The wage hike, known as the Cost of Living Adjustment (or COLA), and represents the first wage increase since 2007. Though it only adds 28 cents to the normal $32 an hour wage, the automakers warn that automatic wage increases like COLA could reduce the competitiveness of Canadian plants, and have suggested lump sum payments and a pay structure tied to company profits.
Talks between the CAW and the Big Three start in July, with some observers suggesting that the unions and the automakers have a long way to go before reaching any kind of common ground. The Big Three are looking to keep their fixed costs in check, with hourly labor costs representing one of the areas that automakers are seeking to keep under control. As a precondition for bailout money from the Ontario and Canadian federal governments, the CAW agreed to freeze COLA as well as their base wage rates until the end of the contract terms signed under the bailout period.
A letter to the CAW from Ford suggested that Canadian plants were operating at a $15 an hour disparity compared to the all-in hourly labor costs at U.S. plants, and a COLA increase would bring that gap to $30. A Chrysler rep said that their plants operated at a $10 disadvantage, while COLA would add another $4.80. CAW President Ken Lewenza dismissed the $30 disparity at Ford as “absolutely ridiculous”. A think tank cited by the Globe and Mail claims that Chrysler has the lowest labor costs in the U.S., at $52 while Ford’s are the highest at $58.
While the CAW has often decried a “race to the bottom” as far as wages go for Canadian workers, the CAW and Canadian plants are in a very weak position, with higher costs and a strong dollar making Canadian plants an increasingly unattractive proposition. With two-tier wages in the US offering automakers the chance to build cars at plants where workers are pay $14 an hour rather than $32, as well as being able to build them in the United States, taking a combative stance against the automakers may not get the CAW too far in accomplishing their goals. At this point, it seems as if Ontario needs the auto plants more than the OEMs need Ontario. A Member of Parliament for the Windsor, Ontario district that is home to many auto workers recently criticized the CAW’s policies as being unrealistic and in danger of sending manufacturing jobs back to America.