The Canadian Auto Workers union is hoping a new deal cut with General Motors Canada will help stave off the closure of a storied Oshawa plant that’s been at the economic centre of the country’s Motor City for decades.
The country’s auto union said Tuesday it has a new agreement with GM Canada to send hundreds of high-paid workers into an early retirement at its two Oshawa plants and bring back lower-paid employees, lowering costs for the Detroit car-maker and enhancing two local factories’ competitiveness with lines elsewhere.
The move may help entice GM to extend the life of the so-called “consolidated” line which is scheduled to close next June — a fate the Canadian Auto Workers union has worked for months to avoid.
“We have a potential plant closure coming next year so we’ve moved some incentives up to an earlier time frame to get some people out that we’ve had here a long time,” said Ron Svajlenko, president of the Local 222.
As part of its 2012 collective bargaining agreement with GM, the CAW negotiated to keep the line, which makes the Impala and GM’s Theta crossover, open until 2014. Svajlenko said the new deal could help extend operations on the line by a year or more.
Under the agreement, 350 line workers and another 20 skilled trades people have agreed to retirement “incentives.” The group will be replaced with laid-off temporary workers, the union said, with the potential to add another 150 employees.
The re-hires will be paid the new base rate the CAW negotiated last year, or a little over $20 an hour. Including medical coverage and other benefits, new employee costs are estimated to be half the roughly $60/hour older workers claim, GM has said.
Svajlenko said the deal will affect workers at the consolidated line as well as the company’s “flex” line, which makes several models including the current Camaro, Impala and XTS.
The flex line is also facing an uncertain future. In December, GM abruptly announced that it would shift production of the next-generation Camaro to a plant in Lansing, Mich., beginning in October 2015.
The CAW, which is merging with the Communications, Energy and Paperworkers union under the new banner Unifor, is angling to land additional production for at least one if not both plants.
With sales on fire in the U.S. and demand expected to continue to reclaim ground lost during the downturn, Dennis DeRosier, principal and analyst at DesRosiers Automotive Consultants Inc. said there’s a shot that could happen.
“This is a good sign,” the long-time analyst said of union announcement. “But I still think there’s a lot of water to go under that bridge.”
The consolidated line’s closing was initially announced in 2005 and scheduled for 2008. The union’s efforts as well as commitments made by GM when it took billions in bailout loans from federal and provincial governments in 2009 have kept the plant open.
The closure is part of a broader restructuring at GM over the last decade to cope with a steady decline in market share and growing cost burdens, which forced the company to file for bankruptcy in 2009.
In the early 1990s, GM had more than 40,000 employees in Canada before closing plants in Ontario and Quebec, including a truck assembly facility in Oshawa.
While GM’s fortunes appear to be stabilized in tandem with the U.S. recovery in auto sales, DesRosier and others say the company’s intentions in Canada are an open question.
Commitments GM made to provincial and federal governments to maintain production levels expire in 2016. Comment from GM on this story wasn’t immediately available.
Industry watchers say the loss of the Camaro has cast a shadow over the last remaining GM jobs in Oshawa.
“One theory is that this is the beginning of GM downsizing Canada,” DesRosiers said. “Another theory is that they’re moving it out to make room for something else.”
“What they’re trying to do, we’re still not certain yet.”