Detroit Three automakers need to invest in their Canadian operations or it’s no deal, the president of the union representing hourly workers said yesterday.
Contract talks kick off tomorrow between the automakers and Unifor, but a cloud already hangs over the negotiations in the form of recent threats of a strike and GM’s reluctance to talk about its Oshawa plant’s future.
Existing contracts expire on September 19, and Unifor president Jerry Dias makes it clear that no deal will be reached without a commitment to preserve the future of Canadian assembly operations. One automaker’s failure to follow through could affect the remaining two.
“These are perhaps the most important auto contract talks in a generation,” Dias said in a release. “There will be no deals with any of the companies without commitments from each of them for investments in Canada.”
Last week, a report said that Oshawa’s Consolidated Line, which employs 750 workers, will certainly close next year. The assembly line currently handles overflow Chevrolet Equinox production from the CAMI plant in Ingersoll, Ontario, but the model is due for a revamp in 2017. Other Oshawa products, like the Impala, Buick Regal and Cadillac XTS, are bleeding away. Camaro production moved stateside last year, which led to 1,000 layoffs.
Sources quoted in the same report said the closure of the Flex Line is not a “foregone conclusion.” According to GM, three-quarters of its hourly Oshawa employees qualify for full retirement.
“The automakers’ relative health and the strength of the North American auto market make now the ideal time to invest,” Dias said, referring to the cost-cutting of the recession/bankruptcy years.
Ford’s Windsor engine plant and Fiat Chrysler’s Brampton assembly plant are other aging facilities in need of new product.
Dias previously said that getting a new product into the Windsor plant, which builds the Triton V10, won’t be easy. The Brampton plant, which builds the Chrysler 300, Dodge Charger and Challenger, has the oldest paint shop in the industry. FCA plans to ditch the LX platform and move its full-size cars to a new rear-drive platform sourced from Alfa Romeo.
According to a recent report, sources say the platform swap — originally slated for late 2018 — won’t happen until after 2020. If true, that buys Brampton some time, but workers at the plant weren’t happy to hear FCA CEO Sergio Marchionne muse that the 300 could adopt the Chrysler Pacifica’s platform.
No product commitment for Oshawa, Windsor or Brampton? No deal, and expect strike action.
“It’s going to be intense,” Dias told Automotive News. “Everyone knows what’s at stake.”
Working in Unifor’s favor is the low Canadian dollar and the health of the three automakers. Dias feels he can make a convincing financial argument for the Detroit Three to stay, and invest, in Canada.
“If we can’t solidify the footprint in that market, we’re never going to solidify the footprint,” Dias said. “So, guess what? We’re going to solidify the footprint.”
Union boss Dias has little negotiating leverage. Like a spoiled brat he’s threatening to hold his breath until he turns blue if he doesn’t get what he wants.
That position might play well for the rank-and-file going into negotiations, but I’d be worried that it might end up the cross I died on by the end of them.
Well, when you consider the corporations have no problems with cartel-level bargaining, I don’t see why labour shouldn’t have the same opportunity.
It may help because Ontario is having a provincial election before October 4, 2018. this gov will do anything to win votes, so never say never
the ruling gov is already spreading “good news” in the economy ahead of the election.
Now would be a good time for a 4-way negotiation between Unifor, Canadian gov’t, GM, and Tesla. Tesla needs production capacity and is always amenable to other people’s money. Let them build Model 3s on the old Camaro line.
Tesla doesn’t need production capacity. Their Freemont plant is capable of churning out way more vehicles than they are right now. Tesla has stated that Freemont’s production ceiling is 600K units a year.
The question that needs answering is this; Under Canadian law can a company shutter a plant while behind a picket line?
if the answer is “YES” then UNIFOR has little in the way of bargaining power. I can see corporations using talk of closing plants combined with labour unrest as a way of leveraging more money out of governments.
In the past it was easy for the Federal government to ignore the manufacturing sector in Ontario since the oil industry was the goose laying the golden eggs. Those eggs have gotten small and infrequent (and over cooked) so this increases the importance of Ontario once again in Confederation.
My money is betting on government concessions and UNIFOR will have to settle for some tight fitting shoes for that desired footprint.
Kenworth closed their truck assembly plant in Ste-Therese, Quebec in April of 1996. That plant had been on strike since August of 1995.
That plant reopened in late 1999, after a major remodeling, aided by a loan from the Canadian government.
I have a hard time understanding the rationale behind “Guarantee us our jobs in the future or else we’ll walk off them today.”
Why isn’t Ontario (where most car plants are located) trying to set up something independently within the framework of its brand new Climate Change Action Plan that has a separate paragraph on greening the automobile?
That’s part of what’s intended in Oshawa, but those jobs are very easily outsourceable and all white-collar.
Strike, then declare victory.
What percentage of each of the Detroit 3’s vehicles are sold in Canada? According to Google, the population is less than that of the state of California. This tells me Unifor should work to entice the Detroit 3 to stay in Canada, not threaten them. The current tactics will result in Canadian Cities resembling Flint, MI.
