Fiat CEO to Chrysler (UAW) Unions: Cut Costs or We Walk

[Solauren]

About Bloody Time

MILAN (Reuters) - Fiat SpA's chief executive, facing a two-week deadline to work out a partnership with Chrysler LLC, warned the troubled U.S. carmaker's unions he would ditch the idea unless they agreed to cut labor costs.

In a clear message to U.S. and Canadian unions, Sergio Marchionne told Wednesday's Globe and Mail newspaper a deal on the partnership had only a 50-50 chance of succeeding because of lack of progress in talks with union leaders.

"Absolutely we are prepared to walk. There is no doubt in my mind," Marchionne said in an interview posted on the Toronto newspaper's website.

The Chrysler unions had to agree to match the lower labor costs of plants run by Japanese and German carmakers in the United States and Canada, he said, adding that Canadian unions were especially resistant to the idea.

Nomura analyst Michael Tyndall said Marchionne was probably not bluffing in talking tough with the unions.

"He's playing hardball," he said, adding that the unions' position would make the deal too costly for Fiat. "We want them (Fiat) to walk away ... I don't see any benefits in this deal."

Under the latest version of the proposed partnership, first announced in January, Fiat would take an initial 20 percent stake in Chrysler in exchange for the technology to make small cars and access to foreign markets.

The two carmakers are under pressure to reach a deal on the proposal with Chrysler's unions and bondholders before an April 30 deadline set by the U.S. government.

Chrysler has been warned by Washington that it would go into bankruptcy if it fails to complete the deal, designed to save the smallest of Detroit's Big Three car makers.

But its lenders have so far refused efforts to eliminate most -- if not all -- of the $7 billion owed to them.

If a deal is reached, Chrysler would get at least $6 billion in extra government funding, having received $4 billion so far.

Fiat would get access to the U.S. market and gain the scale it needs to survive the worst industry crisis in decades. It would bring to North America its popular Cinquecento (500) car next year, while its premium Alfa Romeo brand would make cars in Canada or the United States, Marchionne said.

WHATEVER IT TAKES

Short of having Fiat inject cash into Chrysler, Marchionne vowed to do whatever it took to save the U.S. carmaker, including becoming chief executive.

"Fundamentally, that's possible, but the title isn't important," he said. "What's important is that they hear me."

He expected some of Chrysler's plants to close under the partnership.

The newspaper said Marchionne would not offer odds on a bankruptcy, other than to say that a filing for Chapter 11 bankruptcy protection was "an option" in the absence of a partnership agreement. He did not rule out a Chapter 7 liquidation filing, it said.

At 1102 GMT (7:02 a.m. EDT), Fiat shares were up 2.41 percent at 7.01 euros. The DJ Stoxx auto index was down 1.12 percent.

"(The market) liked it because he reiterated that Fiat would not take out any money," said one Milan dealer.

Many analysts still think the partnership will eventually cost Fiat money even if the terms of the deal do not oblige it to put up any cash.

U.S. private equity firm Cerberus Capital Management owns 80.1 percent of Chrysler and Germany's Daimler AG 19.1 percent.

Nice. About time someone told the unions off, in a way they can't resist

It's basically 'Enough of your extortion. Play fair like everyone else, and be prepared to lose some jobs, or else lose it all'.

Hopefully, the unions will get the clue. If they really think that no one will let them sink, they are wrong.

So very wrong.

[KrauserKrauser]

I remain skeptical that Obama and the Dems in Congress will play anything resembling hardball with the UAW. Color me surprised if I am proven wrong.

Kudos to Fiat for throwing the first punch, I wonder if the UAW brass realize how much the labour market isn;t going to give a shit if they threaten a strike. I sooooo want them to try and swing that bat around, maybe they'll knock their own heads off.

Any word on a UAW response?

[Solauren]

I remain skeptical that Obama and the Dems in Congress will play anything resembling hardball with the UAW. Color me surprised if I am proven wrong.

Kudos to Fiat for throwing the first punch, I wonder if the UAW brass realize how much the labour market isn;t going to give a shit if they threaten a strike. I sooooo want them to try and swing that bat around, maybe they'll knock their own heads off.

Any word on a UAW response?

The article is two hours old. So no.

