At Home in Hespeler

Now that Ford has told the Canadian Autoworkers Union they want the same concessions bankrupt GM and Chrysler got, what choice does the CAW have? From day one their motto has been the same deal for all. It’s called pattern bargaining, and they insist it’s necessary for a variety of reasons, one of which is to not provide a competitive advantage to any one company.

“Wait,” I hear Ford workers saying. “Ford didn’t go bankrupt; Ford didn’t take government money; Ford is doing just fine, why should we give concessions?”

The answer: pattern bargaining. It works on the way up, and it works on the way down. Chrysler and GM weren’t good enough at doing business to survive with that contract, so why should Ford have to?

Thus, Ford Motor Company will get their wish, they will recieve the same concessions that the other companies got, and Ford’s workers will be pressured and threatened and cajoled into accepting those concessions, because that’s what’s good for Chrysler and GM employees.

Auto Industry, CAW, I Love My Job Canadian Auto Workers, CAW, Chrysler, Fiat, Ford, General Motors, GM, unions

Paulsstuff wrote A CAW workers voice of reason last Friday and has an interwebs hit on his hands, his post going so far as to being quoted in the National Post. Good on you Paul my friend, you done good. And frankly, you make a lot of excellent points that I have little disagreement with. (side note to Paulsstuff: my spidey sense says you work at the Brampton plant, as I do. Say hey to me sometime). So why do I disagree with him on the general premise? There are a lot of people asking us Chrysler workers to take one for the team, not one of whom has any, to borrow a Presidential phrase, skin in the game.

Just over ten years ago, successful, profitable Chrysler had a bankroll that was rumoured to be close to $10B. This was money that properly belonged to the stockholders, who had forfeited dividends to create a cushion, they were told, for the next time there is a downturn in the industry.  That downturn came in early 2000, and the money was gone.  Somehow, the money made it’s way back to Germany, somehow, Chrysler had no money. Daimler, it could be well argued, profited nicely from the “merger of equals.”

In 2007, Cerberus capital picked up 80% of Chrysler, as well as Chrysler financial. They also own GMAC, GMs financing arm. The extremely profitable Cerberus, has refused to put any of it’s assets into helping Chrysler, deeming it bad investment. That’s a problem, but here’s worse. The financial arm of Chrysler and GM, both Cerberus owned, heavily tightened rules regarding leasing. People buying cars these days report they can’t get financing through Chrysler credit: off to the banks they must go. So the ownership of Cerberus won’t invest in Chrysler, the financial arm of Chrysler, owned by Cerberus won’t loan people money to buy cars. And finally, Chrysler Financial won’t be taking $750M in federal bailout money, it is reported, because executives don’t want limits on their pay.

These are the people I am supposed to take a pay cut to help?

A new player on the scene is Fiat. Here’s their idea: they pay $0.00, they assume debt equalling $0.00 and they get 20% equity in Chrysler. The condition, I have to take a pay cut. In short, Fiat will take the 20% with no risk only if I, and my fellow workers, buy it for them.

Finally, there is Industry Minister Tony Clements, whose riding is Brampton and, I hope, everybody who lives in his riding and works at Chrysler remembers when their jobs were on the line, he went to bat against them. Clements has tax money aplenty, my and your tax money, and he’s willing to throw it away, if I take a pay cut.  This government may think they are having a good laugh, screwing the union now that they have a chance, but as I have pointed out before, the union may vote for Jack Layton and Paul Martin, but many of the workers vote Conservative – I well remember Clements old boss Mike Harris being at the plant and a line-up of people to meet him, all wanting to let him know they support him, even if their leadership says otherwise.

To Paulsstuffs specific points, I have little quibble. If they want to ditch the legal plan, tuition coverage, various secondary health benefits, have at it. But does anybody believe what ails Chrysler is too much orthodontics? Paying my legal fees when I move every ten plus years? I argued two years ago the extreme mis-management case, and I stand by it.

However, one point I’ll disagree with Paulsstuff: two tier wages. It’s not that I don’t see the seduction of this, and furthermore, it’s not the supposed to be the unions job to save the company from itself. But since that’s what these talks are about, saving the company from itself, it apparently now is the unions job. But you see, two tier wages will just make everything worse.

Remember that extreme mis-management I was talking about. Here’s an example: everybody, but everybody, agrees the biggest problem is “legacy costs,” ie. pensions and benefits paid to retired workers. Last year, when the UAW decided to give two tiered wages, what was the result? The companies threw over $100,000 buyouts on the table for older workers to leave, many of whom retired to the legacy cost side of the ledger.  They filled their jobs with younger cheaper workers, but put guys in pensions who wouldn’t otherwise be in pensions, and might not be for years.  They lowered operating costs, they added legacy costs.

