Chrysler Weighs Contract Deal as Strike Looms

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Chrysler LLC was under pressure on Friday to reach a quick contract deal with the Canadian Auto Workers or face a strike after the union reached a tentative agreement overnight with General Motors Co, leaving Chrysler the only Detroit Three automaker without a labor contract in Canada.

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Both Fiat SpA's Chrysler and the CAW said talks were continuing after the union reached a four-year deal with GM after hours of grueling negotiations. It signed a deal with Ford Motor Co on Monday that will be put up for a membership ratification vote this weekend.

The CAW "may be willing to give Chrysler 24 hours to move towards pretty much the exact same deal" as it reached with GM and Ford, said Tony Faria, a University of Windsor professor and auto industry expert.

"If they haven't gotten it in 24 hours, I am guessing they will give Chrysler their 24 hour warning that they are going to pull labor," Faria said.

Of the three automakers, Chrysler and its chief executive, Sergio Marchionne, have taken the hardest line on labor costs in Canada, insisting that they must come down to match those of the United Auto Workers in the United States.

The Detroit Three say Canada is the most expensive place in the world to assemble vehicles. Marchionne has threatened to move production out of Canada if labor costs don't come down.

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Faria said Chrysler will ultimately have to accept the "pattern" agreement established at Ford and agreed to by GM or face a costly strike that would halt the production of some of the automaker's key products.

Chrysler's Windsor, Ontario, plant, is the sole source of its minivans in North America, and its Brampton, Ontario, plant, assembles the company's popular Charger and Challenger sedans.

"They can't afford a shutdown of those products. If Sergio Marchionne were to push Chrysler into a strike in Canada all that would happen is that he would lose whatever number of days of production and ultimately end up agreeing to the same deal anyhow," Faria said.

"It is up to him from there what he is going to do, if he is going to follow through on looking at possibly moving some activities out of Canada into the U.S. or Mexico. But he is going to have to make the decision as he is definitely going to have this contract."

Pattern bargaining is a longstanding strategy of the CAW meant to ensure that no company has a labor cost advantage over the others. The CAW represents about 20,000 workers at the Detroit Three.

On Thursday night, the CAW and GM agreed on a deal that adds a third shift and 900 jobs to the "flex" line at its Oshawa, Ontario, assembly plant and creates 100 positions at its St. Catharines, Ontario, engine and transmission plant.

As at Ford, the agreement includes a wage freeze for existing workers for the first three years of the contract. Workers will get a cost-of-living adjustment in the fourth year, and a series of lump-sum bonuses. New hires will start at a lower hourly rate than under the previous contract and take longer to reach the top level of the pay scale.