[Coyote]

I think that some Union over-reaching policies definitely need to be shot down... for example, the "Jobs Bank" thing that GM has (I don't know if Chrysler has a similar program) and some of the other extravagent perks should go, but I do hope this doesn't become a "bust the unions!" movement.

[Darth Wong]

I think that some Union over-reaching policies definitely need to be shot down... for example, the "Jobs Bank" thing that GM has (I don't know if Chrysler has a similar program) and some of the other extravagent perks should go, but I do hope this doesn't become a "bust the unions!" movement.

I hope it does become a "bust the UAW/CAW" movement. They're goddamned parasites who have almost destroyed the entire auto industry, and who have harmed the interests of the majority of the workers in that industry. For every overpaid lazy-ass union worker, there are several non-union workers in the vast galaxy of contractors, suppliers, and sub-suppliers which are associated with the auto industry, all of whom work harder and for less pay than the union, in part because they've been ruthlessly squeezed by management for the last 30 years to make up for union demands.

[Solauren]

100% Agree with Coyote.

it's not so much we need to 'bust the unions', as we need to 'wake them up' to reality. And that reality; they are demanding to much for what they do.

I'd also like to know something; I've seen qoutes that the average cost of a GM line worker is $75/hr.

Assuming this is true, what the hell does that go into? How much of it is just wasteful (i.e job banks), and how much of it is actually reasonable? (i.e medical coverage in the US).

[Darth Wong]

It's not so much we need to 'bust the unions', as we need to 'wake them up' to reality. And that reality; they are demanding to much for what they do.

Wrong. We need to bust the unions. Simply getting them to scale back their demands won't change the basic nature of the way they operate. It will only put off the same problem into the future.

[KrauserKrauser]

I'll chime in with DW, the UAW need to be broken up not only for the good of GM/Chrysler/Ford but for the good of the Union movement in general.

They are a shining example of what can go wrong when you let a Union get into your business. Putting them in their place can only be good for the idea of a union shop as Unions will realize what they can and can't get away with when making demands of the company and alter their plans accordingly.

[Ma Deuce]

I'd also like to know something; I've seen qoutes that the average cost of a GM line worker is $75/hr.

That figure comes from taking the cost GM is paying in pension benefits for retired workers, divided among current workers. Your average UAW "lifer" is paid $28 per hour (although GM can now pay new hires $14/hr), but legacy costs for retirees come out to $42 per hour when divided among the current workforce. As you can imagine, something is very, very wrong when two-thirds of your personnel costs care going to your retirees. Some people (including the union themselves) think that adopting universal health care in the US would solve that, it is only part of the problem, as the pensions pay far more than just health expenses, and other industrial employers don't have to pay anything near that ratio.

While this is obviously still the UAW/CAW's fault, it isn't so much wages that are the problem but diamond-studded pensions, which are probably only exceeded by the those paid to unionized civil servants: Indeed some of the "transplant" auto factories now pay similar wages to the domestic union plants to ensure the union stays out, but their pension benefits are far closer to reality (and they have few US retirees to begin with). While GM was finally able to convince the UAW to pension concessions in 2006 after it first started hemorrhaging money (including finally switching over to a defined-contribution system), that still leaves it with a horde of retirees on the old system, and GM is not going to be viable on it's own until those parasites are jettisoned.

[Coyote]

I think unions are an important tool for employees to put protect themselves from exploitation. While I agree that the unions have demanded too much --and have a lot of the blame if the car companies go down-- I still do not trust the average corporation to look out for the interests of employees.

There was a time when I'd've sooner cut my tongue out than say that unions are useful, and when car plants folded because they refused to bow to union demands, I thought it was rediculous that strikers celebrated and cheered "bringing the corporation to it's knees"-- all they did was axe their own jobs.

But left to itself, any business will seek to cut costs by the usual means-- hiring the next batch of workers at lower pay scales, decreasing or eliminating insurance benefits, replacing staff with part-timers who don't qualify for benefits, or pressuring people to put in unclocked overtime, and threaten them with layoffs or firings if they protest. I don't mean to say "rar, businesses are evil!" --businesses are just that, businesses, and their openly stated goal is to make money... no secret in that, and nothing wrong with it, either. But workers need to watch out for their interests, because that is not the goal of business. I'm sure if a business could find willing, qualified volunteers to staff their factories for free, they'd do it in a heartbeat.

