CAW open to cutting costs

But union won't agree to lower wages for new employees

Heading into a summer round of negotiations, the Canadian Auto Workers (CAW) union is standing firm against the Detroit Big Three auto makers' desire to slash Canadian wage and benefit costs.

Chrysler, General Motors and Ford, which have reported billions of dollars in losses, want to cut hourly costs from an average of $77 US to closer to the $49 US paid by Japanese auto makers in the United States.

The union will consider ways to reduce costs but won't agree to lower wages for newly hired employees or reduced time off and it can't make up for extra costs associated with the rising loonie, said CAW president Buzz Hargrove.

"We're committed to get at the costs," Hargrove told reporters earlier this week in Toronto. "We're committed to improving our productivity and equality."

Earlier this year, the United Auto Workers in the U.S. agreed to the Big Three's plan to slash wages for newly hired employees to $14 US an hour, about one-half of the basic wage of existing employees.

Hargrove said a similar two-tiered wage system in Canada would lead to a strike.

However, the Detroit Big Three don't need to cut costs as much in Canada because Honda and Toyota plants in Canada have higher average wage and benefit costs than their American counterparts, said CAW economist Jim Stanford.

Canadian GM, Chrysler and Ford plants are also more productive and profitable than their American counterparts, said Hargrove

However, the skyrocketing Canadian dollar has wiped out what was once a large competitive advantage for Canadian plants. When the loonie trades on par with the U.S. greenback, the average hourly wage is $32.50 US, compared to an hourly wage of $29.25 in the U.S. When benefits and other costs are included, the average hourly labour cost is about $77 US in both countries.

While the main negotiations will take place this summer, informal contract talks have already begun between the union and the auto makers because the 2008 negotiations will be more difficult than usual, said Hargrove.

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