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For the past few years, the toughest job in the auto industry has probably belonged to United Auto Workers president Ron Gettelfinger. Now that torch has been passed north of the border to Buzz Hargrove, president of the Canadian Auto Workers union.
Mr. Hargrove is sitting firmly in the hot seat – in part because of groundbreaking moves Mr. Gettelfinger made during the UAW's negotiations with the Detroit Three in the summer and fall of 2007.
The CAW chief harbours no illusions about what he's up against as he prepares to negotiate new contracts with the same auto makers that slashed U.S. manufacturing costs in the deal with the UAW.
“I think these are going to be the most difficult discussions our union has ever had since its formation,” Mr. Hargrove says of the talks, which already promise to be one of the big events in the auto industry in Canada in 2008.
Buzz Hargrove speaks at The CAW annual convention in December. (Charla Jones/The Globe and Mail)
Ford Motor
General Motors
The usual suspects are putting pressure on the CAW and its approximately 40,000 members at the Canadian units of Chrysler LLC, Ford Motor Co. and General Motors Corp. Among those are the three firms' declining market share, falling prices for vehicles in North America because of relentless competition and the unceasing need for the auto makers to improve productivity.
But the two new factors that will play into the renewal of the CAW's three-year contract are the new UAW agreement and the surge in the value of the Canadian dollar to parity with the U.S. currency and even higher levels. “They certainly didn't help us, I can say that,” Mr. Hargrove says with what for him is an unusual amount of understatement.
The dollar's rise and the UAW deal eliminated major Canadian competitive advantages virtually overnight, although CAW officials insist the savings the UAW provided the auto makers are not as large as analysts say.
Detroit Three wage and benefit costs have been reduced to about $50 (U.S.) an hour from roughly $75 an hour, says Sean McAlinden, chief economist and vice-president of research of the Center for Automotive Research (CAR), an industry think tank in Ann Arbor, Mich. That compares with a little more than $70 (Canadian) an hour at Chrysler, Ford and GM's Canadian operations.
“The UAW just wiped out half the CAW advantage on health care,” Mr. McAlinden says, by shifting the health care burden and its roaring inflationary spiral to a trust under the direction of the UAW, financed by a one-time shift of assets out of the Detroit Three.
Although that's a critical change in direction for the companies and the UAW, it has almost no relevance in Canada because of the taxpayer-financed health care system.
But the UAW's historic shift to let new workers be paid a lower wage and benefits than existing workers is a game changer and will be a serious pressure point for Mr. Hargrove when the talks in Canada get serious in the summer.
He is, however, rejecting that idea out of hand and as befits a labour leader in pre-bargaining mode, he is defiant.
“I'm sending a message to them through the media both here and in the United States … If they want to have a fight with us and they table those issues, there will be a fight,” he says. “We're not agreeing to a second-class group of workers at our plants that come in at half-pay and never get to top pay. That just isn't going to happen.”
Analysts and others caution Mr. Hargrove may have to change that position or find other ways to help the firms reduce costs in Canada if he's going to win the investments at Canadian plants that he has made a centrepiece of his bargaining strategy.
“It's hard for me to see him not buying into [two-tiered wages] but somehow trying to find a different name for it,” Mr. McAlinden says.
Mr. Hargrove counters that he's not going to “bargain down” to U.S. wages and benefits, pointing out that when Canadian costs were substantially lower in the 1990s – helped by the low Canadian dollar – the UAW didn't agree to reduce its costs to the levels prevailing in this country.
