A commitment to assemble new vehicles in Oshawa, Ont., is one of the key demands the Canadian Auto Workers is making in contract talks with General Motors of Canada Ltd. - at a time when the vulnerability of GM's two assembly plants there appears to be growing.
The union also wants the auto maker to commit to new investment at a Windsor, Ont., transmission factory and an engine and parts operation in St. Catharines, Ont., president Buzz Hargrove said yesterday in announcing that full-scale talks with GM begin Thursday.
"They can't get a settlement with us unless we can solve the production allocation problems at all three locations," Mr. Hargrove declared.
That bargaining position could prove difficult for GM, which has eliminated one of three production shifts at its Oshawa truck plant already this year and announced last week that output will be reduced even further in September to just a single shift.
That announcement is on top of the closing of one of the company's two car plants in Oshawa at the end of last year and the cancellation of plans to build several rear-wheel-drive cars at the remaining plant later this decade.
The only new car allocated so far to the remaining car plant is the revived Chevrolet Camaro for the 2009 model year. But production of the muscle car is expected to be about 100,000 vehicles annually, not enough to sustain two shifts of employees at an assembly plant.
All the trimming at what was once the largest single automotive complex in North America means there will be just four shifts of production and about 5,500 CAW members working at the two plants by this fall, compared with 9,400 working eight shifts at three plants as of the end of November, 2007.
To further add to the cloud over Oshawa, General Motors Corp. made a commitment during talks with the United Auto Workers in the U.S. last year that all of its existing U.S. pickup truck plants would receive the investment necessary to build the next generation of the vehicles.
An agreement already reached with Ford Motor Co. of Canada Ltd. and ratified by CAW members on the weekend leaves wage and benefit costs essentially flat, Mr. Hargrove reiterated yesterday.
GM officials have stated publicly that they need to slash costs dramatically to meet a goal of reducing hourly wage and benefit costs to $47 (U.S.) an hour from the current level of $77 in Canada to match the hourly costs of Asian-based auto makers in the United States.
GM gave no indication during a meeting yesterday that they will break the pattern agreement established at Ford, Mr. Hargrove said. "We believe General Motors will meet this pattern and they'll see it, as Ford did, as a very, very major step by our union to try to assist in the problems that the companies face," he said.
The CAW agreed to a three-year wage freeze, an end to cost-of-living adjustments until late in 2009 and gave up 40 hours of holiday time at Ford.
On balance, the competitive gap between Ford and the U.S. plants operated by the Japan-based auto makers is reduced, Stacy Allerton Firth, Ford Canada's vice-president of human resources, said in an interview yesterday. She would not reveal the amount by which costs have been reduced.
But one industry source said yesterday that investment in Canada will be scaled back if GM and Chrysler LLC agree to the same deal.
The CAW will meet Chrysler officials today to discuss the economic pattern set at Ford.
This source said Chrysler's minivan plant in Windsor, Ont., is at least as vulnerable as GM's Oshawa operations - in part, because sales of those vehicles have fallen so much that Chrysler no longer needs two minivan plants. Its other minivan plant in St. Louis is more cost competitive because of the rise in value of the Canadian dollar and last year's UAW agreement, which dramatically reduced hourly labour costs.
GENERAL MOTORS (GM)
Close: $22.36 (U.S.), down 84¢
Oshawa then and now
THEN
General Motors operations in Oshawa as of November, 2007
Car plant No. 1
Three shifts producing the Chevrolet Impala
Car plant No. 2
Two shifts producing the Buick Allure and Pontiac Grand Prix.
Combined 5,500 employees
Truck plant
Three shifts producing the Chevrolet Silverado and GMC Sierra full-sized pickups.
3,900 employees
NOW
Operations as of April, 2008
Car plant
Three shifts producing the Impala and Allure
3,700 employees
Truck plant
One shift assembling the Silverado and Sierra.
2,900 employees (cutback to one shift in September will reduce truck plant to about 1,800 employees)
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