Union members at General Motors plants in Ontario are voting Tuesday on a new contract that freezes wages and pensions in an effort to reduce labour costs for the struggling automaker.
About 10,000 unionized workers at GM's assembly plant in Oshawa and component plants in St. Catharines, Windsor and Woodstock have until Wednesday to cast a vote on the deal.
The Canadian Auto Workers union negotiated the deal because all company stakeholders are expected to make concessions if GM is to receive billions of dollars in federal aid.
"Our members unfortunately understand the circumstances," CAW president Ken Lewenza said Tuesday on CTV Newsnet. "They recognize that (the loans hinge on concessions), but that doesn't mean they like it."
Union members are being asked to ratify the following:
- elimination of a $1,700 annual bonus
- reduction of paid time off to 40 hours from 80 hours
- freeze base wages and pension levels
- extends the union's existing contract to 2012 instead of 2011
- requires workers to pay a health premium of $30 per month, $15 for retirees
One worker told CTV Toronto that the concessions could have been much more painful than what they are being asked to vote on.
However, it is contingent on whether GM Canada is able to secure federal and provincial aid, as well as a promise that Detroit-based parent General Motors maintains the Canadian portion of its total North American manufacturing volume at the current 20 per cent.
Another auto worker told CTV Toronto that auto workers are also taxpayers.
Auto industry analyst Dimitry Anastakis told Canada AM on Monday that while the deal will save the company an estimated $148 million annually, the automaker needs billions to stay afloat.
"The cost of labour, even though it is a huge issue in terms of the public perception, is not a huge amount of the cost of the actual vehicle. It's maybe 10, 12, 15 per cent of the cost of a vehicle," Anastakis said. "So even if they cut their wages, cut their costs by three or four or five per cent, that's not going to make or break the difference."
Dennis DesRosiers, an independent industry analyst, estimates the hourly cost of a GM assembly line worker to be $75 to $78 per hour, including wages and benefits. He suggested the company had to cut that by $20 per hour -- and got a six or seven-dollar reduction.
Lewenza claims the total compensation figure is in the "high sixties," which is comparable to what workers make in Japan, Germany and the U.S., and that the deal cuts that by several dollars per hour. The deal continues the "Canadian investment advantage" over U.S.-based GM plants, he said Monday.
On Tuesday, Lewenza said workers' wages and pensions are not the cause of the automakers' dire financial circumstances and said that Canadian auto plants were being fully utilized until the global financial crisis set in.
"This is not about labour costs, this is not about benefits, this is about consumers not being able to get the credit required to buy a vehicle," Lewenza said.
GM Canada submitted a restructuring plan last month. If the federal and Ontario governments believe the plan will ensure the long-term viability of the company, the automaker will be eligible for loans of up to $3 billion.
Industry Minister Tony Clement refused to comment on Tuesday about how the tentative GM-CAW deal affects Ottawa's bailout plans.
But he did say that the plummeting auto sector can only be saved by the American consumer.
"The issue is not Canadian demand, the issue is American demand," Clement said after a speech to the C.D. Howe Institute.
"If you're asking me what will save the auto sector in North America, it's what American consumers do and buy, not just what Canadians do and buy."
Rick Laporte, head of the CAW local in Windsor, said he expects talks to start with Chrysler on Wednesday.
The CAW has a pattern of establishing a deal with one company, and then requiring the other two North American automakers to accept the pattern.
With files from The Canadian Press
