April 27, 2009 / 12:56 AM / 10 years ago

UPDATE 2-Canadian workers accept sweeping cuts at Chrysler

* Workers vote 87 percent in favor of concession deal

* Cuts labor cost by about C$19 an hour

* Deal cuts benefits and time off, but not base wages (Updates with comments from union, company)

By John McCrank

TORONTO, April 26 (Reuters) - The Canadian Auto Workers union said late on Sunday its members voted 87 percent in favor of a new collective agreement with Chrysler [CBS.UL] that will save the company about C$240 million ($198 million) annually.

The union made the steep concessions in order to try to help the besieged company qualify for billions of dollars in government aid in Canada and the United States and avoid liquidation.

“The reality is this was probably the most difficult and unprecedented time in the history of auto workers,” CAW President Ken Lewenza told Reuters.

“We had probably the best turnout at meetings that I can recall in my career,” he said. “So, you could sense the anxieties, but you also sense the mood that there will be a day, quite frankly, that we can turn a corner and make progress for our members again.”

The deal cuts the overall labor cost of Chrysler’s 8,000 unionized Canadian workers by about C$19 an hour.

“We are pleased that the men and women of the CAW have voted to ratify this contract,” Al Iacobelli, Chrysler’s chief bargainer and vice president of employee relations, said in a statement.

“We appreciate the hard work and dedication that they bring to the job each day.”

Workers agreed to the elimination of their Christmas bonuses, their employee car-purchase program, tuition reimbursement, and semi-private hospital coverage, among other items.

The deal also confirms the elimination of the third shift at Chrysler’s minivan plant in Windsor, Ontario.

The leadership of the CAW also agreed to work with Chrysler to create a trust fund to pay for retiree health care modeled on a similar fund that the United Auto Workers union approved for Chrysler’s U.S. workers in 2007.

The CAW said the cuts were demanded by the company’s potential strategic partner Fiat SpA FIA.MI, which said it would not consider aligning itself with Chrysler otherwise.

A partnership with the Italian car maker was one of the conditions put to Chrysler by the governments of Canada and the United States to make the company viable in order to qualify for the government funding needed to keep it running.

Chrysler had warned the union that if it were forced to file for bankruptcy protection with no CAW agreement in place it would liquidate its Canadian operations, Lewenza said on Friday, when the tentative agreement was reached.

With a deal, he said the company agreed to stand behind its Canadian plants in the event of a Chapter 11 filing in the United States and a Companies’ Creditors Arrangement Act filing in Canada and it would not ask for further CAW concessions.

The company has until Thursday to complete deals with all its stakeholders and win government approval of its viability plan, or it will not receive the funding.

Chrysler is currently surviving on C$1 billion in short-term loans from Ottawa and $4 billion from Washington.

It has requested an additional C$3 billion in Canada and could be eligible for at least $6 billion in extra U.S. funding if the governments approve its restructuring plan.

The CAW has said it will now go back to General Motors of Canada (GM.N) to offer it the same savings and help it qualify for government loans ahead of its end-of-May deadline.

The union said it would do the same for Ford Motor Co’s (F.N) Canadian unit, which has not asked for government assistance.

Chrysler has about 9,400 workers in Canada, about 8,000 of whom are represented by the CAW at plants in Windsor, Brampton, and Toronto, Ontario. ($1=$1.21 Canadian) (Editing by Muralikumar Anantharaman)

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