By on June 7, 2012

The Big Three sent letters to the Canadian Auto Workers union Wednesday, asking them to forgo a small wage increase as a means of keeping Canadian plants competitive.

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.



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36 Comments on “A Month Before Talks, Automakers Tell Canadian Auto Workers To Forget About Wage Increases...”

  • avatar
    Felix Hoenikker

    How does a $0.28 per hour COLA raise on $32 hour increase the cost disadvantage from $15 to $30 per hour?
    Lucy, you got some ‘splainin to do.

    • 0 avatar

      If the union doesn’t like it, they can always strike their employers. It’s happened before. It’ll happen again.

    • 0 avatar

      I’m just referring to the letter sent to the CAW by Ford. Unfortunately, the labor costs and their breakdowns aren’t readily made public so it’s hard to determine the real effect of the COLA increase on the “all-in” costs (i.e. wages, benefits etc)

    • 0 avatar

      Maybe Ford wasn’t expecting anyone to notice their mystical arithmetic? Just take their letter at face value, be shocked at how awful that would be, and cave in. The problem is, by being stupid, Ford will get the opposite reaction.

      The OEMs have been hauling work south of the border for the past year, using “where’s the pea” tricks and hoping the governments who gave them concessions and money won’t notice and ask for their money back. Recent example? How GM moved production from Oshawa to the US. So they ARE going to abandon Canada regardless of how the wage negotiations go.

      • 0 avatar

        dougjp, you can’t expect them to cut jobs in the US?

        Obama and the UAW would never stand for that. There would be outrage in Congress from Democrat constituents! And laws would be enacted that would force bailed-out nationalized companies like GM to bring jobs back to the US.

  • avatar

    Come on down to the south. Union free and you can pay your workers a real market rate for labor.

    $32 an hour for unskilled labor is extremely high.

    • 0 avatar

      I can’t believe I might be taking mikey’s position here, but ‘unskilled’ is a bit of a stretch. There is also the element of backbreaking effort, hazards, and monotony to deal with.

      • 0 avatar

        There are many other “labor intensive” jobs that pay significantly less. $32/hr is insane. I’d expect jobs like that to pay about $14-$16/hr and maybe some sort of floor supervisor to make around $20/hr.

      • 0 avatar

        I think people should get paid what the market will bear as long as their products are competitive. People often question the outrageous amounts CEOs get paid, but as long as their companies are profitable, who cares? The shareholders don’t care and they own the company.

        It is only when companies are NOT profitable that things get dicey. That’s why I believe in ESOPs and performance-based pay. If your employer is profitable, you share in the bounty. If your employer is not profitable, you share in the losses.

        If the automakers are profitable, COLAs and bonuses are not a problem.

        But employees are just employees and they are only entitled to a fair day’s pay for a fair day’s work. If they want a say-so in the company, let them buy stock.

        If they don’t like it, they can choose to work elsewhere.

      • 0 avatar

        In industry, “skilled trades” are jobs like electrician, HVAC tech, welder, or toolmaker. The are often only indirectly related to actually building products on the line and typically require dedicated schooling, apprenticeships, and/or testing and licensing.

        These jobs are very different from direct manufacturing labor, and are (rightly) more highly paid and generally more respected positions.

        In this context “unskilled” is the correct term, meaning only “a worker in a job other than the skilled trades”. There’s no moral judgement or insult there, it’s simply a realistic description of somebody’s skill set.

        Yes, the guys on the assembly line have job skills and I’m sure some of them work very hard.

        No, a repetitive direct assembly job is not at all comparable to the trained and licensed technicians who make up the skilled trade workforce.

        Since some people don’t get this distinction and object to describing people as “unskilled”, it seems that “semi-skilled” is increasingly becoming the preferred term to refer to direct manufacturing jobs.

        No matter what you call them, they’re not actually worth $32 an hour; or they’d be able to quite their jobs, leave the union, and find somebody else to pay them the same amount or more.

      • 0 avatar

        “No, a repetitive direct assembly job is not at all comparable to the trained and licensed technicians who make up the skilled trade workforce.”

        But, but, but….. in a union shop the employer rarely has the choice in who they hire since the pool of candidates is stocked by the union. And we have all heard about nepotism, selective placement, and special positions like the dreaded Job Bank.

        I have found that non-unionized military vets (mostly Navy and Marine Corps mechanics) make the best employees. They get the job done without having to run to the shop steward for every little thing. But most of them prefer the non-union work environment.