But, yes, when employees have to look out for their own interests, that's long-term. And that includes not squeezing the business dry and being the catalyst that ends their own jobs. So unions need to be set back and spanked, but smashed entirely?

[Darth Wong]

I think unions are an important tool for employees to put protect themselves from exploitation. While I agree that the unions have demanded too much --and have a lot of the blame if the car companies go down-- I still do not trust the average corporation to look out for the interests of employees.

And how do they help the 70-80% of employees who are not unionized and never will be for various practical reasons? Oh yeah, they don't. They actually screw them over at every opportunity and treat them as enemies.

But left to itself, any business will seek to cut costs by the usual means-- hiring the next batch of workers at lower pay scales, decreasing or eliminating insurance benefits, replacing staff with part-timers who don't qualify for benefits, or pressuring people to put in unclocked overtime, and threaten them with layoffs or firings if they protest.

That's what worker protection laws are for.

[Big Phil]

I think unions are an important tool for employees to put protect themselves from exploitation. While I agree that the unions have demanded too much --and have a lot of the blame if the car companies go down-- I still do not trust the average corporation to look out for the interests of employees.

There was a time when I'd've sooner cut my tongue out than say that unions are useful, and when car plants folded because they refused to bow to union demands, I thought it was rediculous that strikers celebrated and cheered "bringing the corporation to it's knees"-- all they did was axe their own jobs.

But left to itself, any business will seek to cut costs by the usual means-- hiring the next batch of workers at lower pay scales, decreasing or eliminating insurance benefits, replacing staff with part-timers who don't qualify for benefits, or pressuring people to put in unclocked overtime, and threaten them with layoffs or firings if they protest. I don't mean to say "rar, businesses are evil!" --businesses are just that, businesses, and their openly stated goal is to make money... no secret in that, and nothing wrong with it, either. But workers need to watch out for their interests, because that is not the goal of business. I'm sure if a business could find willing, qualified volunteers to staff their factories for free, they'd do it in a heartbeat.

But, yes, when employees have to look out for their own interests, that's long-term. And that includes not squeezing the business dry and being the catalyst that ends their own jobs. So unions need to be set back and spanked, but smashed entirely?

Unions are important and valuable - would you, however, say that UAW is important and valuable, at least moreso than it is a drain on the industry?

[Solauren]

Yes, the protection aspect is important.

Case in point: I for for the Ontario Government. You know, the people that enforce the labor laws around here. Guess what they love to do?

Contract employees. A little over half of the people I've worked within in the government are on contract. Some of them have been on contract for 20 years at the same job, with it up for renewal every 6 months.

I'm sorry, but after 5+ years, with some of the postions being classified as essential so they are filled in the event of a strike, those jobs should not be contract anymore. They should be made permanent positions. None of them are as of right now.

The UAW and CAW have gone above and beyond that, but I don't think busting them is needed. At least not 'busting them up'.

And as for the retiree's being parasites;

If retirees have any say in union contract talks/votes, that's the Union + Companies fault. Not the retiree's. After all, they can't strike, and they don't produce anything for the company.

Quite frankly, and I'm saying this with my father, grandfather, and several other relatives being GM/CAW retirees, if the 'legacy costs' are the problem, the CAW/UAW/Big Three need to come up with something better.

Retirement packages and continued health coverage instead of pensions would probably be a better idea.

Instead of paying out $2000 a month (or whatever a CAW/UAW/BIG 3 pension is), for who knows how long, give them a fixed retirement pay-off/package based on rate of pay/length of employeement to supplement there government pensions, continued health-care coverage (those jobs are murder on the body sometimes), maybe a discount on future purchase from the company, and then cut them lose.

If the retiree can afford to live after that, it shouldn't be the Union, or Companies, responsiblity. Same as while they are working for the company.

[Darth Wong]

Yes, the protection aspect is important.

Case in point: I for for the Ontario Government. You know, the people that enforce the labor laws around here. Guess what they love to do?

Contract employees. A little over half of the people I've worked within in the government are on contract. Some of them have been on contract for 20 years at the same job, with it up for renewal every 6 months.

