Some old standbys like the Chevy Impala and Buick LaCrosse, get an extended life, while new products are promised to some Ontario plants, and Chrysler pledges to keep its Canadian plant minivan-central for the foreseeable future. That is just some of the fallout in the wake of new master agreements the Canadian Auto Workers union has reached with General Motors and Chrysler.
The two new agreements come on the heels of the ratification of a new three-year deal with Ford. The contracts are startling for the fact they were negotiated and ratified four months before the current agreements are set to expire. They are also noteworthy for the fact they avoided the creation of permanent two-tier wages, which was a cornerstone of the United Auto Workers (UAW) agreements reached in September 2007. All three CAW contracts take effect September 16.
That is not to say the roughly 30,000 Canadian workers did not give back in some areas in a collective bid to keep the auto industry competitive. Base wages will be frozen for three years, cost of living increases are suspended for 15 months, and workers lose some health benefits and one week of vacation, but get a lump sum in lieu. There is what the CAW terms a “grow-in system” which starts new hires at a wage 30 percent below scale, growing them to full scale after three years, as opposed to new UAW workers who are paid about half that of their veteran colleagues and never achieve parity.
Next-Gen Rear-Drive Chrysler Sedans in 2010
On the product front, Chrysler has agreed to make the necessary investment for the next-generation of its rear-drive, full-size cars in 2010 in Brampton, Ontario. The plant makes the Chrysler 300 and Dodge Charger, and added production of the new Dodge Challenger May 15.
Minivan workers in Windsor have been told their plant will continue to take the lead for minivan production in North America, which should preserve the third shift even with the recent loss of Pacifica production. A plant in St. Louis, Missouri, currently makes minivans on a single shift, many of them for export, including vans with diesels and right-hand drive.
GM has agreed to keep building the Impala and LaCrosse at one of its Oshawa, Ontario, plants until 2012—two years later than planned. The car plant will add the 2009 Chevy Camaro coupe, followed by a convertible version a year later. And GM promises a second product from the Zeta rear-drive car platform for Oshawa.
At one time, the Impala was to go rear-drive, but those plans have been scuttled by stringent future fuel-economy standards, hence the extension of the front-drive version. The second Zeta could be the next-generation Buick Lucerne, as GM has said it is in no hurry to move production of the Pontiac G8 from Australia to North America. Another candidate could be the replacement for the Cadillac STS and DTS—there will only be one rear-drive large Cadillac in the future.
A second Oshawa plant was to eliminate a shift, but will now keep both shifts on an alternating two-week layoff schedule to build the Chevy Silverado and GMC Sierra pickups. The union is banking on strong sales of the hybrid Silverado, which is launching now, to generate enough sales to give both shifts full-time work in the future.
GM also promised the CAW it will build a new six-speed automatic transmission in St. Catharines, Ontario, and add a new, fuel-efficient V-8 to the plant mix.
End of an Era for GM
As for a plant count, GM has put a date—2010—on the closing of a 45-year-old transmission plant in Windsor that makes the four-speed automatic trannies that are systematically being replaced by six-speeds. A significant nail in the coffin was the recent move to replace the four-speed with a six in the popular new Chevrolet Malibu. The union was able to negotiate generous buyout packages—up to $125,000—for the workers who will lose their jobs. The closure also marks the end of an era; the last GM plant in Windsor, the automotive capital of Canada.
Chrysler agreed to keep open a casting plant near Toronto until mid 2011, after which time it hopes to find a buyer or joint-venture partner for the facility.
CAW president Buzz Hargrove, who has now completed his final set of negotiations before a planned retirement, said the union entered talks early because it did not want to make hasty decisions in September and it feared the automotive climate was getting worse, which would have put more pressure on the union to make concessions, much like selling a home quickly before the housing market bottoms out.
While the ability to dodge two-tier wages was a short-term coup for the CAW, many wonder if it will cost the Canadian industry in future investment when boardroom decisions are made. The Big Three have said the concessions from the UAW have made the U.S. one of the lowest-cost places to manufacture and that will be reflected in deliberations on where to source future products. Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Michigan, has been quoted as saying GM’s hourly labor costs will fall to $58 an hour by 2011 from $77 today in the U.S., whereas costs in Canada will remain at $77. Hargrove has countered by saying increased productivity in Canada lessens the gap. Link