Outcome will impact auto companies’ choices about new investment, plant closure: Expert
The future of Canada’s auto sector, and 25,000 workers at plants across Ontario, hangs in the balance in the upcoming negotiations between the Canadian Auto Workers (CAW) union and the Detroit Three automakers this September, according to Gary Chaison, an industrial relations expert at Clark University in Worcester, Mass., who follows the auto industry.
“These are the big ones,” he says. “This round of bargaining is crucial. The automakers have gotten better by getting smaller, and I worry about the Canadian plants.”
There are a myriad of complicating factors in this round of negotiations, Chaison says. The economy is a big one. The United States is still struggling with its recovery, the European economy is in its most fragile post-war state ever and there are problems with trade in China.
Under this financial cloud, Canadian autoworkers have to be careful they don’t ask for too much, he says. Chaison calls it a “perilous” situation.
“The Detroit Three are looking at all possible places to make cars and all possible places to sell them,” he says. “And right now, Canada is the most expensive.”
It’s a claim that’s been made repeatedly by Chrysler, Ford and GM, and one CAW president Ken Lewenza refutes at every point.
The $57 an hour wage set as a benchmark back in the 2009 negotiations — at a time when both General Motors and Chrysler were looking for government bailouts — was consistent with what foreign automakers were paying non-unionized workers, he says.
“So here we are three years later and nothing has changed except productivity has increased,” Lewenza says.
Labour costs in Canada are about $60 an hour, including wages, pension contributions, health care and other benefits, according to the CAW.
South of the border, American autoworkers recently agreed to concessions that have put the CAW in a tough spot, according to Chaison. They include a two-tier wage system that allows new hires to be paid less with fewer benefits. The United Auto Workers (UAW) also agreed to profit-sharing in place of an hourly wage increase.
Those agreements cut Ford’s labour costs to US$58 an hour, GM’s to US$56 and Chrysler’s to US$52, according to the Centre for Automotive Research in Ann Arbor, Mich.
“They’re looking at collective bargaining as a way to cut costs,” Chaison says. “The automakers are not afraid.”
So long as the UAW is willing to offer concessions to keep jobs, the automakers will continue to ask for more — all of which puts the CAW in a difficult position, he says.
The automakers are talking to three different audiences right now, and that’s sending mixed messages, Chaison adds. On the one hand, it’s an election year in the U.S., so there are a lot of conversations with politicians about protecting jobs. On the other hand, the investor community is also looking for signs the companies have turned the corner financially, and the workers themselves are being told they’ll have to take less in order to lower fixed costs.
Against this backdrop, any overstatement or misunderstanding in Canadian negotiations could result in a “wrong decision,” Chaison says.
“And the sad part is that when these kinds of jobs are gone, they’re not coming back,” he says, adding any labour action, including a strike, would be a “severe miscalculation.” The autoworkers have only the moral argument on their side, in his view.
Lewenza is more confident. Nothing could be more perilous than the negotiations of 2009, he says.
While the concessions accepted by the UAW “deserve our attention,” the CAW is not prepared to accept profit-sharing or a two-tier wage structure, he says.
On the latter, it’s a moot point in Canada because only new hires would be affected, Lewenza notes. General Motors would first have to recall 1,500 workers on layoff and Ford would have to bring back 1,300 employees to even require “new” hires, he says.
“There’s no impact here unless they re-open (the Ford plant in) St. Thomas,” he says. “There will be no permanent two-tiered system for the CAW.”
When it comes to profit-sharing, the union is “open to ideas connected to workers sharing in the profits of the company” but not in exchange for an hourly wage increase, he says.