I'm sorry, but after 5+ years, with some of the postions being classified as essential so they are filled in the event of a strike, those jobs should not be contract anymore. They should be made permanent positions. None of them are as of right now.

What precisely does "permanent position" mean to you? Most employees of normal companies don't even have a contract for the next 6 months. They could be given their pink slips tomorrow if their bosses feel like it, and they have two weeks to get out.

It seems to me that you're suffering from Bubble Boy syndrome: you haven't had enough exposure to the outside world to understand how this works for NORMAL people.

[Rogue 9]

Yes, the protection aspect is important.

Case in point: I for for the Ontario Government. You know, the people that enforce the labor laws around here. Guess what they love to do?

Contract employees. A little over half of the people I've worked within in the government are on contract. Some of them have been on contract for 20 years at the same job, with it up for renewal every 6 months.

I'm sorry, but after 5+ years, with some of the postions being classified as essential so they are filled in the event of a strike, those jobs should not be contract anymore. They should be made permanent positions. None of them are as of right now.

What precisely does "permanent position" mean to you? Most employees of normal companies don't even have a contract for the next 6 months. They could be given their pink slips tomorrow if their bosses feel like it, and they have two weeks to get out.

A whole two weeks? Wow, that's extravagant; usually I've seen more along the lines of "effective immediately, and we didn't tell you even though we've known it was coming for weeks because we were afraid you'd slack off if we did." The one time I've been laid off, they didn't plan on telling me until after I'd clocked out on my last day; I only found out a few hours in advance because I asked why I wasn't on the next week's schedule.

[Darth Wong]

Yes, the protection aspect is important.

Case in point: I for for the Ontario Government. You know, the people that enforce the labor laws around here. Guess what they love to do?

Contract employees. A little over half of the people I've worked within in the government are on contract. Some of them have been on contract for 20 years at the same job, with it up for renewal every 6 months.

I'm sorry, but after 5+ years, with some of the postions being classified as essential so they are filled in the event of a strike, those jobs should not be contract anymore. They should be made permanent positions. None of them are as of right now.

What precisely does "permanent position" mean to you? Most employees of normal companies don't even have a contract for the next 6 months. They could be given their pink slips tomorrow if their bosses feel like it, and they have two weeks to get out.

A whole two weeks? Wow, that's extravagant; usually I've seen more along the lines of "effective immediately, and we didn't tell you even though we've known it was coming for weeks because we were afraid you'd slack off if we did." The one time I've been laid off, they didn't plan on telling me until I'd clocked out on my last day; I only found out a few hours in advance because I asked why I wasn't on the next week's schedule.

You're right: they pay severance but they usually want you out the door the same day. My favourite firing story was the guy in Ottawa who was working at a badge-in security building. They held a fire drill, and when it came time to re-enter the building, his badge no longer worked. They brought his stuff out to him and told him to go home and not come back.

[Rogue 9]

A whole two weeks? Wow, that's extravagant; usually I've seen more along the lines of "effective immediately, and we didn't tell you even though we've known it was coming for weeks because we were afraid you'd slack off if we did." The one time I've been laid off, they didn't plan on telling me until I'd clocked out on my last day; I only found out a few hours in advance because I asked why I wasn't on the next week's schedule.

You're right: they pay severance but they usually want you out the door the same day. My favourite firing story was the guy in Ottawa who was working at a badge-in security building. They held a fire drill, and when it came time to re-enter the building, his badge no longer worked. They brought his stuff out to him and told him to go home and not come back.

Wow. I hope he deserved a good firing if they were that harsh about it. And yet we're expected to give employers two weeks' notice before quitting. I mean, you don't legally have to, but if you walk out, never expect to get hired for a long-term job again...

(Edit: And yes, the last bit is against the law, but good luck proving that you're having trouble because your old employer told the businesses you apply to the circumstances of your leaving.)

[Darth Wong]

A whole two weeks? Wow, that's extravagant; usually I've seen more along the lines of "effective immediately, and we didn't tell you even though we've known it was coming for weeks because we were afraid you'd slack off if we did." The one time I've been laid off, they didn't plan on telling me until I'd clocked out on my last day; I only found out a few hours in advance because I asked why I wasn't on the next week's schedule.

