The Canadian Auto Workers union has laid out a proposal to cut wages for new employees – a move it says will meet a key demand of the Detroit auto makers as the clock ticks toward a strike deadline just four days away.
The union, which has been at an impasse in negotiations with the Canadian units of General Motors Co., Ford Motor Co. and Chrysler Group LLC, has agreed to chop wages for new hires to less than the current rate of about $24 an hour, sources told the Globe and Mail.
It also agreed to extend the time frame on a "two-tier" system of paying workers. Currently, newly hired workers start at lower wages for their first six years on the job; the CAW proposal extends that to 10.
It is still unclear whether the union's move will be enough to satisfy the auto companies, which have told the CAW that labour costs in their Canadian plants must come down to match those in their U.S. factories. But the proposed compromise illustrates the huge stakes in the negotiations.
A strike deadline looms for next Monday and could involve walkouts by workers at the Canadian operations of all three companies, a disruption that would deal a serious, if temporary, blow to Ontario's economy.
The two sides are also discussing lower benefits for newly hired employees, sources involved in the talks confirmed Wednesday.
"Go lower [on wages], stretch longer and tie in more benefits [to that lower wage rate] and you get some pretty big savings," said one source involved in the discussions.
If wages for new employees were cut to 60 per cent of established employees' wages, it would mean a starting rate of about $20.40 an hour.
The gap in total labour costs between plants in the two countries varies by company, but it ranges between $2 an hour and about $8 an hour. Ford Motor Co. of Canada Ltd. has said wages alone are $6 an hour higher in Canada than they are in the United States.
Changing the existing rules on newly hired employees would move the Canadian operations closer to the full two-tiered wage system in place at the three companies' U.S. plants, but the difference is that the U.S. agreement set up a permanent two-tiered system.
CAW president Ken Lewenza has said the union opposes a permanent two-tier system.
The union said Wednesday that the tone of the talks has improved and Mr. Lewenza said he sensed more urgency on the part of the companies to get a deal done.
Sources involved in the talks said the two sides were taking "baby steps" toward a deal but that Chrysler Group LLC was taking the firmest stance.
Chrysler would benefit most from lower wage rates for newly hired employees in Canada because it's most likely to be in need of new employees soon.
It is considering adding a third shift of workers at its Brampton, Ont., large car assembly plant and has no employees on layoffs at its other Canadian plants – a minivan assembly plant in Windsor, Ont., and an engine parts casting plant in Toronto.
Ford Motor Co. of Canada Ltd. has about 1,200 employees on layoff after shutting its St. Thomas Assembly Plant near London, Ont., last year and is scaling back production at an engine plant in Windsor.
General Motors of Canada Ltd. is scheduled to begin laying off employees at its Oshawa, Ont., operations later this year when it begins the process of closing one of its car assembly plants in that city.
The CAW has still not chosen a so-called target company, with which it would reach an agreement that would serve as a template for the other two auto makers.