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Workers OK cost-cutting deal with GM Canada

Canadian Auto Workers members voted 86 percent in favor of a cost-cutting deal with General Motors Canada as the automaker bids to qualify for more government loans.
/ Source: The Associated Press

Canadian Auto Workers members voted 86 percent in favor of a cost-cutting deal with General Motors Canada as the automaker bids to qualify for more government loans and assure its future in Canada.

Union leader Ken Lewenza said his members had no choice but to vote for it.

"They understand the crisis in the auto industry," Lewenza said in a telephone interview. "The vote shows that."

Lewenza said the deal allows GM Canada to meet the cost benchmarks set by the federal Canadian and provincial Ontario governments, namely making cuts to become competitive with non-unionized Toyota Canada. The deal also stipulates that GM's car assembly and parts plants in Ontario will stay open.

Lewenza said there is little doubt that GM will file for bankruptcy in the United States and said there's a real possibility it will do so in Canada.

"The integrity of our collective agreement will be protected," Lewenza said. "Our members had really no choice but to vote for the collective agreement."

Lewenza said hours earlier that there was much anxiety on the final day of voting.

Workers at three GM plants in southern Ontario cast ballots Sunday on the latest concession package. Workers at the GM plant in the southern Ontario community of Oshawa voted Monday.

The North American auto industry has been battered by the recession, which has cut demand for cars and trucks sharply, leaving companies with assembly plant overcapacity that needs to be cut back.

In addition, the credit crunch has made it difficult for consumers to finance car purchases, squeezing demand further. At the same time, changing consumer tastes and high fuel prices have hurt demand for sport utility vehicles, pickup trucks and other big vehicles, the mainstay market of the Detroit Three — GM, Chrysler and Ford Motor Co.

According to the CAW, the tentative deal with GM Canada provides that the starting pay rate for new hires will be 70 percent of the established rate with increases of 5 percent per year for six years. New hires will be entitled to the same retiree health benefits, funded either through a new Health Care Trust or by the company.

The deal freezes pensions until 2015, eliminates semi-private hospital coverage and ends tuition assistance for workers joining the company after Jan. 1, 2010. The CAW also said a $3,500 vacation compensation payment has been cut to offset other costs, including pensions.

Under the contract, the union and the company have committed to negotiate a Health Care Trust agreement to provide retiree health care benefits in the future, much like the automaker's terms with U.S. workers. GM Canada also agreed to restructure its underfunded pension plan within a year and move to funding the plan on a solvency basis comparable to the plans at Ford and Chrysler.

Lewenza said the deal delivers reductions of 15 to 16 Canadian dollars ($13 to $14) in the average hourly labor cost of GM's Canadian workers on top of a previously negotiated CA$7 (US$6) cut. He said the concessions reached will make GM competitive with Toyota, as the governments had requested.

CAW members had ratified a deal with GM in March, less than a year after settling a three-year wage-freeze contract, but Canada's federal and the Ontario provincial governments said two weeks ago that it did not cut costs enough.

GM has already cut deeply into its Canadian work force, recently closing a pickup truck plant in Oshawa, with the loss of 2,600 jobs. In addition, the company plans to shut down a transmission plant in 2010 in Windsor, Ontario, which employs 1,400 people.

GM Canada said in a statement Friday that "the tentative agreement is a critical step forward toward ensuring GM's future in Canada."

Lewenza said Ford has also been asking for a cost-cutting deal so they are competitive with General Motors and Chrysler in Canada. He said the union would meet with Ford.