You're right: they pay severance but they usually want you out the door the same day. My favourite firing story was the guy in Ottawa who was working at a badge-in security building. They held a fire drill, and when it came time to re-enter the building, his badge no longer worked. They brought his stuff out to him and told him to go home and not come back.

Wow. I hope he deserved a good firing if they were that harsh about it.

It's not about his conduct. It's a high-tech company and they're worried about industrial espionage. Once they fire you, they want to eliminate any possibility that you will take sensitive data with you.

[Havok]

California is an "At will" state. Meaning that at anytime you can be fired for whatever reasonable reason, or you can quit for any reason at all. Notice is a courtesy on both sides and walking out/quitting with no notice will have no effect on your long term employment future as it is illegal for your previous employers to give out more than basic information to verify you worked there. That doesn't mean a jilted boss, or a retarded HR employee will not say what happened, but they are risking a lawsuit if they do and if you found out, and most employers don't care that much about you to do that.

Edit: Rogue, you edited just as I posted.

[Solauren]

After re-reading my post, I muddled up 'Making a position permanent' and 'making someone's job permanent'. My bad.

Maybe I should explain better:

I'm not talking about making staff permanent, I'm talking about making positions permanent. In other words: "Yes, we will always need someone doing this job." Who's actually doing it is not relevant to the requirement.

There are numerous positions in the government that, by there own requirements and regulations, are supposed to be made 'permanent' (i.e minimum number of auditors, tax collectors and field agents per regional office, minimum number of security for a given building's size/staff, etc). While this doesn't guarantee job security, it does increase it.

That's one of the things the unions sometimes screaming about; Having the government live up to their own regualtions.
(Or more specifically, not take 2 years to start the process to fill positions that have become vacant. Or at least come up with a process that doesn't take 2 years to get going.)

However, anyone in such a position can still be fired. The 'having' of a job is no more permanent then anywhere else.

Case in Point: The recent Ontario budget included a 5% reduction in the number of Ontario public servants. Also, most of the Retail Sales Tax division's jobs are now hanging by a thread due to the fact the PST is being folded into the GST, and will be handled by the Federal Government. There is no indication right now, either way, if that 5% reduction is including, or in addition to, the lose of the RST division.

That translates to anywhere from (if I have my numbers right) 5 - 8% of Ontario's Public Servants losing their jobs.

Now, this will be spread amongst the public unions, so don't expect any of them to lose any 'bargaining power'. Within the Ministry of Revenue alone, there are 3 that I know of. One for the general workers, one for managers, and one for maintanence and cleaning staff.

Anyways, I apologize for derailing the thread. If you want to continue to scream at me, however, feel free.

[Dahak]

In the right legal frame, unions can do a good job.
Around here, the unions and employers are bound within a legal framework (and a lot is not negotiable, simply because of strict labour laws). Unions can't just go on strike because they feel like it, it requires certain conditions. And unions don't normally negotiate with single employers but with a employers association representing a particular industrial sector. And normally, the agreements reached between unions and employers is valid for all employees, not just unionised employees.

[Coyote]

Unions are important and valuable - would you, however, say that UAW is important and valuable, at least moreso than it is a drain on the industry?

In it's present form, with demands for things like the "Jobs Bank"? No. That's why I said that they need to be reigned in, but not eliminated. It's not an all-or-nothing proposition; unions can exist without automatically being lampreys.

DW does bring up the point about non-union workers in aplant with union workers; technically if the union bargains for a better contract, and all employees get a raise as a result, then the prescence of the union workers has benefitted the non-union employees.

OTOH, if there are enough non-union employees willing to work during a strike, making a strike toothless, that gives some leverage to management. If the union is asking for things that are unreasonable, management can undercut them with the "scabs".

The argument will always be a 'glass-half-full / half-empty' argument. Pro-union people will always look at a union as a potential defense from employer exploitation; business will always see a union as a means to squeeze the company. Better employee protection laws would make unions un-necessary, but guess where the lobbyist money is to sway lawmakers? With business. A union can pool money to hire lawyers and lobbyists to speak on behalf of labor.

