Could swapping concessions for production contracts secure new work?
General Motors' future in Oshawa has been rocky of late — and with the automaker reportedly pressuring the union to scrap its current pension plan, the outlook is becoming even more cloudy.
Scrapping the defined benefit portion of the pension plan for new-hires at the assemblies in Oshawa and St. Catharines, Ont., could be one route to breed vehicle production contracts, key labour players have noted.
With one plant slated for closure in 2016 and no current contracts on the horizon for the other, Unifor president Jerry Dias said any talks before official bargaining begins next year would be speculative and informal.
"We’re not in any talks with GM because they’re telling us they don’t have a product for Oshawa," Dias said. "So this whole issue of bargaining with ourselves — I’m not going to do it."
But the likelihood of a trade-off cannot be ignored.
According to David Amyot, a labour lawyer on the automotive portfolio at McTague Law Firm in Windsor, Ont., pre-negotiating could give an employer a better idea of the labour costs involved with putting a new product in the facility.
"Clearly they’re laying the groundwork for what’s going to be a central issue in bargaining in 15 some-odd months. GM is holding the prospect of new business for Ontario facilities as leverage to probably make a very large change to its pension," Amyot said. "I’m not sure if it’s a fair trade-off, but it’s an issue the union should take note of. It’s not uncommon."
Currently, workers at GM have a hybrid pension that combines defined benefit (DB) with defined contribution, which Dias said is affordable and effective for both workers and the company.
At Ford, he estimates 1,800 new-hires have joined under the hybrid rubric, and 200 at Chrysler, with more expected after the latter announced plans to bolster its Windsor plants.
Because the Big Three automakers — Ford, General Motors and FCA Canada, formerly Chrysler — follow a pattern bargaining model, changes made to any one collective agreement would put pressure on others to follow suit.
"If I’m Unifor, I’d be concerned about creating within the plant, within the membership, a two-tier kind of employee class — those that have defined benefit pensions and those that have defined contribution pensions," Amyot explained. "Obviously, that’s bad for business for them, in terms of employee and membership morale, but it’s been done before."
Amyot pointed to Ingersoll, Ont., which is home to GM’s Cami assembly plant and exists outside of the bargaining pattern. There, workers have a fully defined contribution pension plan, with the company contributing six per cent, according to the union.
"They need to measure the overall competitiveness of these plans and their ability to attract new work and determine whether or not making a large change to the pension plan is something that they can do to secure the work," Amyot added.
GM declined to comment on the pension plan or upcoming negotiations, but spokesperson Faye Roberts added, "We are engaged in positive discussions with all our partners including Unifor, governments, suppliers and others to ensure our operations are as innovative, efficient and cost-competitive as they can be."
New pension order
Pension shakeups herald a new world order for many employers.
With mortality rates indicating longer life spans and companies touting austerity in the wake of the 2008 recession (the blowback of which is still being felt years later), the defined benefit pension as we know it could be on its last legs.
"All companies are looking to scrap the DB plan, there isn’t one company we’re dealing with that isn’t looking at the DB issue. GM is no different than anyone else — no matter how well the company is doing, they always want more concessions from the workers," Dias said, adding that workers are the only ones taking a hit. "DB plans are a problem for all their employees, just not for the people who run the company. The workers can’t have it, but they can."
Amyot agreed, saying demographic changes will soon see all employers looking for ways to mitigate the impact of defined benefit plans.
"We’re also dealing with the baby boomers and a demographic bulge. The impact of that for pensions on the tail-end is you have fewer people coming up to pay, but you have more people collecting and, generally, living longer," he explained.
Far south of the border
For Dias, there is a an automotive elephant in the room — Mexico. More and more vehicle production contracts are being awarded there, where low wages amount to low labour costs, effectively establishing the country as the fourth largest auto manufacturing country in the world.
Most recently, Toyota announced it would pull production for the Corolla out of Canada and into Mexico. Though Toyota’s Canada operation remains the focus of a certification drive, Dias called on the federal and provincial governments to develop an automotive strategy.
"Ten years ago, we had a $15-billion auto surplus, today we have a $20-billion deficit. Of course, the reluctance is foolish," he said.
