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Concessions from CAW come with a Canadian catch

The Ford's Essex Engine Plant in Windsor, Ont.

CRAIG GLOVER/CP

The Canadian Auto Workers union wants new investments at the Canadian plants of the Detroit Three auto makers in return for the concessions it has put on the table.

"We think the proposal we've made keeps us competitive with the U.S. plants and the all-in active wage costs in the U.S. and it won't handicap or hurt us in terms of investments in Canada," CAW secretary-treasurer Peter Kennedy said Thursday.

The CAW has offered reduced wages and changes in pensions for newly hired employees that it says will cut overall hourly labour costs in Canada to the same level as unionized plants in the U.S. That would meet the key demand the companies made when talks started last month. Talks are continuing ahead of a strike deadline on Monday.

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The move to match U.S. costs underscores a critical concern for CAW president Ken Lewenza and his lieutenants – how to ensure the medium-term future of the companies' operations here in the face of a high Canadian dollar and U.S. labour agreements that have clamped down on rising costs.

The proposal to cut costs "comes hand in hand" with investments by the companies that would secure jobs at the plants – and possibly add new ones – for the better part of a decade, one senior union source said Thursday.

At General Motors of Canada Ltd., for example, the union is seeking new investments at the company's Oshawa, Ont., operations, where one assembly plant is scheduled to close by the middle of 2013, eliminating as many as 3,000 jobs.

"We need to make sure General Motors has a long-term commitment to our country," Chris Buckley, chair of the CAW's GM bargaining committee, said earlier this week.

An investment in Oshawa would show the taxpayers that their $10.6-billion contribution to the bailout of GM's parent General Motors Co. in 2009 was worthwhile, Mr. Buckley said.

At the moment, he said, GM has made no firm commitments at its Canadian operations beyond an agreement – in return for the bailout money – that through 2016, it will produce 16 per cent of all its North American-made vehicles in Canada.

Union representatives for Ford Motor Co. of Canada Ltd. employees are seeking investment promises for the auto maker's Windsor, Ont., engine plant, which has no new products earmarked for it and is making V-8 and V-10 engines that are declining in popularity as gas prices soar.

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For union officials at the negotiating table with Chrysler Canada Inc., the priority is a new paint shop at the company's large-car assembly plant in Brampton, Ont.

That's an investment of at least $400-million, and it would be in doubt if the CAW does not agree to reduce labour costs to match those at U.S. plants, Chrysler Group LLC chief executive officer Sergio Marchionne told The Globe and Mail last week.

The union has offered to cut wages for newly hired employees to less than the current level of about $24 an hour and stretch to 10 years from six the so-called grow-in period during which those wages rise to the level of those paid to longer-term employees.

Mr. Kennedy said Thursday that the union has also offered to cut pension costs for newly hired employees while maintaining the defined-benefit pension plan that now covers all CAW workers at Detroit Three plants.

"The costs associated with it for the companies would be less than what would be associated with the current defined-benefit plan," Mr. Kennedy said.

The union proposal could include newly hired workers contributing more than the $1 an hour to their pension plans than they currently pay, he said.

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About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

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