General Motors and Chrysler were still at the bargaining table Wednesday with the Canadian Auto Workers Union, and analysts believe the union will be victorious in achieving similar deals to the one inked with Ford.
CAW President Ken Lewenza said late afternoon that he’s optimistic the union will be able to reach agreements with GM Canada and Chrysler. On Tuesday night, he said there has been more progress at the table with GM.
“There are still a number of challenging issues to work through,” Lewenza said in a news release.
“We’re not there yet, but as long as we keep making progress at the bargaining table, we will continue to negotiate.”
Chrysler would only say that talks are ongoing and had no further comment.
Canadian Ford auto workers will vote this weekend on the tentative agreement that was reached on Monday, which the union hopes to use as a framework for an agreement with the others. The CAW said results of the vote will be released Sunday.
The auto workers union is usually insistent that the first collective agreement reached be followed by the others in a system called “pattern bargaining,” designed to prevent one automaker from being disadvantaged by a less competitive deal than the others achieved.
“On anything core at all, the CAW will not accept any deviation from the pattern by the Ford deal,” said Tony Faria, marketing professor at the University of Windsor.
“I think you can declare a winner and the winner in this contract is the CAW. They essentially gave up nothing.”
The Ford deal contains no base wage increases and pension plans will remain the same for existing employees. Each worker will get $2,000 a year in the second, third and fourth years to cover cost-of-living increases, and a $3,000 ratification bonus.
New hires will make 60 per cent of full pay, which would be reached after 10 years, up from a six-year progression scale agreed upon in the last collective agreement. New hires will also be signed up for a hybrid pension plan, rather than a defined benefit plan like current workers.
The Ford deal will also give 800 laid off employees a chance to get back to work, partially through the creation of 600 new jobs at its Canadian operations. Most of the those positions will be at its Oakville, Ont., assembly plant.
Faria said the Big Three automakers will be hiring few if any new workers in Canada at this point.
The automakers went into negotiations talking about concessions and getting Canadian labour costs down, but that isn’t happening, he said.
The average hourly wage rate for an assembly line worker CAW is $34 an hour and it’s about $6 less in the United States.
And that means Canada’s auto sector could, in the long-run, be the loser in this round of bargaining.
“That cost gap stays,” he said. “I think that does not bode well for the future of investment from Ford, GM and Chrysler into Canada. It’s going to Mexico and the U.S. for sure and it already is.”
Ford closed its St. Thomas, Ont., plant last year while investing in plants in the U.S.
And General Motors is shutting down its consolidated plant in Oshawa, Ont., next year, a move that will eliminate 2,000 direct jobs. Meanwhile, it is restarting production at the former Saturn assembly plant in Spring Hill, Tenn.
Industry analyst Dennis DesRosiers said the CAW won some signing bonuses — a “visible in-your-pocket contribution” — and avoided permanent two-tier wages. He believes they’ll see similar results at the others.
“It won’t be the exact agreement, but it forms the basis for getting something done at both General Motors and Chrysler,” said DesRosiers of Toronto-area DesRosiers Automotive Consultants.
DesRosiers said major investments in the auto industry are being made outside Canada and noted that Mexico has about 21 per cent to 22 per cent of North America’s auto production.
Meanwhile, Canada has 17 per cent to 18 per cent of North America’s auto production, he said.
Pradeep Kumar, who teaches at Queen’s University School of Policy Studies, said the cost for GM and Chrysler rejecting the Ford agreement will be high.
“The economy is still weak and auto sales are not as predictable as they used to be,” Kumar said from Kingston, Ont.
“Settlements are looking to the future and the future is very uncertain especially in the auto industry.”