I have a hard time accepting that I have to do more for less (after 20 years, my holiday time is decreasing by anywhere from one to three weeks) when the people asking for sacrifice have so little real stake in the company.  Lots of people who stand to benefit if the miracle happens, but the only people with any money at stake seems to be the workers (and suppliers, of course).  And if I thought it wasn’t just prolonging the agony, I might fall in line anyway. But this parrot is dead, and all anyone is realling asking the workers to do is nail it’s feet to the perch. Paul, if they can’t make a go of it with GMs deal, after three other round of concessions in the past three years, then they can’t make a go of it. Perhaps it’s time to let Chrysler run down the curtain and join the bleedin’ choir invisible.

Auto Industry, CAW CAW, Cerberus, Chrysler, Chrysler Credit, Daimler, Daimler Chrysler, Fiat, Industry Minister Tony Clements, Paulsstuff, spidey sense, two tier wages, UAW

GM has said they don’t want, nor need, Canada’s short term loans, for now:

General Motors Corp.’s Canadian arm says it may not use $3-billion in emergency aid pledged by the Ontario and federal governments several more months, stating it is focused instead on long-term restructuring talks to ensure it keeps operating.

It seems innocuous enough, but other media are reporting this story as GM has refused Ottawa’s money:

General Motors of Canada has turned down an offer by the federal and Ontario governments of emergency short-term aid, a move that has stunned some analysts and left negotiations on a highly touted auto bailout in limbo.

Count this analyst along with the stunned if this is true.  There are only two reasons to turn down the money. One is that they don’t intend to continue in Canada – perhaps new American money from the new American administration comes with a “no jobs leave America while you have jobs elsewhere,” clause.

The second possible reason is that the CAW is not playing ball refusing all concessions. GM would then not be eligible for the money. However, if that was true I would expect GM to say so, thus putting pressure on the CAW to compromise.

Whatever the reason, one thing is clear. GM wants the flexibility to leave it’s Canadian operations, at least in the short term. A company who wasn’t expected to make it through Christmas doesn’t leave $3B on the table. This one looks like bad news for the Canadian auto industry.

Auto Industry, CAW

Last night I posted that the effects changes to Employment Insurance in the mid-90’s had a dramatic cost on the auto Industry, the payments for which have now come due. Mere hours later, The National Post hit the street with a front page comment by John Ivison that expands on my thesis.

Significantly about federal government plans to add stimulus through the EI system, Ivison notes:

…he expects the government to create a more level playing field across the country when it comes to who qualifies for EI, so that an unemployed auto worker in Southern Ontario can access the same amount of benefit, for the same length of time, as an unemployed fisherman in Newfoundland. At the moment, Ontario workers are disadvantaged when it comes to coverage and benefit period.

Lets be clear, when Ivison talks about Ontario workers, he means the auto industry.

Now here’s what I had to say on EI, just last evening:

Paul Martin balanced the budget in part… on the back of the auto companies, who every party now seems to agree need a bailout…

When Stephen Harper sits down to sort out the EI mess that Paul Martin & The Supremes have just handed him, and Jack Layton calls him to ask what he’s doing about the auto jobs, he should look at the changes made to EI that affect the auto companies and consider undoing them.

So you see Mr. Harper, I write tomorrow’s headlines, today. The perfect candidate for team Harper up in Ottawa. Why would you give a red velvet seat to some Toronto Red Tory?

Auto Industry, National Post, The Media Following My Lead.

The last few weeks a couple of things have happened. One is that the Parliamentary opposition, including the Michael Ignatieff led Liberals, have screamed for stimulus, in large part to the auto industry. Another is the Supreme Court ruled that the Liberal run Government of Canada of the 2002, 2003 and 2005 illegally rolled Employment Insurance surpluses into general revenues.

The two stories are connected.

Many years ago the unions negotiated a benefit called Supplementary Unemployment Benefit (SUB). It is, in essence, a guaranteed income supplement, that promises the company will top up EI funds to 85% of the workers wage. Back when it was negotiated it meant a small weekly stipend for the company during lean times and they could maintain their work force for good times.

As an example, the first time I wound up on temporary lay-off, EI (or UIC as it was then called) sent me a cheque for something in the $400’s, SUB for less than $100 ($85 I think).

