By on January 20, 2020

FCA Brampton Assembly Line Challenger & 300 - Image: FCA

Detroit Three automobile production will rise 5 percent in the U.S. over the life of the recent four-year UAW contract, with Mexican assembly plants cranking out 11-percent fewer vehicles over the agreement’s lifespan, but there’s little good news for the snowy land north of the U.S. border.

By 2023, Detroit Three production is expected to decline by a whopping 27 percent in Canada, continuing a decades-long trend. Labor contracts expire this year, so what’s a union to do?

For Unifor, the union representing Detroit Three autoworkers in Canada, the list of options is a short one.

Those earlier figures come by way of the Center for Automotive Research, via Automotive News. Last week, the center outlined the increase in labor costs associated with the recently-ratified UAW contracts, with the biggest increase impacting Fiat Chrysler’s bottom line.

Contained within those contracts was big-time spending on American auto plants; similar generosity shown to the future of the remaining Canuck plants might not be forthcoming, leaving Unifor with only workers’ wages to battle over. New product could be too much to hope for.

“They’re going to be looking for guarantees of product, and there’s not much left to guarantee,” Art Schwartz, a labor consultant and former GM negotiator, told AN. “Oshawa is going away; it’s not coming back. That leaves a grand total of four assembly plants for the Detroit 3. That’s it. [Unifor’s] going to try and protect what they have.”

FCA Windsor minivan assembly Dodge Grand Caravan 2011 - Image: FCA

In terms of automotive production, the Detroit Three’s Canadian footprint is meager. Fiat Chrysler operates a minivan plant in Windsor, Ontario, with its Brampton, ON facility continuing to crank out the ancient LX-platform cars. Ford has a crossover plant in Oakville, ON, and, after ceasing production in Oshawa late last year, General Motors is left with its lone CAMI Assembly plant in Ingersoll, ON. That facility builds the Chevrolet Equinox.

If the next four years stand to see Canada lose production volume, it’s no different than the past four. Product dried up in Oshawa long before the plant went dark. GM punted GMC Terrain production southward when the current-generation model debuted. Currently, FCA’s Windsor plant stands to lose the Dodge Grand Caravan this year (with the Chrysler Voyager and a yet-unconfirmed AWD Pacifica inbound), while the Chrysler 300 built in Brampton is living on borrowed time.

Brampton’s product future remains hazy; at last check, the Dodge Challenger and Charger will gain a heavy refresh for 2023, at which time the 300 will begin its dirt nap. Any plant building just cars in this day and age has reason for concern. As for Windsor, the automaker greeted the new year with a two-week shutdown to align production with reduced minivan demand. The automaker’s holding off on a shift cut announced last year.

As reported by Canada’s Financial Post, the plant’s third shift will remain through the first quarter of 202. After that, 1,500 workers could be out of work. At least the looming merger between FCA and France’s PSA Group isn’t expected to result in any North American plant closures, with FCA CEO Mike Manley claiming late last year that a merger would have “no affect on production in Ontario.”

The current labor contracts expire in September 2020.

[Image: Fiat Chrysler Automobiles]

Get the latest TTAC e-Newsletter!

Recommended

20 Comments on “Incredibly Shrinking Production Footprint Is Unifor’s Cross to Bear...”


  • avatar
    ravenuer

    As The World Turns. eh?

  • avatar
    schmitt trigger

    “… At least the looming merger between FCA and France’s PSA Group isn’t expected to result in any North American plant closures…”

    Hmmmm. That sentence seems…..So vaguely familiar.

  • avatar
    Arthur Dailey

    Oshawa consistently ranked as the highest or among the highest facilities for quality and efficiency. If that can’t assure the workers of retaining their jobs, then what can the union possibly do?

    Canada (Ontario) had an auto manufacturing industry primarily for the following reasons.

    1) The US-Canada Auto Pact (1965) This was dismantled when Mexico was allowed into what had been the Canada-US Free Trade Agreement.
    2) The lower Canadian dollar.
    3) Lower energy costs in Canada (Ontario). Ontario lost this advantage with the break-up of Ontario Hydro under the Harris government. Now we sell electricity to the USA for less than Ontario users are charged.
    4) Universal medical care. Ontario’s employers were largely relieved of medical costs for their employees by our OHIP system. Manufacturers in the USA paid not only for medical coverage for their workers, but also for retirees. These costs have largely been offloaded by the manufacturers.
    5) Proximity to major American markets. Since 1965 American population growth has significantly shifted southward and away from the Canadian border.

