General Motors Co. has asked the Canadian Auto Workers to reopen the contract at an Ontario assembly plant seven months early, a move that could help the factory win the work to build the next generation of a pair of GM’s hottest-selling vehicles.
The Cami auto plant in Ingersoll, Ont., already builds the Chevrolet Equinox and GMC Terrain crossovers, but GM had been considering shifting the work to plants in Spring Hill, Tenn., and Ramos Arizpe, Mexico, in 2015, when assembly of the redesigned vehicles is scheduled to begin.
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GM has all but decided to keep Equinox and Terrain production at Cami, industry sources said. Reaching a deal on a new contract in March, instead of the scheduled expiration date of September, means the company would know what its labour costs will be for the next three to four years as it makes a final decision on Equinox production later this year.
Winning the investment for the next generation of Equinox and Terrain would secure the future of about 3,000 jobs at the Ontario plant, which has become one of Canada’s most productive auto factories and one of the most prolific GM assembly plants in North America.
The company’s request to open the contract early comes amid renewed concerns by General Motors of Canada Ltd. president Kevin Williams about how expensive it is to make vehicles in Canada compared to other countries.
“Canada continues to be the highest-cost producer for General Motors,” Mr. Williams told Canadian reporters in Detroit last week. He made those comments about four months after GM signed a new contract covering workers at its other plants in Canada that included extending the life of one assembly plant that was scheduled to be closed.
If workers at Cami approve their union leadership’s recommendation to open negotiations early, they will expect GM to offer them the same deal it gave its other employees in September, a concept known as pattern bargaining. That agreement included a freeze on base wages, but also a cost-of-living adjustment in the final quarter of the last year of the contract, a ratification bonus, and Christmas bonuses this year and in 2014 and 2015.
“We took a strike in 1992 to achieve pattern,” said Mike Van Boekel, chairman of the Cami plant unit of local 88 of the Canadian Auto Workers union.
GM Canada spokeswoman Faye Roberts said the company sees benefits to signing an early agreement.
But the key item of the deal the CAW signed with GM, Chrysler Group LLC and Ford Motor Co., in September will not save GM much money at Cami.
That’s a clause that reduces the starting rate for newly hired employees to 60 per cent of the full wage rate of $34 and stretches out the time it takes for new workers to reach that rate to 10 years.
Cami is already operating on three shifts a day and it doesn’t have a large number of employees approaching retirement, so there are likely to be few new hires in the short and medium-term.
The use of three shifts a day and overtime enabled workers at Cami to crank out 305,414 vehicles last year, or more than 150 per cent of its capacity of 187,000 vehicles, as measured by how many it could produce operating five days a week with two shifts of eight hours each day.
Cami’s vehicle production was exceeded last year in the GM chain only by a pickup truck plant in Fort Wayne, Ind.
Sales of Equinox soared 13 per cent and Terrain deliveries surged 18 per cent in the U.S. market, which is where about 80 per cent of the vehicles are sold.
GM North America president Mark Reuss told an industry conference in Detroit last week that the company will announce investments worth about $1.5-billion (U.S.) in North America this year, but did not specify where it will be spent.