DC Commits to One, Maybe Two Plants

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Most labor settlements are cut and dried, once all the shouting is over. But an air of mystery hovers over Canadian Auto Workers’ new pact with DaimlerChrysler.

The CAW reported DaimlerChrysler is prepared to spend between $1.5 billion and $2 billion in and around Windsor, Ont. DaimlerChrysler concurred they have indeed agreed to put up the money.

Beyond that, things get murkier. For one thing, the billion-dollar plus investment is at least in part contingent on the Canadian government offers some incentives similar to those offered in places such as Michigan, South Carolina, Alabama and Georgia, according to Basil "Buzz" Hargrove, CAW president. Both the federal and provincial governments in Canada have been cool to the idea of subsidies for the last few years, though Hargrove said there are indications the opposition is softening in the face of the huge subsidies being offered for new plants in the United States.

Newly minted plant

What is known about the new Windsor plant is that it will operate differently than others in the auto industry, Hargrove said. For one thing, the stamping plant and paint shop will be operated by suppliers, rather than by DaimlerChrysler. The idea has been tried out in South America, but unions in the U.S. and Canada have been cool to the idea until now. In addition, the union has agreed to allow outside contractors to take over some duties in the new plant now customarily handled by CAW members.

Under the principles set out in the new CAW-DaimlerChrysler agreement, however, the union has the right to represent all of the employees on the site, regardless of whether they are actually working for a supplier or for the DaimlerChrysler. In addition, the union agreed that any new employees hired for the venture will only be hired at 75 percent of the pay of more experienced workers for up to 5 years. The new phase-in labor rate will help minimize the labor costs, Hargrove said.

The proposed pact on the new, and ostensibly greenfield, plant is a big deal. It was the last item resolved during the negotiations, said Hargrove. Hargrove, however, said the company would not tell the CAW what it planned to build in the new plant, which will basically replace the old Pillette Road van plant in Windsor. The Pillette plant will close next summer when the Chrysler Group finally halts production of its big B-van, which was designed by in the 1970s.

Ed Brust, president of the company’s Canadian operations, said the agreement will create significant new employment in the Windsor area near the end of 2005. "Over the three years of this contract, we will invest $1.7 billion in our Canadian operations," he added. "The investment underscores our company's commitment to Canada and the communities in which our facilities are located,” Brust said.

Southern media exposure

Adding to the puzzle was an announcement in Georgia that DaimlerChrysler would also build a new plant there— an announcement made by the state’s governor, not the company. The day after the CAW settlement, Gov. Roy Barnes of Georgia announced that DaimlerChrysler's commercial vehicle group had selected a site near Savannah for a new van plant. DaimlerChrysler executives cautioned the announcement was premature. If DaimlerChrysler decide to build a plant to make Sprinter commercial vans, as has been anticipated for some time, it will be located near Savannah. But the DaimlerChrysler hasn't decided yet if it really want to build the plant, one DaimlerChrysler source said.

Chrysler Group executives, however, have hinted in recent months they are also looking at way to expand the Jeep line - perhaps with a vehicle similar to the old American Motors Eagle. In addition, Mercedes-Benz also is considering plans for bringing A-Class production to North America. Too, coordination by DaimlerChrysler executives between the Chrysler Group, Mercedes-Benz and the Commercial Vehicle Group as well as Mitsubishi has become much tighter in recent months.

The basic economic provisions of the new CAW-DaimlerChrysler pact are based on the pattern agreement reached with General Motors of Canada and subsequently adopted by Ford Motor Co. of Canada. The package calls for a 3-percent pay increase in the first year and again in the second year, and a 2-percent pay increase in the third year. CAW members currently make about $20 per hour. The economic package also includes 28 hours of additional paid time off for workers covered by the agreement.

In addition, the CAW and DaimlerChrysler also agreed to a buyout for younger workers at a DaimlerChrysler assembly plant in Brampton, Ont., which is outside of Toronto. Until last year, the workers have been employed on the third shift at the Brampton plant, but they have been laid off for several months and have no idea when or if they might be recalled, said Hargrove. The buyout will give some of the younger workers the option of moving on to other jobs, Hargrove said.

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