CAW Threatens Strike at GM Oshawa Plant

The Toronto Star reports that the Canadian Auto Workers (CAW) union Local 222 has threatened to strike at General Motors (GM)'s Oshawa (Ontario) plant later this year if the company does not announce new product for the plant. The CAW's current contract is set to expire on 17 September 2008, and negotiations for a new contract are expected to begin in the third quarter. "Live up to the commitment given to us in the [2006] shelf agreement or you will not be getting a collective agreement this fall," the union warned in a leaflet distributed at the complex on Thursday (24 January). "The company promised us jobs when we did the shelf agreement and implemented the changes right away but [it has] yet to deliver on their commitment." GM has agreed to produce the new Chevrolet Camaro at the Oshawa plant in early 2009, but plans to also produce a rear-drive sedan at the plant have reportedly been shelved, leaving the plant without significant volume. "The employees are all up in arms about it. They're all worried about their jobs," said veteran GM worker Mike Plumpton, as quoted in the Star.

CAW president Buzz Hargrove is confident that GM will continue to put some sort of volume in the plant, due to the financial commitments by the company, the provincial government, and the federal government. According to the union boss, GM is spending C$2.6 billion in Oshawa, including C$435 million pledged from the Ontario and federal governments. "We anticipated that [the Camaro] would be followed by other rear-wheel-drive vehicles, but the money they spent on the plant makes it a flex plant, so you can build both front-drive and rear-wheel-drive in the facility," said Hargrove in an interview with the Canadian Press. "I'm confident that [GM officials] not only want to build there, they're obligated to," he added. The investment is to consolidate the two existing facilities into one new facility, according to the company.

But a GM official spoke to Automotive News last week, and sang a somewhat different tune. "Between the time we made the decision to make the investment in the flex plant and move forward with the new competitive offering agreement and Camaro, a huge amount has changed," said Stew Low, director of communications for GM of Canada. "The loonie [Canadian dollar] has soared to parity and beyond, and nobody anticipated a 35 mpg [CAFE] standard," Low toldthe trade publication. "The union is focused on new product programs and jobs—and guess what, so are we."

Outlook and Implications

Several factors have finally conspired to deal a serious blow to the Canadian auto industry, which in just a few short months has seen its cost and labour advantage over U.S. manufacturing all but evaporate. The recent agreement by the American United Auto Workers (UAW) union has taken the Canadian advantage of government-provided universal healthcare out of the equation, as the costs involved for the Detroit Three with regards to retiree healthcare are now set to be transferred in one lump sum to the UAW by 2010. Wages have also taken a big step away from the CAW contract, with the installation of a two-tier wage system at the UAW, which allows for workers at each of the Detroit Three to be hired in with total costs nearly one-third of legacy workers. The CAW has balked at the thought of a two-tier system, steadfastly refusing to discuss any such measure.

The Canadian dollar achieved parity with the American dollar late last year, making imports of Canadian-manufactured goods more expensive. CAW contracts have been very good to CAW workers as well over the last 20 years, with vacation and wages that will make Canadian auto manufacturing actually more expensive than American manufacturing, once the new UAW contract is fully in effect. Unlike their cousins to the south however, the CAW has only recently begun to experience any kind of job or wage pressures, with the first rumblings of possible plant closures coming last year with Chrysler's Brampton (Ontario) facility. A fifth product, a new Chrysler Imperial luxury sedan, was scheduled to be built at the plant, but union refusal to grant concessions on a contract modification caused Chrysler to initially pull the project. Only after the company decided that it would not pursue manufacturing at Brampton did the union hold an emergency meeting and re-vote of the contract, passing the somewhat modified mid-cycle adjustment. The Imperial has since been cancelled due to corporate average fuel economy (CAFE) regulations anyway, which is what is also looking to affect the GM product portfolio as well.

The final straw for the CAW may be the new CAFE regulations passed by the U.S. government, to be implemented by 2020. The new 35 mpg average fleet requirement is causing all of the Detroit Three to re-evaluate their product line-up; the rear-drive family of big sedans based on the Zeta platform shared by the Camaro may not proliferate much beyond the already announced models, according to GM insiders. The company reportedly told CAW representatives that the Impala slated for Oshawa, which was to have comprised nearly half of the total plant volume, would instead be made in the U.S. at a Michigan plant.

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