The main issue is the hourly labor costs, estimated by Chrysler to amount to $76. In order to be competitive, the manufacturer says it need to cut that down to at most $57. If it can't do that, "our Canadian manufacturing operations are at a significant disadvantage relative to our manufacturing operations in North America and may very well impair our ability to continue to produce in Canada," as Tom LaSorda, Chrysler president warned last week.
Those were not empty words, it seems. Sources familiar to Chrysler told wheels.ca the company already started looking for "alternative locations with more competitive cost structures." Currently, Chrysler operates three plants in Canada: Brampton and Windsor assembly plants in Ontario and a casting plant in Ontario.
Tony Faria, director of the automotive research centre at the University of Windsor said that Chrysler will move the Windsor facility to Saint Louis, as well as relocating the Chrysler 300 sedan and Dodge Charger production from Brampton to plants in Michigan or Mexico.
"I think it might not be unreasonable to presume that if Chrysler doesn't get a good labour deal in Canada, we could be seeing the end of any Chrysler future investments in Canada," Faria added.
CAW president Ken Lewenza on the other hand stands his ground and says his organization will not give Chrysler more than it did last week to GM. The $7 dollar an hour reduction offer forwarded by CAW was deemed unacceptable by Tom LaSorda. As a last result, the company might look to cut its costs by cutting paid time off, unemployment assistance and overtime pay.
If a consensus is not reached by March 31st and Chrysler won't receive government aid, packing the bags might be the only remaining option. By doing so, some 10,000 hourly workers will be out of a job.
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