TORONTO - The CAW has reached a tentative agreement with Chrysler Canada Ltd. on a new collective agreement, as part of the North American auto industry's restructuring process.

The agreement will result in over $240 million per year in annual cost savings for Chrysler's Canadian operations, as a result of a combination of benefit reductions, compensation changes, and increased productivity through operational improvements. CAW members perform 12.5 million hours of work per year for Chrysler Canada. The agreement therefore meets the benchmark for negotiations which was established by the federal and Ontario governments as a condition of their continuing support for the two companies.

The agreement includes all of the cost-saving provisions originally included in the contract negotiated with General Motors Canada in early March. It also contains some additional provisions, including:

- The elimination of semi-private hospital coverage.
- The elimination of a one-time $3,500 vacation buyout negotiated in
2008.
- The elimination of clawback reimbursement through the SUB program.
- The elimination of employee car purchase and tuition rebate programs.
- An increase in the waiting period for sickness & accident benefits.
- A reduction in the maximum dispensing fee for prescriptions.

The agreement also contains several operational changes that will further enhance productivity and efficiency in Chrysler's Canadian operations (which are already the most productive for Chrysler in the world). These provisions include the adoption of the "World Class Manufacturing" operating system that is used by Fiat in its global production operations. (Fiat is anticipated to merge with Chrysler through the restructuring process.)

Finally, the agreement also contains measures aimed at providing retiree pension and health benefits (so-called "legacy costs") in a more cost-efficient manner. The pension contribution timetable is adjusted in line with provisions announced by the Ontario government in its 2009 budget, and the CAW and Chrysler have agreed to establish a Canadian Health Care Trust (HCT) to provide retiree health benefits. This initiative will be similar to U.S. VEBA arrangements, although with several important differences; the details of this plan will be worked out over the next month.

CAW President Ken Lewenza indicated that the bargaining of the agreement was extremely challenging, but expressed his support for the solidarity which CAW members have demonstrated through the past difficult weeks. "CAW members supported their union right through this process, rather than allowing themselves to be intimidated by crude threats. That has allowed us to bargain the very best agreement possible, imposing the minimum possible sacrifice on our members and their families, despite the incredibly tough times."

CAW members working at Chrysler in Windsor, Brampton and Etobicoke will vote on the new contract in a series of meetings held over the next two days. Members of the media are welcome. Results of the ratification votes will be released late Sunday night via Canada News Wire (CNW).