Although Canada is the highest-cost location in North America in which to build a car, Canadian Auto Workers (CAW) union president Buzz Hargrove maintains he'll allow no concessions on salary or benefits in the contract negotiations this year. "We're not going to try to buy jobs by being the cheapest workers in the world," he told CAW workers meeting in Toronto. The Globe and Mail says Harvgrove and his hired economist, Jim Stanford, both deny the concessions given by the UAW last fall are equivalent to a $25/hour labor cost reduction. The fact that the exchange rate has driven Canadian wages and benefits to the equivalent of $80/hour in the U.S. is irrelevant to Stanford. He claims the higher productivity in their plants more than makes up for the cost difference between the average CAW and UAW worker. We'll see how long this posturing lasts once the negotiations start. At that point, it will most likely turn into a bidding war between the CAW and the UAW for the "right" to build new and existing product.

Chrysler's standing by. At 4pm EST, a federal judge will rule whether or not the American automaker owns the tooling that makes the plastic parts they need to build cars. Should the court rule against bankrupt parts supplier Plastech and green light a Chrysler reclamation, a fleet of trucks are ready to swoop in, grab the tooling and whisk it off to other suppliers. According to Automotive News [sub], Chrysler has already signed letters of intent to relocate production with three of their other suppliers, with more sub-contractors "angling" for a piece of the Plastech pie. Wherever the toolings end up, ALL Mopar assembly lines will shut down while they're installing the equipment in its new homes– which could take as long as a week. Or… a year if Plastech's testimony to the judge is accurate. Which would kill Chrysler dead. If you're going with the former scenario, a shutdown could be a blessing in disguise; Chrysler's inventory levels are too high as it is.

While we've taken Detroit to task for its lousy supplier relations (nose, face, spite, rhinoplasty, etc.), we finally get a look at the Plastech showdown from Chrysler's perspective. It's buried at the bottom of a Crain's Business Detroit article on their "Crain's Newsmaker of the Year" award to United Auto Workers' boss Ron Gettelfinger. After Big Ron wishes [unionized] Plastech well, we learn that "During court testimony last week, Douglas Doran, director of interior procurement, said Chrysler had been monitoring Plastech's financial condition for more than a year through Southfield-based BBK Ltd. BBK told Chrysler that Plastech was having trouble paying suppliers and had violated agreements with its lenders." And so "Chrysler twice participated in bailout agreements with other customers [GM? Ford?] over the past year, including in January when it contributed $10.7 million to help bail out Plastech. Chrysler attached conditions to each bailout agreement granting Chrysler the right to relocate its tools at any time." Yes, well, Chrysler acknowledged that Plastech has an additional $13.4 million of equipment for which the automaker didn't pay. Meanwhile, we hear that "Plastech's production quality was falling. In 2007, Chrysler issued 449 'quality tickets' to Plastech for 'non-conforming material.'" That's a lot of deeply worrying info, especially the bit about "other" supplier bailouts. Could this thing snowball? We shall see. [NB: Federal Judge Phillip Shefferly is set to rule on ownership of the disputed tools tomorrow, at 4pm.] 

The Detroit automakers aren't the only ones feeling the cost crunch in Canada. The London Free Press reports our neighbor to the north is also the most expensive place Toyota assembles vehicles– in spite of a distinct lack of Canadian Auto Workers' union members. And yet, in spite of higher operating costs, ToMoCo may be looking to expand their RAV-4-producing Woodstock assembly plant even before it opens next fall. Toyota's playing down the rumored expansion. They're declaring that the plant must first open and perform before they'll consider adding more capacity. When asked why they'd consider spending more on a plant that already costs so much to operate, Toyota Canada's president Yoichi Tomihara replied "Toyota's philosophy is to make the investment in the long term, not the short term." Toyota executives also said they don't let current market conditions sway their strategy; economic conditions can change. Besides, they added, they like making vehicles in Canada. I'm thinking ToMoCo likes it anywhere where they don't have to deal with a labor union.