        With a union shop an employer is forced to take what the union sends them, skilled, semi-skilled or unskilled, some licensed, some not. Some worth the money, many not. Some quality-conscious, most not.

      • 0 avatar

        I didn’t make 32 bucks an hour hunting IEDs in Baghdad. That job too entailed some backbreaking effort, monotony, and a couple hazards here and there. Like me, if they feel underpaid they are free to seek other employment.

      • 0 avatar

        Bikegoesbaa –

        THANK YOU. As a health care professional, I’m quite aware of the difference between “skilled” and “unskilled” labor.

        You can train damn near anyone to successfully perform assembly tasks or operate assembly machinery. On the job. In a few weeks, at most. This is not typically the case with skilled tasks. Therein lies the distinction. In order to acquire my particular “skill set”, I had to complete a 4 year BS and 3 year graduate program (including a year of unpaid clinical internship). I possess knowledge and abilities laypersons do not. These skills cannot be passed on via on the job training because of the educational knowledge basis required to utilize them correctly and safely.

        The hell of it to me, in this discussion, is that if you break my salary down to an hourly rate, I don’t even make $32 an hour (close, but not quite). That’s a fucking insane wage for manufacturing work in the modern world.

        As for “monotony, backbreaking effort, etc.” – retail and fast food peons making minimum wage to $10/hr deal with that on a daily basis. No sympathy.

        Don’t get me wrong – there is no judgement of or ill will towards manufacturing work. It’s honest work, and it should pay a liveable wage. However, what these union goons are extorting in terms of pay is about twice that.

      • 0 avatar

        Right….Its tough work. I lost count of the number of folks, I tried to train ,that could not keep up with line speed. I’ve seen grown men cry, after thier 3rd try , and the boss ….let them go.

        Some people are just not good with thier hands.

    • 0 avatar

      Yep, join the race to the bottom, it’s a load of fun.

      • 0 avatar

        Paying more for labor doesn’t necessarily yield better product or higher profits for shareholders. No company wants to race to the top when it comes to labor costs building consumer products.

      • 0 avatar

        Lets ask the people recently hired into the VW Chattanooga plant how they are enjoying this “race to the bottom” and whether they would prefer that the plant was still a bean field or whatever it was before they broke ground.

        My expectation is that they will tell you that it has been a great opportunity that has positively impacted their quality of life.

      • 0 avatar
        dash riprock

        What is your solution? The ontario and Canadian govt’s have handed out Billions to the Ontario automakers, domestic and to a lesser extent Honda and Toyota. We taxpayers in all parts of the Country have subsidized the caw and their employers. In your opinion, should taxpayers contribute even more to protect the caw wage and benefit package?

      • 0 avatar

        “they will tell you that it has been a great opportunity that has positively impacted their quality of life.”

        Even if they don’t say it, we can see for ourselves how much better each of the locations near a plant is doing since the employees were hired. I’ve been to the Tundra plant in Texas.

        It’s a great place! Clean, modern, sprawling, prosperous, bustling with activity in the area, businesses doing well. The Toyota workers in Texas where my Tundra was made are enjoying the best years of their lives.

        A detraction is the NUMMI plant in California. People in that area are smarting from that plant closure.

  • avatar

    I’m actually sympathetic to both sides. Five years without a raise is a long time, but $32/hr makes it hard for mfrs to compete.

    I also agree (heaven help me) that Ford’s claims are ridiculous. However, the CAW jobs might not go to the US, but to Mexico instead.

    • 0 avatar

      If the automakers want to be profitable I believe they have to expand in Mexico, and further South. And I think they will.

      I don’t see many losses of existing jobs in Canada and the US, although there will be some as outdated plants are closed instead of updated, but I do see a trending toward opening new plants in Mexico, Central and South America to take full advantage of NAFTA.

      • 0 avatar

        Mexico is cheap, but not THAT cheap. I heard not too long ago that their wages are 10x that of China’s.

        With the new push to open up trade with Colombia, I bet that’s where some of the manufacturing will end up. They already have Toyota (and I think GM) plants down there.

      • 0 avatar

        You’re right. Mexico is not cheap when compared with China, India, Pakistan, Bangladesh, Viet Nam, Myanmar, Thailand, Indonesia and a few yet-undiscovered assembly locations.