In the 90’s Jean Chrétien’s Liberal government revamped the Unemployment system, making it more expensive, harder to access and with a decrease in benefits. As an example, somebody who collects EI two years in a row must repay 15% the second, and every subsequent year. When announcing the changes to EI, Finance Minister Paul Martin talked about companies using EI to supplement their workforce.

The result is predictable and generally what was desired. If I get laid off now, the EI cheque is still in the $400’s, the SUB cheque for an amount greater than the EI cheque. Furthermore, it didn’t take long for the unions to argue that the 15% claw-back meant the employees were making less than 85%, and the companies began reimbursing it.

The result is that for the auto companies to temporarily lay-off their work force for re-tooling or inventory adjustment, it now costs them somewhere in the neighbourhood, and probably in excess of, 50% of the employees wage.

I don’t present this as evidence for or against the SUB plans. They are a reality in the automotive industry and the companies themselves used the plans to supplement their labour costs when cyclical demand for their product was low. Paul Martin balanced the budget in part by illegally using the Employment Insurance fund as a tax revenue, and he did so partly on the back of the auto companies, who every party now seems to agree need a bailout. When the companies you built policy on ten years ago can get an all party consensus that they need bailed-out a decade on, your legacy takes a hit.

When Stephen Harper sits down to sort out the EI mess that Paul Martin & The Supremes have just handed him, and Jack Layton calls him to ask what he’s doing about the auto jobs, he should look at the changes made to EI that affect the auto companies and consider undoing them.

Auto Industry, CAW

I’ve noted before that bad management is the auto industry is real. My out of the house life, like most people, is run by idiots: supreme, extreme idiots. I build cars for a living and yes, that does have a hemi in it.

That said, at least the people who run Chrysler have 1) experience in the industry & 2) a personal stake in the companies success. Unlike, say, Elizabeth May who if given the choice would tell Chrysler from Ottawa what cars they will build:

“Building things is not something Greens are against, it’s just a question of building the right things,” said the 54-year-old American-born May, who noted her party’s policy ideas are often overlooked. “The plants that are building the muscle cars and the trucks should be building small, energy efficient vehicles.”

Yea, yea, yea… and politicians who can’t even get a seat in Parliament should concentrate on getting a seat instead of touring the country FDR style and promoting a competing party. But politics is not my business and while I might offer suggestions to Elizabeth May, et al. I wouldn’t dare tell her how to do her job.

I’ll know it’s time to jump all over those buy-outs when activists/politicians are deciding what cars we should build.

Auto Industry, Elizabeth May

I have been at two events with union speakers the last month. At the first, an in plant celebration of the launch of the new Challenger, Jerry Dias, assistant to Buzz Hargrove and, I’m told, the next CAW President, spent his time at the mike taking pot shots at Jim Flaherty. This was a celebratory function. Everyone else talked about the great car, the great company, the great workers. Jerry Dias whined about someone who wasn’t there. I was standing beside a guy who was the head of one of our locals chapters (i.e. chairperson for one of the companies), and he says to me with a roll of the eyes, “classy guy.”

Ten days later I went to the “hurry up, get the vote in during a long weekend, we only have six months to get this done” ratification vote for a new contract. Local bargaining committee is not even in place yet, but we have one day to decide on the contract. So naturally you would assume it would be an informative meeting: you would assume wrong.

Instead CAW economist (and Globe and Mail columnist) Jim Stanford spends over an hour explaining why we had to sign the contract now: note the difference; not why we should like the contract, but justifying the contract they got. The reason they negotiated early, and got us the contract they did: Evil money traders, Stephen Harper, Jim Flaherty. An hour of cheap political shots, very little real information.

I mention these stories to explain to the wife why there’s cornflakes all over the kitchen. It’s Buzz Hargrove’s fault, honey. You see, after these two events, I thought cheap political points where OK, that’s what we do. Then I open todays Toronto Sun and voila:

Cheap shots at Premier McGuinty are unfair
By BUZZ HARGROVE

Oh, grow up Buzz!

So when Bob Runciman and Howard Hampton stand in the legislature and question giving money to a company who is laying off a few thousand Ontarians, it’s a cheap shot, and unfair to boot (unfair, by the way, is the official whine of the CAW).

On the other hand, attending a corporate celebration, or an unrelated contract ratification meeting, political thoughts are fair game. But doing so in the legislature, not so fair. Or rather, poking Conservatives in the eye, with other peoples money, is fine. Poking Liberals is cause for another bottle to go with the glazed chicken in truffle sauce.

One thing is becoming clear, I was right three months ago, Buzz is running in the next election, and auto-workers got sold down the river to accommodate that ambition.

