The Canadian Auto Workers union will decide later this week which company it will approach next to negotiate cost-saving changes to its master contract with Detroit-based auto makers.
The changes will enable General Motors of Canada Ltd., Chrysler Canada and Ford of Canada Ltd. to qualify for emergency aid from Ottawa and the province of Ontario.
GM and Chrysler have requested billions in taxpayer-funded loans to help them weather the current economic storm, while Ford has indicated it may seek a line of credit.
Meanwhile, the CAW’s 10,000 members employed by GM will vote Tuesday and Wednesday on a tentative deal that will help the auto maker lower its labor costs in the region.
“We compliment the CAW for their leadership to share sacrifices in these extremely challenging economic times,” GM Canada says in a statement. “GM Canada is committed to ensuring a viable, leaner and greener business for the future, which will allow us to continue providing high quality, fuel-efficient cars and trucks for our loyal customers.”
The agreement awaits ratification by GM Canada’s roughly 10,000 CAW members in voting tomorrow at sites in Oshawa, St. Catharines, Windsor and Woodstock, ON. But Lewenza says the CAW’s concessions minimize the pain CAW members would have felt otherwise and better position the auto maker for C$2.5 billion ($1.9 billion) of government assistance.
“At the same time, we understand that workers didn’t cause this crisis, which was caused by the global financial meltdown and ensuing credit freeze,” Lewenza says in a statement.
Changes to the contract hinge on GM Canada receiving the government help.
The tentative agreement freezes base wages for the remainder of the contract, which also extends by one year to September 2012. Also:
- Quarterly cost-of-living adjustments for wages are suspended until June 2012.
- Annual cost-of-living payments are eliminated for the life of the contract.
- Cost-of-living adjustments to pensions are eliminated for the life of the contract.
- Expenses for CAW-sponsored programs such as child-care facilities are cut by one-third.
- Paid time-off is reduced by 40 hours per year, which comes in addition to a previously negotiated cut.
- A C$1,700 ($1,312) special bonus for active workers will be diverted to defray retiree health care.
The new contract alters a range of health and non-wage benefits, such as a new monthly co-pay premium of C$35 ($27) for active workers and pensioners under 65 years, and C$15 ($11.57) per month for pensioners and surviving spouses. The contract caps other benefits, such as life insurance and tuition.
“Together these changes represent a major sacrifice by our active members and retirees,” Lewenza says. “They will reduce active hourly labor costs by several dollars per hour, reinforcing Canada’s investment advantage relative to U.S. facilities. And they will significantly reduce the company’s legacy costs associated with pension liabilities and retiree health benefits.
“We committed that the CAW would be part of the solution to this crisis, and we have done just that,” he adds. “But we fully understand that the industry will not be secure until governments confirm a financial-assistance package for the industry and until consumers start buying vehicles again.”
