Workers at the Chrysler minivan plant in Windsor, Ontario could soon be out on strike.
Detroit’s Big Three automakers appear to be heading for a showdown with Canadian workers that could cripple their entire North American production network.
Claiming Canada is now the industry’s high-cost manufacturing base, General Motors, Ford and Chrysler are each demanding concessions from the Canadian Auto Workers Union – including a two-tier wage structure like one the makers have set up in the States. But the CAW is digging in its heels and workers have authorized their leaders to call a strike if negotiations deadlock when the current Big Three contracts expire next week.
“With only a week until the collective agreement expires, the demands facing the CAW have not relented, with all three companies calling for dramatic changes to the contract,” a flier distributed to workers by the union warned.
A walkout could lead to shortages of key products, such as the new Cadillac XTS and Chrysler’s 300 sedan and its two minivan models. And the loss of parts produced at Canadian facilities could create havoc on American assembly plants, as well, industry analysts warn.
Detroit automakers have operated in Canada for the last century, starting with an early cross-border facility set up by industry pioneer Henry Ford. In recent decades a weak Canadian dollar and the North American Free Trade Agreement had encouraged manufacturers to increase their investments on the Canadian side of the border. But as the U.S. dollar has lost strength – at times reaching parity with its Northern equivalent — the economic equation has shifted.
Complicating matters, the CAW has generally taken a more militant approach than its American counterpart, the United Auto Workers Union. The UAW has given the Big Three significant concessions in recent years that have not been matched by the Canadians. Since 2007, those have helped Detroit makers reduce the cost of an hour’s labor from around $72 to just over $50 in the U.S.
Chrysler claims its cost in Canada are now about $7 an hour higher. Ford and GM reportedly face similar cost burdens and company officials have claimed their Canadian plants are the most expensive in the world to operate from a labor standpoint.
Among the concessions they are demanding:
- A two-tier wage structure that would see new hires start at just over half the wages of veteran line workers;
- An end to the 30-and-out retirement program;
- Reduced benefits and the elimination of cost-of-living adjustments.
The union said Monday it is “determined to reject these demands.” The hardline position has apparently been enhanced by the makers’ unwillingness to guarantee additional investments in Canada that would ensure future jobs.
“Unfortunately, our efforts have not been met with equal willingness by the companies to negotiate fair terms,” the leaflet distributed to workers declared.
For their part, the Big Three insist they remain committed to an “open” dialogue with the union but there has been relatively little progress as next week’s deadline approaches. But Chrysler CEO Sergio Marchionne broadly hinted that instead of adding work the maker could disinvest in its Canadian operations if it doesn’t get what it wants.
“Nobody in their right mind would continue to create an unlevel playing field in its own organization,” Marchionne told the Toronto-based Globe and Mail newspaper. “It’s impossible. We have other plants, other options.”