Wrenching Blow

A Chrysler strike in Canada

Chrysler Corp. workers tossed a wrench into the firm's plans last week, when nearly 9,000 members of the United Auto Workers walked off their jobs in Canada.

Like their U.S. counterparts, the Canadian workers have gone without raises for two years and make less than employees at General Motors or Ford. But unlike Chrysler's American labor force, which voted to stay on the job just two weeks ago, the Canadians ran out of patience. Says a U.S. employee: "I think they had a little more guts than we did."

The strike is a culmination of anger and frustration that began building in 1980, when the U.A.W. agreed to concessions that have put Chrysler workers behind the rest of the industry. The Canadians particularly resented the settlement, which the U.S. Government demanded as the price of loan guarantees to the company. The workers now average about $20,000 (Canadian) in annual earnings and want nearly $3 more an hour than their base wage rate of $9.07 to catch up to their counterparts at Ford and GM. Said one embittered striker: "We're losing our homes, and we're losing our sanity, and all we want is our money."

The walkout, which could cost Chrysler $15 million a week, is clearly a financial threat to the company. The automaker immediately laid off 2,500 U.S. workers who produce parts used in Canada and said that another 3,500 could be let go if a settlement is not reached within several weeks. The Canadian shutdown also cuts output of the highly profitable Dodge vans and New Yorker models, all of which are assembled in Windsor.

Chrysler Chairman Lee lacocca tried using both carrots and sticks last week to avoid the walkout. He first sent Canadian workers a strongly worded warning: "We will take a strike if we must, even though we are aware that it could put us out of business." Some employees responded by burning the letter. lacocca then flew to Toronto to make a personal but unavailing eleventh-hour appeal.

Chrysler, which insists that it cannot afford higher wages, wants its Canadian employees to return to work and then relume negotiations in January, as U.S. employees have agreed to do. A lengthy strike "will be extremely damaging to the company and potentially ruinous," says Vice President Thomas Miner.

Analysts say that a short walkout will probably cause only limited harm but a prolonged one may be devastating. Observes David Healy of Drexel Burnham Lambert: "I don't think the strike threatens Chrysler's survival. It is beginning as a nuisance, but it could be severely disruptive if it continues." The financially fragile company can survive a skid, in other words, if not a total spin out.