General Motors

Canada Auto Union Picks GM (Its Biggest 'Bully') to Start Negotiations

Sept. 7, 2016
Being nice, ratifying, crossing your fingers and hoping hasn’t worked well for us,' said union leader Jerry Dias.

Canada’s autoworkers union picked General Motors Co. for negotiations that will form the basis of a new labor contract at the Detroit Three automakers, zeroing in on the company with the biggest question mark over future production in the country.

Unifor, which represents about 23,000 autoworkers at GM, Ford Motor Co. and Fiat Chrysler Automobiles NV in Canada, will focus its demands on securing new investment for GM’s Oshawa and St. Catharines plants near Toronto,  Jerry Dias, president of Unifor, told reporters Tuesday.

GM plans to close one of its two Oshawa production lines next year and won’t commit to scheduling production on new vehicles beyond 2019 before labor negotiations are finished.

“We are not under any circumstance going to sign a collective agreement with General Motors unless there is a firm commitment to St. Catharines and to Oshawa,” Dias said in Toronto. If Unifor has to pick a fight, they will do it with the biggest “bully” in the schoolyard in order to show strength, he said.

“Being nice, ratifying, crossing your fingers and hoping hasn’t worked well for us,” Dias said, noting GM shut down production after concluding previous labor talks. In 2012 it announced it was moving Camaro production to the U.S. and in 2008 it announced closure of its truck plant in Canada, he said. “What we are saying emphatically is that there has to be real solutions or there won’t be a deal.”

GM Canada remains "focused on working with Unifor to reach a mutually beneficial and competitive new agreement," GM Canada spokeswoman Jennifer Wright said in an e-mail.

Output Shrinking

Unifor is choosing GM as Canada’s auto industry faces a loss of investment and jobs to cheaper regions such as Mexico and the U.S., even with near-record North American auto sales and a weaker Canadian dollar. Canada auto output fell to 13 percent of North America production last year from about 17 percent in 2009, while output in Mexico has risen to about 20 percent, according to data from Ward’s Automotive Yearbook. Canada lost more than 53,000 automotive jobs from 2001 to 2014, according to a study by the Automotive Policy Research Centre.

Unifor is aiming to sign a new contract with GM before the current agreement expires on Sept. 19, and then move on to Ford and Fiat Chrysler to negotiate contracts in a process known as pattern bargaining. Unifor began negotiations with the U.S. automakers on Aug. 10 and considered proposals from each company before selecting its first target.

Strategic Choice

“It’s a bit of a surprise, but clearly a strategic choice,” Harley Shaiken, labor professor at University of California at Berkeley, said. “Had they gone to Ford or Chrysler first, General Motors would have been the 800-pound gorilla in the room. Instead they’ve decided to take on the 800-pound gorilla directly.”

Unifor wants the U.S. automakers to boost future production in Canada now that the industry has shown signs of recent strength. North American auto sales have risen more than 60% since 2009, when GM and Chrysler restructured in bankruptcy.

“If we cannot win investment with the stars completely aligned, then we would be naïve to expect that we would win investment when the cycle starts to turn in the opposite direction,” Dias said.

Strike Mandate

Mexico has emerged as a very tough competitor, Shaiken said. “Their productivity is very high, comparable to Canada, their quality is very high, comparable or even greater than Canada, and the costs are not simply low, they’re artificially depressed in many ways by Mexican government policy on labor costs and by the lack of independent unions.”

Canadian autoworkers voted to give Unifor a strike mandate if a deal isn’t reached by the September deadline, according to an Aug. 28 statement from the Toronto-based union. Dias said Tuesday that he expects GM to cooperate and a strike will be avoided.

“A strike is on the agenda, but I don’t think it’s going to happen,” Shaiken said. “They could slip into a strike, but if there is one, it won’t be long, I suspect. But I think it’s in the interest of both sides to avoid a strike.”

Unifor is also looking for the government to invest more in the auto industry, Dias said. The union has spoken with Prime Minister Justin Trudeau’s office and Minister of Innovation, Science, and Economic Development Navdeep Bains, and is speaking with Ontario Premier Kathleen Wynne this week, he said.

The Detroit Three produced 1.3 million vehicles, 1.1 million engines and added C$5.8 billion ($4.5 billion) to Canada’s GDP in 2015, according to Unifor.

“All levels of government need to understand and do understand that if we’re going to have a successful industry here in Canada, then they’re going to have to play a role,” Dias said.

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Licensed content from Bloomberg, copyright 2016.

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