GM-UAW Agreement A Blow To CAW

Anthony Fontanelle
October 4, 2007

Last week, the United Auto Workers strike against Dearborn automaker General Motors. Two days after union members stopped production at General Motors plant all over the United States, a deal was agreed upon which put a halt to the nationwide strike. Although both sides may seem happy with the agreement, the Canadian Auto Workers is on its toes in preparation for their forthcoming talks with Detroit-based automakers.

According to experts, the deal agreed upon by General Motors and the United Auto Workers will affect the round of talks between automakers and the Canadian Auto Workers union. According to the Canadian Press, it can be expected that whatever General Motors and the UAW agreed upon will serve as a blueprint for the agreement that the automaker will push to the CAW union.

Major aspects of the tentative deal between General Motors and the United Auto Workers union include a four-year wage freeze with annual bonuses, a lower pay scale for new workers, and a shift of approximately $30 billion covering health care benefits for retirees to a trust administered by the union.

But CAW President Buzz Hargrove said that the CAW has les problem than the UAW and that is why they can expect to have a better deal then the latter. "Our plants are more productive; we have our own national health-care program," said Hargrove according to the Canadian Press. "We don't have the same kind of challenge that the UAW faces," he added. He also said that the automaker has been reducing their workers and not hiring new ones which is the reason why the lower pay scale for new workers is not in the cards.

"There is some cost saving (in the UAW contract) but nowhere near what some of the analysts are saying. I don't see any impact," concluded Hargrove. If Hargrove is right, the deal that automakers might agree with the union may be better than the one they gave to the UAW union. If that is the case, auto sales in Canada can be expected to increase along with sales of auto parts like muffler Canada.

According to industry analyst Dennis DesRosiers, the deal between UAW and General Motors represents "a very dark day for the Canadian automotive sector". He said: "GM and very shortly Ford and Chrysler will have created about a $25-per-hour cost advantage to build vehicles in the U.S. instead of Canada." This means that automakers will opt to build more vehicles in the United States and reduce the number of vehicles made in Canada. This will be a big blow to the Canadian auto industry. DesRosiers though reduced his estimated gap to $10 after more light is shed on the agreement between General Motors and the United Auto Workers union.

Another reason for CAW to worry about is the strengthening value of Canadian dollar. In the past, Canadian assembly facility workers enjoyed production cost advantage but with the stronger loony, the gap has considerably shrunk. "The dollar is eroding our cost advantage much more than anything the UAW has done in bargaining," said Hargrove.

Source:  Amazines.com