General Motors of Canada Ltd. is warning that a dispute with its unionized retirees over a key element of the auto maker's restructuring plan threatens future investment for new vehicles at the massive assembly operations in Oshawa, Ont.
The disagreement about funding for a health care trust that GM, its unionized retirees and the Canadian Auto Workers union are setting up to finance benefits for retirees surfaced Wednesday as General Motors Co. confirmed that it will assemble the next generation of the Impala sedan at a plant in Detroit in 2013.
In an internal memo distributed in Oshawa, GM Canada said it will redesign the Impala and build it in Hamtramck, Mich., but didn't specify whether the next version of the car will also be built in Oshawa, the only factory where it's built now.
"GM Canada intends to meet its contractual and production commitments," the memo said. "However, the health care trust, which is a key element of our restructuring, has not yet been established. Therefore, we are not making any announcements regarding our Canadian operations today."
The memo infuriated the CAW, which interpreted the document as a threat that the next generation Impala will be pulled from Oshawa unless the union convinces retirees to agree to how the company wants the health care trust structured.
"What we find very disrespectful, threatening, you name it, is the way they communicated to our members in the plant, implying that there will be no announcements of products in Oshawa as a result of the health care trust not being resolved," said Chris Buckley, president of CAW local 222, which represents the Oshawa workers.
The creation of a health care trust to finance dental care, vision care and other benefits for retirees was demanded by the federal and Ontario governments in 2009 when General Motors Corp., sought a bailout as it was on the verge of financial collapse.
The union agreed to negotiate such a plan. GM agreed to put up $1.8-billion to finance the fund, Mr. Buckley and Leslie MacDonald, a member of the retirees' steering committee negotiating with GM Canada said Wednesday.
"I don't think we have enough [money] I know we don't," Mr. MacDonald said.
The retirees group has made a counter-proposal, he said, but would not reveal the amount.
The communication by GM is not helpful as the retirees, the union and the company negotiate the terms of the health care trust, CAW president Ken Lewenza said.
"General Motors has repeatedly said to me that if the health care trust does not get completed, then the Canadian competitive advantage will be in a precarious position," Mr. Lewenza said. "We recognize the pressures of the fund and the pressures on investment in Canada."
But both he and Mr. Buckley noted that neither the CAW leadership, nor the workers at the Oshawa plants speak or negotiate for the retirees.
The memo came as GM announced that it will add 2,500 jobs at Hamtramck, which already builds the Chevrolet Volt and will add production of the mid-sized Malibu as well as the Impala.
"We are going to communicate to our members that General Motors is using scare tactics in order to have the health care trust resolved," Mr. Buckley said. He said he was reassured by GM officials Wednesday that Oshawa will assemble the next generation Impala.
CAW officials won a commitment in contract negotiations in 2008 that GM would keep its Oshawa Truck Plant open, but the company announced the closing of the plant a few months later when pickup truck sales collapsed.
GM reiterated in the memo, which pointed out three times that the health care trust issue has not been settled, that it plans to close what it calls the consolidated line, which is the Oshawa plant where the Impala is built now.
The union has written commitments that GM will build the next generation Impala in Oshawa, but at the neighbouring flex plant, which currently assembles the Chevrolet Camaro and Buick Regal and is scheduled to add a Cadillac model.
"The consolidated line will cease production at the end of its current product lifecycles," the memo said. The CAW has been urging GM for several years to find new products to assemble on the consolidated line because shutting it down would wipe out more than 1,600 jobs. The two plants employ about 4,200 hourly workers in total.
Jason Easton, a spokesman for GM Canada, said the company looks forward to completing the health care trust, but did not respond directly to comments made by the union leaders.