The Canadian Auto Workers union has reached agreements on new contracts with all three Detroit auto makers, avoiding a crippling strike and keeping labour costs low enough to win new jobs and new investments from the companies at their Canadian operations.
The final deal was reached late on Wednesday with Chrysler Group LLC, which agreed to match key wage and benefit clauses negotiated first at Ford Motor Co. last Monday and General Motors Co. last Thursday.
Chrysler chief negotiator Al Iacobelli confirmed the agreement, but would not comment on how the deal affects the company until it is ratified.
Among the key victories for the union are a promise of $675-million worth of new Canadian investment from GM, 650 jobs at Ford operations in Canada and a commitment by Chrysler to maintain five shifts of operations and about 7,500 jobs at two Ontario assembly plants for the next four years.
The companies get a deal that holds the line on wage costs with a four-year freeze on pay and gives them an opportunity to begin cutting hourly labour costs through a reduction in pay and benefits that will apply to employees hired between now and 2016. How much they save depends on how soon they are able to hire new employees and how many they hire.
CAW president Ken Lewenza hailed the agreements as a recognition by the union that it needs to help keep the companies competitive in Canada while still permitting workers to share in the auto makers’ return to profits after the 2008-09 recession sent two of them into bankruptcy protection.
“We should be able to defend good, value-added jobs – jobs that provide for our families, jobs that provide us the opportunity to send our kids to college and university to get the education they need,” Mr. Lewenza declared before General Motors of Canada Ltd. workers in Oshawa on Wednesday as they prepared to vote on the agreement.
The union fought off the companies’ initial demands for drastic cuts in wages and benefits and insistence that Canadian workers match the 2011 agreement the auto makers reached with the United Auto Workers in the United States, which calls for permanently lower wages for newly hired workers and pay increases that are based on profit.
In the Canadian plants, newly hired workers will start at about $20 an hour and progress to full wages of $34 an hour after 10 years. Existing workers will receive a $3,000 signing bonus and bonuses of $2,000 in each of the final three years of the contract – whether or not the companies are profitable.
GM spelled out in its agreement with the CAW that the wage and benefit scheme for new hires will help make Canada more competitive when decisions on new investments are made.
“The company acknowledges that the recently negotiated new-hire provisions substantially enhance the labour cost competitiveness of new employees in the Canadian operations, which is one of the several important factors of consideration for investment.”
The CAW and the companies avoided the worst-case scenarios, said industry analyst Dennis DesRosiers, which would have been an announcement of more plant closings or a strike at one or more of the auto makers.
The agreements indicate that “Canada is now moving toward being competitive with the U.S. industrial north,” said Mr. DesRosiers, president of DesRosiers Automotive Consultants Inc.
The danger ahead for the industry in Canada – both the Detroit Three and the two Japan-based auto makers that build vehicles here – is that the Canadian dollar continues to soar against the U.S. currency. That would further harm the competitive position of auto makers and the manufacturing sector as a whole, which has already been battered by the dollar’s rise to parity with the U.S. currency in recent years.
The most positive scenario, Mr. DesRosiers said, is a return to record vehicle sales levels in the U.S. market, which is the destination for about 80 per cent of the cars, minivans and crossover utility vehicles assembled in Canada.
Record sales would require all companies to throttle up vehicle production in Canada, providing more jobs and boosting the overall economy.