6 per cent sales increase in 2007, pulling decisively ahead of Ford as the country's second-largest seller of cars and trucks.

Chrysler said Thursday its deliveries last month were up 2.9 per cent from December 2006, and full-year volume advanced to 232,859.

Market leader General Motors, meanwhile, moved 403,410 units on the year, down 4.2 per cent from 2006 – with a 28 per cent slump in December.

Marc Comeau, GM Canada's vice-president of sales, explained that GM has continued reducing low-profit sales to rental fleets, and "while this strategy has resulted in some overall sales declines we are experiencing good retail sales performance, higher residual values and solid sales from our recently introduced cars and trucks."

At Chrysler, year-over-year sales were higher in every month of 2007 as the automaker introduced nine new models and also steered away from rental-fleet sales. Its overall sales increase enabled it to boost its market share.

Sales at its Jeep division surged 62 per cent to a record 47,693, while Canadians bought 56,572 Dodge and Chrysler minivans.

For General Motors, the dismal December numbers included sales of 9,678 passenger cars, down 42.4 per cent from December 2006, while purchases of GM trucks, including pickups and sport utility vehicles, declined 15.9 per cent to 16,412.

**************************************

Bumpy Road Ahead
for Ailing Auto Sector

With 85% of domestic production exported south,
U.S. recession `could be fatal' for firms on the edge


Business Reporter Toronto STar
Jan 02, 2008

Kacee Vasudeva turned to India and Taiwan in late 2005 to stay in business in Canada.

In an effort to cut losses, the chief executive and majority owner of Maxtech Manufacturing Inc. turned to those countries as a source of cheaper steel components for his auto-parts plants in Canada.

It's a sign of a crisis in Canada's auto industry that has deepened during the past year and won't be easing next year, analysts say.

The auto sector, a key engine driving the Canadian economy, will be "on the bubble" in 2008, according to industry watcher Dennis DesRosiers.

If a slowing United States economy side-swipes auto sales, the Canadian industry will be in big trouble because domestic auto and parts makers export more than 85 per cent of their production south of the border, said DesRosiers, president of DesRosiers Automotive Consultants.

"It could be fatal for many parts suppliers who are already on the edge and just holding on," he said.

DesRosiers and most other industry analysts are already forecasting auto production and sales to decline in North America in 2008 on expectations of a softening U.S. economy.

But if the U.S. slows sharply amid a weakening housing market and the credit crunch, the impact on Canada's auto sector will be severe for many Canadian players already on shaky ground.

Vasudeva has seen Maxtech Manufacturing's annual revenues plunge from about $100 million to $50 million since the start of the decade, the result of rising commodity costs and energy bills, customer demands for lower prices, stiffer competition from offshore rivals and a soaring Canadian dollar.

Industry watchers call it a "perfect storm."

Maxtech, North America's largest producer of oxygen-sensor parts for vehicle exhaust systems, closed two plants, sold four business properties, cut unprofitable lines and slashed production costs. For example, the company imported semi-finished parts and then added value before shipping them out again.

The Waterloo-based company, which also reduced its workforce from 500 people to 310, has cut its losses, but Vasudeva acknowledged that 2008 will likely be "rough."

Vasudeva, who is a director of the Automotive Parts Manufacturers' Association, said governments need to provide loan guarantees so struggling parts makers can invest in equipment that will make them more competitive. "We don't want a handout, but just some assistance to help get over this bump."

Carlos Gomes, auto industry specialist at Scotiabank, said U.S. economic data shows credit and energy costs now consume 26 per cent of U.S. household disposable income, which leaves less money to buy cars and trucks.

As a result, U.S. auto sales are expected to drop by about 700,000 to 16 million vehicles next year, Gomes said.

Gomes is forecasting North American auto production will drop by about 400,000 vehicles to 15.4 million, the lowest number since 1993, resulting in "more casualties" in the sector here, he predicted.

In Canada, DesRosiers's forecasts sales will drop 3 per cent, by about 55,000 vehicles, to 1.6 million next year.

He said there will be less demand since the Canadian market has remained strong for about five years.

DesRosiers said auto makers have also brought Canadian sales forward by offering incentives in the past few months to match U.S. prices after the soaring dollar hit parity with the greenback.

Chris Travell, vice-president of Maritz Automotive Research, said automakers will likely continue the incentives early in the new year.

"It should be one of the best times ever to buy a car," he said.

On the production side in Canada, some analysts are forecasting a net decline of about 15,000 vehicles to 2.5 million.

General Motors and Chrysler have already announced plans to temporarily idle some plants in the first quarter. The two companies have also announced a reduction in the number of shifts at plants in Oshawa and Brampton next year.

However, production will start next year at Toyota's new assembly plant in Woodstock, which will offset some of the declining production at GM and Chrysler.

DesRosiers noted GM, Ford and Chrysler here are vulnerable because they make models that are less energy efficient at a time when consumers are shifting to smaller vehicles with better fuel economy.

Meanwhile, the three automakers will be pushing to cut labour costs when contract talks with the Canadian Auto Workers start next summer, in a bid to match the concessions they won in the U.S. last fall.

This year "will be the most challenging ever for us," said CAW president Buzz Hargrove, who has stressed his union will reject demands for major concessions.

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