    Unifor, previously the Canadian Auto Workers also shot itself in the foot when it separated from the UAW. Prior to the split any loss of Canadian jobs to a third nation resulted in a loss of UAW members/dues. Since the split the UAW had not only competed with the CAW/Unifor for jobs/members, but has no reason to support the CAW/Unifor when Canadian jobs are shipped ‘offshore’ or to Mexico.

    Some may say that the union workers have ‘priced themselves out of competition’. However the recently negotiated trade pact between the USA/Canada/Mexico requires that Mexican auto workers receive $16 per hour. Well that is just over minimum wage (currently $14.00) in Ontario. The Mexican wage of $16 is not a ‘living wage’ in Ontario. Therefore regardless of how much Ontario workers relinquish in wages/benefits/etc they can never match the low wages of offshore/Mexican workers.

    Sorry but I cannot provide an adequate solution.

    • 0 avatar
      thornmark

      >>3) Lower energy costs in Canada (Ontario). Ontario lost this advantage with the break-up of Ontario Hydro under the Harris government. Now we sell electricity to the USA for less than Ontario users are charged.<<

      Maurice Strong the guy that got rich off AGW and spent his last days in communist China was behind that

      • 0 avatar
        Arthur Dailey

        @Thornmark. Great now I will have nightmares tonight. You mentioned “he who must not be named’. Those of you who believe in world government conspiracies should research his career.

    • 0 avatar
      Maymar

      As one minor point, wouldn’t that $16 be in USD, or roughly $22 CAD? That’s about what wages start at for Toyota (and Unifor members, if I read the Oshawa deal correctly).

      • 0 avatar
        Arthur Dailey

        @Maymar: Thanks. Yes currently 16.00 USD is equal to 20.88 Cdn.

        The living wage in Toronto is currently estimated to be $22.08.

        Brampton (Chrysler) and Oakville are in the GTA but on the outskirts. As is Oshawa. Although Oakville has high housing prices.

        Ingersoll (GM) is outside of it. Cambridge (Toyota) is on the edge as is Honda (Aliston). The other Chrysler facility is in Windsor, opposite Detroit. Each of these have lower costs of living.

        So if not worker costs, then is it the cost of property taxes, environmental costs and taxes that continue to make Canada more expensive than Mexico (or the USA)? Or even manufacturing offshore and transporting the vehicles by ship and train?

        • 0 avatar
          ect

          In GM’s case, sales and market share have been declining for years, so they inevitably have to reduce manufacturing capacity.

          I have not done (or seen) any detailed analysis of Canada vs. US vs. Mexico manufacturing costs, so don’t claim to have any special insight. But I do wonder how the apparently shrinking D3 footprint in Canada compares with those of Toyota and Honda. Toyota, in particular, seems to have been expanding operations in Cambridge.

    • 0 avatar
      eng_alvarado90

      This has been misunderstood a few times:
      “However the recently negotiated trade pact between the USA/Canada/Mexico requires that Mexican auto workers receive $16 per hour.”
      No way Mexican workers are being paid $16 an hour, that wage would be higher than a run of the mill Engineer or Designer in Mexico. What USMCA says is 40-45% of auto content has to be made by workers making at least $16 an hour. Since a blue collar Mexican worker is paid as low as $350 a month, the math doesn’t work. That’s why overall Mexican production is also down compared to previous years; automakers will just shift production back to the U.S to get the mix they need to meet the minimum wages associated to the USMCA

      • 0 avatar
        Arthur Dailey

        @eng-alvarado: You are of course correct. We/I was merely working on ‘best/worst’ case scenarios for costs. As per the releases/tweets from the POTUS.

        What is worrisome is why not of that D3 production appears to be ‘shifting’ back to Ontario? Particularly when import car makers appear to be profiting nicely from their production in Ontario.

        Would it not be reasonable to expect that for every vehicle sold in Canada that close to one vehicle also be manufactured in Canada?

      • 0 avatar
        tomLU86

        @ eng_Alvarado.

        Mexican workers are not PAID $16 per hour, any more than GM US workers are paid $61 per hour.

