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File photo of workers on a General Motors line in Oshawa, Ont.Moe Doiron/The Globe and Mail

Auto manufacturing has a future beyond 2019 in Oshawa, Ont., after a deal between General Motors Co. and the union that represents the company's workers in Canada.

The agreement saves 2,500 jobs at a plant that has been on the endangered list with the scheduled closing of one assembly line next year and the gradual phasing out of another assembly line during the next three years.

"We are thrilled," Unifor president Jerry Dias told an early morning news conference at a Toronto hotel.

"The commitment to Oshawa is hundreds of millions of dollars, therefore our fear of closing is 2019 is now over," Mr. Dias said.

Related: The union leader driving a hard bargain with auto makers

Read more: Trouble in Canada's Motor City: The future of GM's Oshawa plant hangs in the balance

GM will invest $400-million to upgrade what the company calls the flex line, which now assembles Chevrolet Impala, Buick Regal and Cadillac XTS passenger cars. The consolidated line will close at an unspecified date, but Mr. Dias said there will be more jobs in Oshawa than there are now, with a new vehicle to be built on the flex line.

The tentative agreement averts a strike that would have halted vehicle production in Oshawa and output of engines and transmissions at a factory in St. Catharines, Ont., which supplies several of the auto maker's North American assembly plants.

The deal for St. Catharines includes shifting some engine work from Mexico to GM's only Canadian engine plant, Mr. Dias said.

The wage rate for newly hired employees will be higher than the current $20.50, workers will receive signing bonuses and lump sum payments and there are wage increases for longer-term employees.

A commitment to new vehicles for Oshawa and investment in St. Catharines was the key demand by Unifor, which has successfully negotiated agreements with the Canadian units of the Detroit Three auto makers without going on strike since 1996, when the union was called the Canadian Auto Workers.

"We do have a product commitment for Oshawa," Mr. Dias said although he would not identify the new vehicle.

GM agreed to spend $120-million to upgrade the engines and transmissions made in the St. Catharines plant.

Unifor gave up a hybrid pension plan that combined defined benefits and defined contributions and agreed instead to a full defined contribution plan for new hires, meeting a key demand from GM.

For more than year, GM insisted that it would not allocate new vehicles to the Oshawa facility until Unifor had signed a new contract and the company had assessed how that contract, other operating costs and government incentives affected the competitive position of its Canadian operations.

GM has been assembling vehicles in Oshawa since 1918, when the McLaughlin brothers sold their fledgling car making business to the company that eventually became the world's largest auto maker.

Although the plant is now off the endangered list, the Oshawa operations will not return to the glory days of the mid-2000s, when GM operated three vehicle assembly plants employing more than 11,000 people at what was then the largest automotive manufacturing complex in North America.

The tentative agreement will be subject to a vote of workers this Sunday. If it's approved, the union will move on to negotiations with Fiat Chrysler Automobiles NV or Ford Motor Co. In a process known as pattern bargaining, the agreement with GM will serve as the template for contracts with Fiat Chrysler and Ford.

Mr. Dias said Unifor chose GM to bargain with first because the union faced its toughest issues at that company.

"This agreement we tried to make sure would work with all three [companies]" Mr. Dias said.

General Motors of Canada Co. said in a statement that the agreement will enable "significant new product, technology and process investments at GM's Oshawa, St. Catharines and Woodtock facilities placing those operations at the forefront of advanced manufacturing flexibility, innovation and environmental sustainability."

The company will seek "potential support" from governments, the statement said.

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