The Canadian Auto Workers is gearing up to win new investment for Canadian plants and regain benefits its members surrendered during the crisis, setting up a battle with auto makers determined to hold the line on labour costs.
Union president Ken Lewenza said Monday he believes the CAW can achieve both goals in negotiations with Chrysler Group LLC, Ford Motor Co. and General Motors Co. later this year.
“I’m confident that we’re going to make some progress,” Mr. Lewenza said. “Not significant progress. We’re going to make tiny steps forward.”
That confidence butts up squarely against public comments by senior auto industry executives – notably Chrysler chief executive officer Sergio Marchionne – that labour costs in Canada need to be reduced and annual pay increases eliminated in favour of profit sharing.
The difference of opinion sets the stage for tough negotiations at a critical time in the industry as the Detroit Three collectively ponder whether to make billions of dollars worth of investment at their Canadian operations, where competitiveness has taken a beating because of the rise in the value of the Canadian dollar.
At the same time, the companies have slashed their U.S. labour costs and governments in Mexico and some southern U.S. states are throwing hundreds of millions of dollars at auto makers to land assembly plant investments. Volkswagen got more than $500-million (U.S.) from the state of Tennessee and municipal governments, while Honda Motor Co. Ltd. and Nissan Motor Co. Ltd. have announced that they will be building new assembly plants in Mexico.
Contracts covering about 25,000 auto workers at plants in the Ontario cities of Windsor, Oshawa, Oakville, Brampton, St. Catharines and the Toronto suburb of Etobicoke expire in September. The two sides will kick off negotiations in July. After those talks, the CAW chooses what is known as a target company, with which to reach a contract that will serve as a template for the other two.
The CAW leader made his comments as the union released a policy paper beseeching the federal government to adopt a national automotive policy as Brazil, Japan, Germany and other major auto making nations have done. Canada does not have a policy despite more than 10 years of discussion, reports and policy initiatives set out by the Canadian Automotive Partnership Council, a joint industry-government-union group set up in 2002 to assess the health of the industry.
The federal government could follow its own precedents, such as its participation in the more than $13-billion bailout of Chrysler LLC and General Motors Corp. it shared with the Ontario government or recent shipbuilding contracts that were open only to Canadian companies, the CAW said.
Federal and provincial governments need to jump in again to help win the new investments and make sure the industry continues to grow, Mr. Lewenza said, adding that an official policy is necessary rather than ad hoc decisions.
“We’re not going to grow jobs without an effective auto industry strategy,” he said. “Make no mistake about that. We can’t deal with this in bargaining, in isolation without the government.”
The paper calls on the federal government to lead the way with strong government intervention in the sector. The CAW wants Ottawa to encourage the creation of a Canadian-owned auto maker, cease free-trade talks with South Korea, Japan and the European Union, and slap tariffs on auto makers that sell vehicles in Canada without making any here.
Much of the paper sets out to refute the idea that labour costs are higher in Canada.
They’re about $60 (Canadian) an hour, including wages, pension contributions and health care and other benefits, the CAW said.
The Center for Automotive Research in Ann Arbor, Mich., says agreements signed with the United Auto Workers last year cut Chrysler’s U.S. costs to $52 (U.S.) an hour, GM’s to $56 and Ford Motor Co. all-in hourly costs to $58.
But CAW economist Jim Stanford says those figures don’t take into account the fact that Canadians pay higher prices for goods and services than Americans – including for those vehicles CAW members put together at assembly plants in Ontario.
The higher prices mean a basket of goods and services that costs Canadians $1 would cost Americans 81 cents when the dollar is at par, he said.