Fiat Chrysler’s Brampton plant could be in danger because it needs an investment of about $1-billion for a new paint shop and other upgrades.PETER JONES/Reuters
Hourly labour costs for the Detroit Three auto makers are expected to rise in new contract agreements the companies have reached with the United Auto Workers, a development that could bolster the case for new investment by the three companies in Canada.
But the key question as negotiators from Unifor assess the UAW deals is whether Fiat Chrysler Automobiles NV, Ford Motor Co. and General Motors Co. have any new products left to allocate to the three Canadian plants – one at each company – that are on the endangered list after promising $15.8-billion (U.S.) in new spending on vehicles, engines and transmissions at their U.S. plants.
The 2016 negotiations between Unifor and three companies are "really going to be about the future of the industry in Canada, no question in my mind," Unifor president Jerry Dias said.
The companies' U.S. labour costs will rise with the new contracts, Kristin Dziczek, director of labour and industry at auto think tank the Center for Automotive Research and Art Schwartz, president of consulting firm Labor and Economics Associates, said in a presentation.
Hourly labour expenses, which include wages and benefits, will rise to about $56 from $47 for FCA (Chrysler) by 2019 and approximately $60 each for Ford and GM from $57 and $55 respectively, the analysts said.
Ford and GM workers approved the tentative deals on Friday.
The new U.S. hourly labour costs make Canadian labour rates of about $62 (Canadian) an hour much more competitive – $46.50 (U.S.) with the Canadian dollar trading at about 75 cents.
Canadian costs will have to be lower in order to win new investment in Oshawa, Ont., Steven Carlisle, president of General Motors of Canada Ltd., said earlier this month after a speech to the Canadian club.
"I think the same is kind of a non-starter, right?" said Mr. Carlisle who has said that no decisions on new vehicles for the auto maker's two Oshawa assembly plants will be made until after Unifor negotiations next year. No new products are allocated for either plant, one of which has had its life extended five times and is now scheduled to close in 2017.
Industry analysts see no new products for GM to put in Oshawa.
"It does appear that the focus for the domestic auto makers is on securing their investments in the U.S. That really makes Oshawa a tough sell," said Jeff Schuster, senior vice-president of forecasting for LMC Automotive, an automotive research firm.
The UAW said GM came up with $1.9-billion in new investments for U.S. plants during the negotiations, on top of $6.4-billion in new spending already announced in 2015.
Analysts also figure FCA's Brampton plant, which makes full-sized cars, is also in danger because it needs an investment of about $1-billion (Canadian) for a new paint shop and other upgrades and they see nothing in the FCA product portfolio that can be shifted there.
Ford's V-8 and V-10 engine plant in Windsor also has no new products earmarked.
"Ford has to come up with a solution for our Windsor plant, GM needs to come up with a solution for Oshawa and Chrysler needs to make a commitment to Brampton," Unifor's Mr. Dias said.
He noted that Ford invested $1.2-billion at its Oakville assembly plant, FCA is spending $2-billion to engineer, develop and assemble the next generation of its minivan, which will be built in Windsor, Ont. and GM has announced an investment of several hundred million dollars at its Cami assembly plant in Ingersoll, Ont.
"I would make the argument that they never would have made those investments if they didn't think Canada was a good place to do business," he said.
Editor's Note: An earlier version of this story incorrectly stated that Fiat Chrysler Automobiles NV is spending $2-billion (U.S) on its assembly plant in Windsor, Ont. In fact, the auto maker is spending $2-billion to develop, engineer and build its next generation minivan, which includes spending at the assembly plant in Windsor. This online version has been corrected.