A Month Before Talks, Automakers Tell Canadian Auto Workers To Forget About Wage Increases

Derek Kreindler
by Derek Kreindler
a month before talks automakers tell canadian auto workers to forget about wage

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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  • Carbiz Carbiz on Jun 08, 2012

    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,.

    • Ccode81 Ccode81 on Jun 09, 2012

      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.

  • Vanpressburg Vanpressburg on Jun 08, 2012

    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.

    • Carbiz Carbiz on Jun 09, 2012

      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.

  • Inside Looking Out Enforcing laws? It is so yesterday! Welcome to California!
  • Lou_BC You'd think cops would have an understanding of the laws they are supposed to enforce.
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