Ford and Canadian Auto Workers have reached a tentative labor agreement that has saved jobs. Will the CAW achieve the same degree of success with General Motors and the Chrysler Group? Click if you missed PART 1 or PART 2 of this article.
Canadian Auto Workers business shrinking rapidly in Ontario
Since 2000, auto industry production in Ontario has decreased by one-third, which Canadian Auto Workers estimates has led to the loss of at least 50,000 Canadian jobs. The latest Ford plant closure came last year in St. Thomas, Ontario, where the Crown Victoria and Lincoln Town Car were assembled. General Motors is the last Big 3 automaker to be hit by a walkout in Canada, and that was for 20 days in 1996. Operations were paralyzed, forcing layoffs at numerous North American plants.
“Nobody wins in a strike,” said Van Conway, CEO of restructuring firm Conway MacKenzie Inc. of Birmingham, Mich. “If the automakers make a strategic decision in the long run to exit Canada because they don’t want this to happen again, that would be the worst thing that could happen to the CAW.”
The projected job loss that would occur in that situation prompted the Canadian Auto Workers to propose that there be a national policy calling for government intervention involving devaluation of currency and the negotiation of a larger manufacturing footprint in Canada.
“Ontario’s unemployment rate is above the national average now, and one of the big reasons is that the auto industry hasn’t come back to its full potential of before the financial crisis,” said Hosen Marjaee of Manulife Asset Management in Toronto.
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A widening gap
CAW officials fear that if wage freezes aren’t alleviated soon, the automotive production gap between Canada and its neighbors to the south will continue to widen. As it stands, wages currently account for about 6 percent of auto production costs, according to the Center for Automotive Research in Ann Arbor, Mich. Ford pays $81 per hour for wages and benefits to hourly Canadian employees, the highest rate of its kind worldwide, said Ford spokeswoman Lauren Moore. That compares unfavorably with $64 per hour in the U.S., although CAW disputes Ford’s figures. The labor union estimates that automakers pay $64 per hour for CAW constituents, versus $62 per hour for members of United Auto Workers, Canadian Auto Workers’ U.S. counterpart.
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The stakes for Ontario in this labor dispute are quite high. Factories in the province produced 1.42 million cars over the first seven months of 2012, 20 percent more than over the same period in 2011, according to an Aug. 14 report compiled by the Bank of Nova Scotia.
“Anything that holds back economic growth and employment is a serious concern,” said Marjaee. “Ontario cannot afford to have more people unemployed or on strike and less revenue coming in.”