Industry association welcomes evidence of ‘flexible, creative and innovative’ attitudes
The Canadian Auto Workers (CAW) union and seat-maker Lear Corp. have reached a deal that will see the Kitchener-Waterloo plant in Ontario stay open and protect retirees’ pensions.
The agreement will see wages reduced by 30 per cent over the next four years, with a $40,000 transition payment. New hires will start at about one-half of what workers earn today.
But the agreement is “not the new norm — period,” for southwestern Ontario’s auto parts sector, says Jerry Dias, assistant to CAW president Ken Lewenza and the person who heads up negotiations with auto parts manufacturers.
Although the CAW is satisfied, Dias says this situation is unique and shouldn’t be seen as a template going forward.
The plant, which provided about 800 jobs at its peak, now employs about 285. The result is there are five retirees for each active employee.
The situation is compounded because about 80 per cent of the current plant population will retire within the next five years, he says.
“So the problem becomes how do we get them to the finish line and still keep the plant open for another 30 years,” Dias says.
It’s a far different outcome from the one at Electro-Motive Diesel just down the road in London, Ont., a few months ago.
Dias credits the attitude of Lear, which was willing to invest $40-million to keep the plant open, including offering an industry high severance package of three-and-a-half weeks pay for every year of service.
“This is where Electro-Motive was different. It had no intention of keeping the plant open,” he said. “Lear understands workers need to be treated well so it reached for a solution.”
While every situation is unique, the deal reached with Lear shows a new kind of bargaining attitude — one that is necessary for the survival of the auto parts industry, according to Automotive Parts Manufacturers Association president Steve Rodgers.
For a long time, Canada has had the reputation of being inflexible when it comes to being competitive, he says, adding this deal sends a different signal.
“It shows we can be flexible, creative and innovative on the global stage,” Rodgers says. “It makes a huge, huge difference.”
The closures of Electro-Motive and the Ford plant in St. Thomas, Ont., came after both sides took entrenched positions, rather than looking for options, Rodgers says.
He credits Lear and the CAW for recognizing the need to try something new.
That attitude, not necessarily the concessions, should be the model for future negotiations with other auto parts manufacturers, Rodgers says.
“Management and employees both have responsibility,” he says. “We can be competitive but we also have to address productivity costs like absenteeism and disabilities, too, and find savings there.”
Capacity, not wages, are the real issue in auto parts manufacturing, says Dias, adding several non-unionized manufacturing plants, including Progressive Molded Products in Vaughan, Ont., have gone out of business in the past several years.
He cautions other manufacturers not to expect similar concessions in future.
“If another company comes to us and says we want what you gave Lear we’ll say fine — if your circumstances are the same and you’re willing to spend money like Lear,” Dias says. “We aren’t going to bargain poverty wages.”
The deal with Lear is a sign unions understand the need to be flexible, says Mike Moffat, a specialist in manufacturing and unions at the Ivey School of Business at the University of Western Ontario in London, Ont.
“Management has so much power now with so many blue collar workers out of a job,” he says. “Unions are just getting hammered on all sides. Any day where we can keep a plant open is promising.”
This deal was likely helped along by the fact Lear is struggling to recover from filing for bankruptcy, Moffat adds.
“We forget that it’s the rank and file members who have the final say,” he says. “It’s a lot easier to convince them when a company is near bankruptcy.”
There are encouraging signs in the auto sector, according to Moffat. For example, the Cami plant in London, Ont., is running at full capacity.
He sees the agreement between the CAW and Lear as another positive sign.
“We do have to celebrate the successes when they happen and this is one of them,” he says.