Belvidere has been down since early Wednesday morning due to a broken gear in a press in stamping area. Trucks came and removed the dies and such to other Chrysler stamping facilities. There were a lot of trucks though. More than I would imagine would be needed for one press and its dies. Is it possible they are pulling out all stamping? Is it possible they may close the doors at the Belvidere facility? Nobody knew anything on Tuesday, yet the union seemed to know we would be off at that time without notifying the workforce. I can't get any info. I know they have bounced checks and aren't paying suppliers. They intend to cut one shift next Friday. Their supply of vehicles is much higher than that posted on your site. Chrysler bullshit. That's what it is most of the time.

If anyone has a spare $6.1b or so laying around, former GM division Delphi would like you to give them a call. According to the Detroit News, that's how much dinero the struggling parts maker needs to exit bankruptcy. However, because of the poor credit market, they're having trouble raising the money. If they don't get it, they'll have to rework their plan and head back to bankruptcy court– and continue paying professional and legal fees totaling around $10m per month. Delphi has few options; they're probably asking GM to foot the bill or using pension funds in return for a stake in the company. Despite GM's insistence that they're sitting on a healthy cash pile, the beleaguered automaker's hardly in a position to shell-out that kind of "investment." As far as using pension funds in concerned, Ron Gettelfinger is opposed. Even though the United Auto Workers (UAW) boss has had no discussions with GM or Delphi on the matter, Automotive News [AN, sub] reports that Gettelfinger asserted "we're not going to let Delphi rape a pension fund." You might wonder if Big Ron should have added "That's OUR job," but I couldn't possibly comment.

GM's record losses last year is Canada's fault– at least part of it anyway. GM CFO Fritz Henderson told Financial Post "three-tenths of a billion" of the $38.7b loss was due to foreign exchange losses. In other words, "This is largely driven by the strengthening C-dollar versus the U.S. dollar and the impact on our balance sheet through the 2007 calendar year." And in spite of CAW president Buzz Hargrove's insistence he will give no concessions in the upcoming contract negotiations, the handwriting is on the wall; Canada is now the most expensive place in North America to build cars. David Healy, an analyst at Burnham Securities: "[GM]'s strategy would likely be to do some hedging and hope that everything settles down. But Mexico and the U.S. are looking more attractive than they were to build future product." Looks like Buzz may be reconsidering his stance, if he wants to keep his union's members employed and paying their dues.

Canadian Auto Workers president Buzz Hargrove knows what's killing the North American auto industry: imports from South Korea and Japan. He's upset that Canada imports more vehicles from Asia and Europe than Canada ships to those areas. And if the problem continues unchecked, he's predicting GM and Ford will be in bankrupt within 10 years.  His solution? The Globe and Mail reports Buzz wants Canada and the U.S. to ban imports from Japan and South Korea until they open their markets to North-American-built vehicles. Reality to Buzz: they don't want your vehicles. If you've never been to those countries, roads are narrow, city streets are clogged and parking is at a premium. The average GM, Ford or Chrysler product from this side of the globe would fit in there like an orca in a fishbowl. Also, I don't know about Canadian sales, but the majority of Hondas, Toyotas, Nissans, and Mitusubishis sold in the U.S. are bolted together in North America, not imported. He needs to put the blame where it belongs: on the auto companies that sat by complacently resting on their laurels and denying the imports were a threat until they lost customers they'll never regain.

GM really, really, really wants to get rid of all their high-paid UAW workers. In addition to the buyouts they're offering to all salaried UAW members, they're upping the ante by offering retirement incentives as well. The Detroit News reports GM will offer workers taking the bribe buyout the option of rolling the payouts into a 401(k) or retirement account. Exactly what they're offered depends on their seniority and job skills. Workers with 30 years or more will be offered $45 to $62.5K to retire with full pension and benefits. Workers with between 26 and 30 years can take leave with reduced pay until they reach 30 years (at which point they can take a regular retirement). Workers 50 years old or older and with at least 10 years with the company can retire early with whatever pension they've accumulated and health benefits. Any worker with 10 or more years is eligible for a one-time payment of $140k to walk out the door; for workers with less than 10 years it's $70k. GM isn't saying how many UAW members they want to eject, but UAW President Ron Gettelfinger thinks they're shooting to reduce their numbers by about 20k. GM is expected to replace them with about 16k new hires, paying them about half of what their predecessors made. Some experts think GM hopes "to turn around its beleaguered North American division by the end of the decade… largely [by] moving out senior workers." And there I was thinking that improving their products was the key… 

It's the strangest form of worker buyout so far, Forbes reports that Ford sold off its driveshaft factory. And now they're offering 700 workers $140k if they stay with the plant under its new owner, Neapco. The money would be paid out over a two-year period– if the United Auto Works (UAW) agrees to the deal. The workers staying with Neapco will have to deal with a new labor contract between the UAW and the new owners; they'll most likely give-up whatever seniority they've amassed, and have a different (i.e. smaller) benefits package. Hence the "incentive." Ford is also considering offering the same deal to workers at an interior component factory they're in the process of selling to Johnson Controls.

