There are concerns mounting about another labour disruption in Canada after Unifor members at a trio of major automakers voted overwhelmingly in favour of a strike mandate, and at least one economist says it could add to the ongoing inflation facing the country.
Early this week, Canadian workers at Ford, General Motors and Stellantis all voted between 98 and 99 per cent in favour of the mandate as negotiations between the union and the companies took a pause.
The bargaining talks have been taking place ahead of the Sept. 18 expiration date for the current batch of collective agreements covering 18,000 workers.
Following last month’s strike by B.C. port workers, and amid the current labour disruption at 27 Metro grocery stores in the Greater Toronto Area, economist Moshe Lander says a work stoppage at any of the automakers could be a contributor to more inflation in Canada.
“Most of the inflation we’ve been seeing in this country has been coming from supply chain disruptions, not from higher labour costs,” he told Global News in an interview.
“Labour costs start feeding into output cost. Bank of Canada, next thing you know, is going to start increasing interest rates, saying, ‘We told you this was not helpful.'”
He also cautioned that amid talks of whether the country could be on the precipice of a recession, a supply chain disruption from an auto strike could add to that potential economic issue.
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Lander said a lack workers in the production process would lead to cars not making it to dealership lots, and in turn fewer vehicles being sold.
“That means that our GDP (gross domestic product) numbers, which track the amount of goods and services produced, is going to be lower,” he said. “So it’s making that fine line of ‘are we in a recession or not,’ much likelier that we are in a recession.”
Last month, inflation rose to 3.3 per cent nationally, falling outside the Bank of Canada’s one-to-three per cent target range. Food prices at the grocery store were up 8.5 per cent, and mortgage costs also grew again at a record rate due to the rise in interest rates.
While there is still hope the Bank of Canada won’t announce another rate hike in September, some economists are not convinced of a pause.
On Tuesday, Unifor announced it had chosen Ford as its target company for the ongoing negotiations with the so-called Detroit Three, with national president Lana Payne signaling she was confident a deal could be reached, which would then serve as a blueprint for further talks with GM and Stellantis.
However, Payne also cautioned that if the two sides cannot reach an agreement that union members can be “proud of,” there would be no deal.
“If anyone thinks that I’m bluffing right now, just follow what our union has been doing this past year, these past weeks,” she told reporters, appearing to allude to the ongoing strike by Metro grocery store workers at several Toronto-area stores.
Unifor’s negotiations with the Detroit Three are coming as the United Auto Workers in the U.S. are in the midst of their own talks with the same companies. Last week, that union’s members also voted in favour of a strike, posing further concerns of what could happen should a strike happen on both sides of the border.
Lander said that it could create issues in supply for the U.S. and Canada, but even if those in the north do come to an agreement, even the Americans going on strike would still cause an impact.
However, Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, says any potential strike even south of the border would not necessarily mean a big impact, but a redirection of resources may be needed.
“It will be really interesting to see how if there is (a strike) in the U.S., how the companies and the unions redirect their resources,” he said. “It might in the short term, while the disruption is happening, require that the Canadian operations is a bit of an overflow operation.”
Despite concern of potential impacts of a strike, however, Volpe said he did not expect a work stoppage here in Canada in part due to the relationships the companies and Unifor have with each other.
He said this comes in part because both the companies and Unifor, along with other stakeholders and governments, often work together in situations such as negotiating with the U.S. on trade disputes.
“These aren’t strangers who are sitting down with each others,” he said. “These are people who know each other and work well together with thoughtful relationships, and that’s very, very helpful.”
Volpe added that he expects Payne and the Unifor bargaining committee to push for the best possible deal for its workers, while both sides work to continue a “labour peace” that has traditionally been seen among automakers.
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