Naturally both sides will seek to further their power, and once they have that power, abuse it. That's the nature of human organization, unfortunately. Labor and Business will always be locked in a tug-of-war over influence for the third party, the lawmakers, who can decide things for or against both sides' wishes. I feel that eliminating unions would eliminate the ability of workers to be heard when the courts make their decisions on what a fair labor rights law is.

[Darth Wong]

DW does bring up the point about non-union workers in aplant with union workers; technically if the union bargains for a better contract, and all employees get a raise as a result, then the prescence of the union workers has benefitted the non-union employees.

Unless the law requires them to do so, unions negotiate on behalf of their own members, and nobody else.

The argument will always be a 'glass-half-full / half-empty' argument. Pro-union people will always look at a union as a potential defense from employer exploitation; business will always see a union as a means to squeeze the company. Better employee protection laws would make unions un-necessary, but guess where the lobbyist money is to sway lawmakers? With business. A union can pool money to hire lawyers and lobbyists to speak on behalf of labor.

Political lobbying is the only thing unions are good for. But their ability to negotiate pay increases with companies almost invariably comes at the cost of everyone else working at that company, and eventually, perhaps at the cost of the destruction of the entire company.

[Darth Wong]

There are numerous positions in the government that, by there own requirements and regulations, are supposed to be made 'permanent' (i.e minimum number of auditors, tax collectors and field agents per regional office, minimum number of security for a given building's size/staff, etc). While this doesn't guarantee job security, it does increase it.

What does it mean to make a position "permanent"? If the rules say they need 50 people in an office doing a certain job, why does it matter whether they keep hiring 50 contract workers to do that job or call it a "permanent position"?

Case in Point: The recent Ontario budget included a 5% reduction in the number of Ontario public servants. Also, most of the Retail Sales Tax division's jobs are now hanging by a thread due to the fact the PST is being folded into the GST, and will be handled by the Federal Government. There is no indication right now, either way, if that 5% reduction is including, or in addition to, the lose of the RST division.

That translates to anywhere from (if I have my numbers right) 5 - 8% of Ontario's Public Servants losing their jobs.

And that's a problem because ...?

Anyways, I apologize for derailing the thread. If you want to continue to scream at me, however, feel free.

If I wanted to "scream" at you, you would know.

[Edi]

There are numerous positions in the government that, by there own requirements and regulations, are supposed to be made 'permanent' (i.e minimum number of auditors, tax collectors and field agents per regional office, minimum number of security for a given building's size/staff, etc). While this doesn't guarantee job security, it does increase it.

What does it mean to make a position "permanent"? If the rules say they need 50 people in an office doing a certain job, why does it matter whether they keep hiring 50 contract workers to do that job or call it a "permanent position"?

I think what he means is something that we have here. Here everyone has an employment contract and those come in two varieties, limited duration temporary contract and a "permanent" contract, which means indefinite duration. That type of contract is in force until it is terminated by typically either the person quitting the job for another or (more rarely) being fired for cause. The third way these contracts can be axed is through negotiations between employers and unions when it is clear that some cuts need to be done. In such situations, the duties associated with the position are usually distributed or reassigned or the position itself is eliminated.

An employee on an indefinite contract also cannot be fired without cause. Or they can, but the employer is going to end up paying through the nose to do it when the employee takes them to court. It's all tied up in what kind of worker protection laws we have, and they are fair to the workers (in the public sector, more than fair) and they are not excessively onerous to employers either. Daisy chaining limited duration temporary contracts is a fairly common practice in various places, but by a strict reading of the law, they are illegal. Various companies and even government agencies and entire municipalities have gotten in legal trouble over daisy-chaining what is essentially a permanent position that should be filled by a person with an indefinite duration contract.

Typical practice is hire someone on a temp contract for a year or so or a couple of six month stretches, but if the job is continuing so that the position itself is not going anywhere, employers have a legal obligation here to hire the contract temp with an indefinite contract and that person must have preferred consideration if there are others applying for similar jobs, because they have been doing it already. You can hire someone else in that case, but they need to be more qualified or it'll go to court again.

I think this is what Solauren is talking about. The fact that the Ontario government can keep daisy-chaining temp contracts on an essential permanent position just means that they have shitty worker protection laws and they are dicking over their employees just like any private company would.