        But factor in transportation cost, tax levies for goods made outside of the NAFTA zone, and it quickly becomes apparent that companies like Sony, Toyota, Mazda and others see the benefit of producing in Mexico.

        Personally I’m all for more Mexicans staying home and getting a job in Mexico than in coming over here sucking dry our social and healthcare programs. Texas, NM, AZ and California are the worst-hit states for illegal aliens living on the taxpayer dole.

        Understand that I’m not against LEGAL immigration. We are all immigrants in America. My family hails from Portugal and Germany. But they got here legally.

        I am against illegal immigration.

    • 0 avatar

      I too am sympathetic, but if I hadn’t gotten my current position last year, I would have gone five years with two 2% COLA adjustments, and I made nowhere near $32/hour doing software development work at a profitable healthcare firm. I think its possible they were simply overpaid to begin with and the past few years were simply their real world wages coming down to Earth. If the auto market were gangbusters I’d say they were getting ripped off and cheated out of a reasonable share of success, but the fact is its not. Based on what I’ve read in the past few weeks I would say the manufacturing industry in Ontario (and elsewhere as evidenced by the Ford/Holden bailout in Australia) is on life support. Hopefully things will stabilize and those in the industry will be able to keep their positions, but future growth does not bode will for automobile manufacturers.

  • avatar
    Gardiner Westbound

    GM’s Canadian workforce has fallen from 40,000 a few years ago to 8,000 now. The CAW seems determined to reduce that to zero.

  • avatar

    I guess that this story makes Caterpillar’s decision to close its EMD locomotive plant in London, Ontario and move it to a start-up plant in the middle of the Rust Belt of Muncie, IN appear prophetic.

  • avatar

    Incredible. Thirty-two dollars an hour is what I make as an RN with 11 years of critical care experience and three courses short of a master’s degree. I’m not usually one to complain about comparative wages – I more blame myself for choosing the “wrong” career – but that’s just downright offensive.

    • 0 avatar

      Then you’d be pretty peeved at what retail pharmacists make. I have a few in my family and they make $60-$80 / hr straight out of school. One of them even got a BMW 328 + $15k as a sign on bonus (for their trouble of relocating to a slightly smaller city not too far away). Then they go and complain about their job – how it’s so much stress because their customers “yell at them” and how they have to deal with insurance companies “all the time.”

  • avatar

    This is all really about the Canadian dollar. For years it was significantly under the US dollar. But now that it is near par, or frequently above it, the Canadians no longer have that advantage. The CAW is ignoring that and has kept the entitled attitude that previously leader Buzz Hargrove promoted.

  • avatar

    One of my friends lived in Ontario.
    He is a scientist and after moving to Canada, he delivered pizza for 8 CAD/hour.
    One of his neighbors worked at Car Company, he was uneducated, unskilled
    person with low IQ and he used to order pizza almost every day, that how spoiled he was.
    And scientist with IQ 150 and world class skills was a servant to uneducated working lazy person, who lived from HIS TAXES.
    This was socialist Canada in 2000’.
    Enough is enough !!!

    • 0 avatar

      @vanpressburg….Socialist Canada?…What Pizza place pays 8 bucks an hour for delivery? Most drivers are independents. Most don’t declare thier income.So this so called “low IQ” autoworker? Did he not pay taxes?..Who paid more, your frind,or the autoworker?Your friend the scientist? and the IQ of 150? Can he speak, and write, English, or French. Did he not qualify for any part of our social safety net? He never went to a hospital or a doctor? Who picked up the tab for that?

      How about his creds? Are they legit? If his qualifications are that good, why not go to the USA?

      Hmmm?….maybe he tried the USA route,and they didn’t need any pizza drivers

      Your comment is an uninformed b.s.

      If your friend has problem with my “home and native land” and the welcome he recieved…… all means pack and leave.

  • avatar

    Mikey, I respect your opinion as a CAW retiree. I am a former Teamster who crossed over to the dark side (management) years ago. When I was with UPS, the company’s operations in right-to-work states in the US always intrigued me, because I knew no other system than the closed-shop environment in Ontario. The non-union drivers got paid the same as the Teamster-affiliates, but had a bonus and performance-reward structure that the union members were not entitled to. Do you think it’s time for Ontario to consider right-to-work legislation as an incentive to attact jobs? In the case of EMD (I live in the London area, so that story was front-page news here), it seems the RTW status of Indiana was a major benefit to moving operations there. Not saying I’m in favour of this, just want to know your thoughts.

