A tentative labor deal with General Motors Co sends a clear signal to Ford Motor Co and Fiat Chrysler that Canada’s autoworkers union is determined to secure new investment in local plants, the union’s president said on Tuesday.
The deal includes pension concessions by the union, Unifor, and a rare shift in work from Mexico to an Ontario facility, averting a strike that would have shut some of GM’s Canadian plants and affected some top-selling vehicles, such as the Chevrolet Equinox.
Under pattern bargaining, the first deal typically sets a template for the other automakers’ contracts. A second target company will be selected shortly.
“We have been absolutely straightforward with the automakers that we want investment in Canada,” Unifor National President Jerry Dias said in an interview. “This shows that to the other companies.”
Unifor wants Ford to keep its engine plant operating in Windsor, Ontario and called on Fiat Chrysler to upgrade a paint shop at its Brampton, Ontario plant.
The GM deal, reached early Tuesday, will ensure “hundreds of millions” in investment, Unifor said, including new jobs and higher wages. GM is expected to invest about C$400 million ($303 million) in Oshawa and C$120 million at the St Catharines powertrain plant, the Globe and Mail reported. Union members vote on the deal on Sunday.
WATCH: Tentative deal reached between GM, Unifor
The union agreed to a pure defined contribution plan for new workers, the first such plan under the master agreement that covers most assembly workers at GM, Ford and Fiat Chrysler. Veteran employees have defined benefit pensions and those hired since 2012 have a hybrid plan.
The deal is positive for the Canadian auto industry, which has lost jobs to lower-cost markets in the United States and Mexico. While GM agreed this year to move some truck production from Mexico to Michigan, it is rare for an automaker to shift production from Mexico to Canada.
“It’s a big deal,” said analyst Sam Fiorani at AutoForecast Solutions. “The drawback for Canada has never been the quality of the labor, which is high. It’s the energy costs.”
Any change in Ontario’s policy to lower its energy costs for automakers would “be a huge win for Canada,” he said.
GM Canada said it will look for government funding to support its investments. GM spokesman Tom Wickham declined to give further details.
The federal government recently agreed to offer automakers grants rather than loans, which helped both sides reach a deal, according to a source directly involved in the talks.
Canada industry ministry spokesman Philip Proulx declined to comment on specifics on funding, adding “we are in the process of reviewing the terms” of the fund.
The Ontario government said it will “provide further information regarding potential government support at the appropriate time.”
Dias did not say what vehicle model or models would be built in Oshawa, but said the car plant would become capable of producing trucks.
A four-year contract covering some 20,000 Canadian autoworkers at the three automakers expired on Sept. 19.