Ford will build the Verve (or whatever they end up calling their subcompact) in Mexico. And we know this because…? The Detroit Free Press reports "two people with knowledge of Ford's production plans" told them so. Although Ford refuses to identify the location of their new subcompact's fabricator, it appears the concessions given by the UAW still don't make a U.S.-built economy car a profitable proposition. Global Insight's NA light-vehicle production manager doesn't see "Made in America" making a comeback anytime soon. "In general we see capacity in the U.S. dropping," Haig Stoddard advised. "And continuing to gradually rise in Mexico." That's at least until the automakers replace most of their older UAW work force with cheaper new hires. But even at the lower $14.20 per hour rate, American workers still make a lot more than their Mexican counterparts. Between that and the Mexican government's willingness to contribute incentives, well, it's a slam dunk. No matter where it's made, Ford needs the Verve ahora. ¡Ándale!

As part of Chrysler's "all hands off deck" plan to trim production, the domestic automaker is offering ALL United Auto Workers employees at its Metro Detroit plants buyouts and early retirement packages. The goal: to eliminate 8500 to 10k hourly jobs. Although the Detroit News is quick to point out that most UAW members have been with Chrysler longer than a year, the $100k offer is open to any union member who's put in their 365 days. Well, less, counting holidays and possible sick days, etc. Like Ford, Chrysler has expanded its buyout program to just about everyone with a union card, save workers at Chrysler's Newark (Delaware) Assembly plant– and it's only a matter of time before the sayonara swag heads in their direction. Will the last high paid union worker switch off the lights? Of course not.  [thanks to starlightmica for the link]

Does the American Family Association have a Canadian chapter? If so, someone better alert them to avoid all cars built by union labor there. Marketwire is carrying a news release from PFLAG Canada (Parents, Families and Friends of Lesbians and Gays) that the Canadian Auto Workers (CAW) union has donated $25k from CAW's Social Justice Fund to the organization. CAW President Buzz Hargrove explained: "The donation recognizes the important work of PFLAG and underscores the ongoing commitment of the CAW to creating a positive environment for LGBT members and their families." I don't know what kind of car American Family Association chairman Donald Wildmon drives, but he'd better be careful. Not counting the Canadian-built Fords he's busy boycotting, CAW labor builds 15 other vehicles for the U.S. market. I'm sure Donnie wouldn't want to be exposed as a hypocrite of some sort.

Yesterday, Ford CEO Alan Mulally told the world that he'd downsize the company if needs be. Well, needs be. After revealing that FoMoCo dropped $2.7b in the last financial quarter, the Detroit News reports that the American automaker is offering buyout to ALL of its [remaining] 54k United Auto Workers (UAW) employees. You heard right: Ford is asking every single UAW worker laboring for The Blue Oval Boyz if they'd like to abandon ship. To that end, Ford's sweetened the deal for union members with retirement packages in place. "Workers eligible for retirement will receive a lump-sum payment of $50,000 if they agree to leave the company, plus full retirement benefits. That is $15,000 more than Ford offered to retirement-eligible UAW workers in 2006. Moreover, skilled trades workers, who are among the highest paid, will receive a $70,000 buyout payment, or $35,000 more than the previous offer." Although Henry's Mob doesn't expect everyone to leave, the move paves the way for Ford to hire lower-cost replacements; you know, if they need them. The DetN ends on the usual upbeat note. "'Ford is becoming a smaller company and becoming a lower-cost company at the same time,' said Gary Chaison, a professor of labor relations at Clark University in Worcester, Mass. 'You can become profitable by becoming small.'" Ah, but will they? Watch this space.