Canada is roughly 10% of the US market, but that doesn’t tell the whole story. Canada’s auto sector is very close geographically to Detroit, there’s free trade in goods across the border, and Canada offers some solid competitive advantages (good education system, cheaper healthcare, etc).
If you ignore the border, which automakers have been doing since the 1965 Auto Pact Agreement, you’ll see that southern Ontario is an integral part of the traditional US automotive manufacturing sector, and benefits from its synergies (suppliers, workforce, infrastructure, etc).
California isn’t, which is why they manufacture very few cars.
Heavy Handle,
Thank you for the information. I was not suggesting anyone ever make anything in California. I just used California as a population comparison.
heavy handle – well said.
Canada per capita likes compact cars and pickups more than their southern brethren. As heavy handle pointed out that doesn’t change things too much since our market is 10 times smaller. Over 90% of our population lives within 100 km of the USA border so our geographical size has little bearing upon product mix. Rural and heavy industry probably does pump up the sales numbers for pickups which may account for the per capita difference in sales.
Fog. ….. No , not really . Oshawa is about 30 miles east of downtown Toronto , where a 900 sq ft house built in the 50s, will fetch you $ 600 K . Oshawa now has two major highways, and commuter train to access Toronto. That same 60 year old bungalow sells for $375 in the Shwa…
If GM was to close the doors ? …Oh yeah, it would hurt….But not kill us.
mikey is right. Oshawa is not Flint. Most of Oshawa’s GM jobs are already gone and it is still a viable city. At this point, Flint even has more GM jobs than Oshawa. That doesn’t seem to be helping Flint much.
This is extortion, and will only get worse over time.
Shut it down and move production to a Right to Work state, or to a free(er) country.
FREEDOM!
“Shut it down and move production to a Right to Work state, or to a free(er) country.”
You mean like Mexico or China?
“In four of the seven measures (GDP per capita, poverty, insurance and life expectancy rates) so-called “right-to-work” states come out significantly (and statistically) worse.”
But what you’re forgetting, is companies DO NOT CARE about any of that. They care about profit. Nothing more. So moving to one of those states or countries is all that matters. I read one paper that said that moving the minivan plant (or one similar in size) to Mexico would save $500 million per year in wages. That a HUBE number for manufacturers to ignore forever…especially when you have a union throwing around threats.
RRocket, raw wages are only part of the equation. Manufacturing is complex, capital costs are huge, supply chain issues are critical, and factory workforces are increasingly (a) smaller and (b) more skilled.
After NAFTA came into force, I was involved in a corporate project to rationalize manufacturing across the 3 countries. It led us to unexpected conclusions, which contradicted the “send it all to Mexico, where labour is cheap” presumption.
For the D3, there are also political optics to consider. The day that one of them decides to stop making cars in Canada will be the day when they stop selling cars in Canada. That’s a lot of sales volume to walk away from.
$500 million per year in wages?
Let’s see. If they make 250,000 minivans a year, that’s $2,000 savings per unit.
A modern plant should be able to build each unit using 20 hours of labor or less, so they would be saving at least $100/hr from each worker!
You see the problem: for your numbers to work, the savings have to be much higher than costs. In other words, the Mexican workers wouldn’t just need to earn less money, they need to be paying Chrysler $50 to $70 per hour to work there. I doubt that’s realistic.
Heavy,
Could you elaborate on your explanation? I got lost trying to reach a conclusion based on how I understand what you wrote.
Both might be in some way free(er). I do know until recently both had a demand for certain types of skills, but China hiring is down double digits in the last two quarters. I can’t remember where I heard it, but SE Asia is becoming the new hub for slave-level labor costs. Next, it will be zee robots.
Right to work for less state you mean. Fixed it for you.
In the immortal words of Gwen Guthrie: “You got to have a J-O-B if you want to be-with-me”
Okay guys. What we have here, is a classic “chicken- egg” case.
I know squat, about the situation at FCA, and Ford. GM , on the other hand, has made it perfectly clear, that they have no intention of product allocation for Oshawa without an agreement with the Union. UNIFOR will not sign an agreement without product allocation.
So, historically , the Union has sat at the table, with their finger on the metaphorical trigger. “if things don’t go our way we’ll pull the trigger”. Way back in 2009 that weapon was making its way across the table. Fast forward to 2016. Now management has their finger on the trigger….Only this time, its way bigger weapon.
Madness, madness, each way I turn madness.
:-(
“Jerry Dias makes it clear that no deal will be reached without a commitment to preserve the future of Canadian assembly operations.”
Jerry’s doing a great job of talking himself out of a job.
Serious question. So Jerry represents the former CAW in all of its operations and thus can have the power to call a strike at FCA, Ford, and GM plants simultaneously. But, do FCA, Ford, and GM have the ability to meet with each other and come up with a joint plan to deal with Jerry since he threatens all of them?
To answer your question . GM, Ford and FCA , have done just that, and they will do just that.