******

Update: Progressive blogger Mack the Hackistan (i.e. Kevin Wilson) has written a piece for Now Magazine Blowing off Buzz.

Auto Industry, CAW, I Love My Job, Wasted Away Again in Buzzistan

The damage locally her in Waterloo Region is drastic. Two weeks ago it was Ledco closing it’s doors (here, here and here), now it looks as though Martinrea International Inc. will close it’s Kitchener plant, killing 1,200 jobs. For those who ever spent time here, Martinrea is the former Budd Automotive plant on Homer Watson Drive.

What’s worse is the Globe and Mail is reporting that once again, the company tried to negotiate with the CAW, once again the CAW refused to discuss concessions of any kind:

…[a] union official said yesterday that in those talks Martinrea wanted to reduce the $50-an-hour wage and benefit costs by 50 per cent.

Mr. Hargrove said the CAW will not agree to pay cuts, noting that his members could work for free at the GM truck plant in Oshawa, Ont., for example, but even that would not have stopped the auto maker from eliminating one of three shifts of production there.

Of course, if the government threw in half-a-billion dollars, that would help. If the employees do, that “would not have stopped” the company from closing the plant.

It’s getting hard not to notice that this blood bath seems pretty one sided – CAW plants are getting killed.

Auto Industry, CAW

A few weeks ago I wrote about the closing of Ledco in Kitchener and the CAWs refusal to negotiate concessions, even though their members wanted the negotiation to occur. The refusal to negotiate directly resulted in Ledco closing it’s doors and declaring bankruptcy. The CAW then occupied the plant, blamed Stephen Harper/globilization/the big three. Pithily, I commented:

…you have to wonder if the CAW has no shame: this closing is directly attributable to their refusal to negotiate, and now they are occupying the plant demanding the company do just that.

and

… does the CAW, today, still refuse to negotiate wage and benefit cuts? And if so, what car will GM put in Oshawa when they are done putting 16 cars in US plants?

Yesterday, Peter Shawn Taylor, a “Waterloo based Freelance writer,” with quite a resume, has written a piece on Ledco, CAW Kills Jobs, Then Demands Severance, and the unions involvement. Taylor makes a few interesting comments:

The union then picketed the empty building for a while. CAW head Buzz Hargrove dropped by once to blame the factory owners and Ottawa. The CAW’s most recent gambit is to demand that Ford, Chrysler and GM ante up for Ledco’s missing severance. This is based on the heretofore unknown financial insight that companies have an “obligation” to cover the payrolls of firms they do business with. Of course none of this makes any practical sense.

The real point of the CAW riding off madly in all directions — casting blame, flexing flaccid muscles and taking nonsensical actions –is to distract everyone from the fact that the demise of the Ledco workers’ jobs was a strategic decision on the part of the CAW itself. In short, they were expendable.

He’s right too. In order to prove to the big three that the CAW is serious about no concessions, they had to let Ledco die. Taylor then points out the CAW position on concessions

It’s worth consider the wording of the CAW’s no-concession statement: “We will not cut our wages, pensions, and benefits. That will never save our industry; at absolute most, it slightly defers the inevitable.”

While Taylor considers this a fatalistic view, I had a different thought. If the above is true, would it not also be true for government bail outs? Especially when you consider a one time bail out of half a billion dollars would be about one years (give or take a hundred or so million) payroll at a big three assembly plant. In other words, Paul Martin’s $200M to GM Oshawa would have equally been saved by now had the union gave a 30% wage concession.

The material point, however, is that an apocalyptic showdown is coming this fall, the big three vs. the CAW. The big three have US concessions from last year in their pocket that may make Canada the most expensive place in the world to build cars. The CAW has it’s stubborn refusal to save Ledco as proof, that concessions are off the table. If you think the Ontario’s manufacturing has been in trouble up to now, a storm is coming to the Canadian auto industry this fall that will determine the future of the industry in Canada.

Auto Industry, CAW, I Love My Job, Wasted Away Again in Buzzistan

Bad news tends to reign in the Canadian auto industry, and it’s easy to be pessimistic. Today, however, I am going to allow a little optimism to run it’s course.

Chrysler’s Brampton Assembly has had it’s share of tough news in the past few years, not the least of which is a shift cancellation later this month. Yesterday at the Chicago Auto Show Chrysler was showing off the new Dodge Challenger, which will be built at the Brampton Plant. I won’t go into the parts of the article relating to fuel efficiency and long term prospects for the car, although they are fair comment. As I said, today I’m running with optimistic. So instead, here’s some pictures of the nice looking Dodge Challenger.

Auto Industry, I Love My Job