  • avatar

    Like it or not, as the next Depression ravages what is left standing of the Western world, Canada and other smaller countries may have to begin reintroducing protectionist measures.
    Things worked very well in the industrial heartland of Canada during the Auto Pact years. Like I’ve said: the Big Three spread the jobs around during their heyday: Korea Inc does diddly squat for Canada’s economy; Japan Inc hardly much more. A country with 10% of the population of its main competitor/market doesn’t stand a chance.
    If Alberta wants to turn itself into one giant strip mine and whore itself out wholesale to world markets for its oil, it can knock itself out.
    The 100,000 auto related jobs that Ontario has lost since 2001 is hardly worth the price to pay so we can drive around in a new Sonata.
    Take a look around, people: The West is sick, perhaps terminally so. Harper wants to sign more free trade deals with Asia. Any fool can see that it is outrageous to have to compete with someone who is willing to work for $5 a day, especially when they breed like rats and will never saturate their labor market. That is not sustainable and anyone who claims it is is a shill for one of the Asian trade guilds, or a selfish pr$ck,.

    • 0 avatar

      Sounds like Canada Inc should forget about industrial work and keep digging the earth.
      In reality the main reason of strong CAD is backed up by the reserve amount of natural resources, which demand from Asian populated countries are bursting.
      CAD 32/hour will not be too much problem if CAD that self weakens.

  • avatar

    Dear Mikey.

    1.My friend as an emigrant had the worst location and he had in average after expenses 8 CAD/hour. I didn’t say that he was literally paid for hour.
    2.When I moved to Canada in 2002, my building manager from Poland (and master degree)had 8 CAD/hour.
    He had to work evening and weekend 80 hour/week because the house was in devastating situation, with some drug addicts tenants but he got paid just for 40 hour,and the owner told him , he will fire him , if more tenants move out.
    So in average he earned and we count it …..4 CAD/hour !!!
    3…..He never went to a hospital or a doctor?….
    Yes, we tasted Canadian Medicare!
    Yeas Mikey, my wife was waiting 1 year for surgery and in the USA people got it next day.
    My coworker father died waiting for treatment and my wife’s friend’s father died of cancer because he wait for cancer treatment to long.
    Mikey , why all rich people from the world go to USA for surgery?
    4. …. maybe he tried the USA route….
    USA don’t need emigrants, Canada neither,
    but Canada takes emigrants to cover up the socialist ponzi scheme
    5. my “home and native land”
    Mikey –yours ?
    I am Canadian citizen and me and my family fought in cold war
    and we suffered a lot, some of my relatives in prison.
    Almost all money in Canada are from oil and mining and we fought for Canada.
    Do you know other example in history, when million times military stronger country left alone much weaker ( and very spoiled) country alone, like now Russia leaves Canada alone?
    Half of Canadians declare themselves as neutral in cold war, so I did much more for Canada than they did. Mikey , I don’t know you, if you fought in Afghanistan, you certainly deserves the money from
    Canadian oil and mining but if you are a spoiled autoworker than
    Mikey, Canada is MY home and native land.

    • 0 avatar

      Not sure where the train wreck of a rant of yours was headed, but there are two items I’d like to take exception to.

      1) Cancer is a complicated disease. Without knowing the details of the case, one cannot accurately ascertain whether the disease was survivable or not. No health system is perfect. I can tell you that when I went to a walk in clinic with a resting heart rate of 142 bpm, there was NO waiting for an ambulance and admittance to the hospital and I was booked for a cardio-ultrasound the next morning.

      2) Russia invade Canada? I’m not going to get into the ‘Canada couldn’t defend itself against Luxembourg’ argument (even though in 1945 a tiny nation of 12 million had the 4th largest army in the world), but thanks to Canada’s geopolitical position, it is extremely unlikely ANY superpower would dare invade. Turn a globe on its side and look at Earth from the north pole: Canada is neatly situated between all 3 of the major players: China, the U.S. and Russia. If one made aggressive moves toward Canada, there is no way in hell the others would sit idly by and let our resources (potash, uranium, oil, diamonds, natural gas, nickel, copper, etc) fall into that aggressor’s hands.
      Although it wouldn’t hurt to have a submarine that didn’t leak or an icebreaker that could traverse the north even in winter, Canada can (almost) afford its socialist programs because more powerful, more able nations would do the defending for us.

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