GM to cut 900 jobs

OSHAWA - It was bad news mixed with good for General Motors of Canada workers, who learned Monday that between 900 and 1,000 Oshawa truck-assembly plant workers are being axed in September while union leaders cut a deal on the same day with Ford Motor company that could pave the way for early contract settlements with GM.

Effective September 2008, GM will be dropping another shift at the plant which assembles the Chevrolet Silverado and the GMC Sierra, said Chris Buckley, president of CAW Local 222. That will leave one shift operating. Another shift was cut early this year.

“It feels like a kick in the gut; these are permanent job losses that will have a major ripple effect,” said Mr. Buckley.

For example every one GM job results in 7.5 spinoff jobs including auto parts manufacturing and transportation.

But he said he was “cautiously optimistic that GM will follow the pattern set” after a Monday announcement that Ford and the CAW have reached an agreement that avoids a controversial two-tiered wage system. Many had feared contract talks in Canada would follow the trend that occurred with the United Auto workers in Big Three auto plants in the U.S.

“This agreement puts us in a better situation but there are absolutely no guarantees GM (will agree to the same deal),” said Mr. Buckley.

The CAW’s three-year deal with Ford lowers the starting rate of a new hire to 70 per cent from 85 per cent and extends to three years from 18 months the length of time new hires will see wages increase to the top wage and benefits package.

The deal worked out five months early will now become the centerpiece of all-out collective bargaining aimed at reaching a tentative agreement between the two sides later this week, said CAW president Buzz Hargrove. Once that is completed, the CAW will meet with GM and Chrysler officials.

Historically in most cases, once one agreement is settled the other car-makers follow suit with similar deals, although GM resisted doing so in 2006.

“We now have a pattern established for negotiations in 2008,” said Mr. Hargrove in a news conference Monday. “We believe GM (and Chrysler) will meet that pattern. We don’t anticipate a fight with (them).”

The offer includes a mixture of modest gains and cost savings that in the CAW’s judgment will ensure that Canadian facilities over the life of the agreement will remain in the ballpark for new investment opportunities, he added.

Both Mr. Hargrove and Mr. Buckley criticized the federal government for not doing enough to stem the flow of exports into the Canadian auto market. Besides the high Canadian dollar, a softening in the U.S. economy where most Canadian-built GM cars are sold and higher oil and gas prices, trucks sales are declining.

Highlights of the Master Economics offer:
- Three year contract, expiring midnight September 14, 2011;
- No changes in base wages;
- No two-tier system for wages, pensions or benefits;
- Extended the life of the St. Thomas assembly plant through life of agreement (to 2011) The product commitment was scheduled to end in 2010;
- COLA payments frozen for remainder of current contract and first year of the new contract. Quarterly COLA wage adjustments resume under existing formula December 2009;
- $2,200 “productivity & quality” bonus to be paid upon ratification;
- Inflation-indexed pension increases for both existing and new retirees in second and third year;
- Significant savings in health costs (stricter cap on long-term care, 10 per cent co-pay on drugs to $250 annual maximum per family);
- Modest improvements in health benefits and spousal insurance benefit;
- New-hire grow-in system, where wages, COLA, SUB benefits, and time-off provisions are phased in (starting at 70 per cent of base wages) over the first three years of work; after three years, wages reach 100 per cent of base wages;
- Reduction in vacation pay by 40 hours per year, compensated with special $3,500 cash payment in January 2009;
- Improved restructuring benefits (“buy-outs”) and renewed income security funds.
- Commitment to explore Canadian opportunities to establish a pre-funded, off-balance-sheet Retiree Health Benefit Fund.

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