        THose figures however reflect what it COSTS GM (or whichever automaker) for labor per hour.

        The employer must pay FICA. Health Insurance. Possibly a pension. Vacation replacements (to cover people on vacation or absent). Unemployment Insurance. So for that UAW worker to have a gross pay rate of $28* (a mix of $30-35 for higher seniority and $18 for the “new” hires), GM was spending $61 per hour.

    • 0 avatar
      Pig_Iron

      I would add to that the insistence of successive federal and provincial governments to turn their back on “smokestack” industries, and substitute the “knowledge” economy; which is the easiest one to offshore thereby minimizing the prospects of job growth or security.

    • 0 avatar
      tomLU86

      There is no “solution” that will satisfy all parties.

      For (most) “ordinary” Americans from 1946 to about 1971-73, was a glorious summer of prosperity, with improving living standards, including more and better cars, and the ability to afford them.

      That was because the factors of demographics, technology, productivity, and most importantly, the self-interests of the elite (big business and big money) as well as the interests of working Americans all aligned. Kind of like a birdie in golf.

      The same can be said of Canada–and Canada was blessed without the mindless waste of blood and treasure in Vietnam, or paying for the Cold War, or racial strife.

      In 1973, the energy crisis shook the foundation of these factors. Also, as the world changed, and as the government’s relatively mild limits (or shackles) on big business and big money were loosened and discarded, combined with trends in demography, technology, world economy, the interests of the working middle and the elite began to diverge.

      And that’s why Oshawa is closed, and why while GM sells more Equinoxes in the US than ever, CAMI is not making as many as they did before, with some Equinoxes and all Terrains made in Mexico (and none in the US).

      From the US point of view, one could argue that the 1965 deal with Canada was a giveway to Canada at the expense of US workers. But it was minor, as Canada and the US are comparable. NAFTA was huge–at the expense of both American and Canadian workers. And Perot, who was mocked, was proven correct: the trade deficit got worse, and the flow of Mexicans into the US increased.

      CEO pay is higher today than in the 1960s and 1970s. If the auto industry was a football, in the 1960s, GM was winning the super bowl every year; and in most every category–rushing, passing, defense yards allowed (marketing, styling, engineering per dollar, manufacturing efficiency) was near or at the top. Yet GM’s leaders then made 10-20x what workers made. Today’s CEO make about 300x as much; yet today’s GM is just another car company, isn’t it?

    • 0 avatar
      danio3834

      It was the Green Energy Act ponzi scheme under the previous regime that drove power prices through the roof. Paying 20 year 80c/kwh contracts to producers who put up solar panels and the thousands of windmills caught up with reality.

  • avatar
    volvo

    This line caught my attention

    “Any plant building just cars in this day and age has reason for concern”

    Maybe if we ignore Toyota’s Mississippi, Kentucky and upcoming Alabama plants

    Honda’s Indiana and Ohio plants

    Hyundai’s Alabama plant

    But if your point is that (the used to be) big 3 have given up on cars (sedans) then I would agree but don’t think this will be a great long term strategy.

    They won’t be able to jump back into producing competitive sedans without years and years of design/development/production work to get back in the game.

    The strategies and incentives (BEV subsidies, high gas prices and taxes on inefficient ICE vehicles) to a mostly BEV fleet will be a long one with small, efficient ICE/Hybrid vehicle as a stopgap along the way.

  • avatar
    indi500fan

    Per this trend, it appears that non-union plants in the US are more competitive than union plants in Canada. So Unifor can join the UAW on the road to retirement.

    • 0 avatar
      Arthur Dailey

      How do we define ‘competitive’? As pointed out union workers at Oshawa started at around $16 US per hour ($20.88 Cdn) , and that plant ranked at or near the very top regarding quality and efficiency. For many years. If you produce the best quality and are among the most efficient, then why are your not ‘competitive’?

      • 0 avatar
        ToolGuy

        Arthur, I don’t have any special knowledge in this situation. But just want to say that sometimes the decision of which plant to keep open and which plant to close comes down to factors other than wages/benefits/quality/efficiency. I’m aware of one OEM assembly plant closure decision (years back) that ultimately was decided by paint plant emissions and the investment which would have been required to address the situation going forward.

  • avatar
    loopy55

    All great, but the technology is a failure as it does not deliver the expected fuel economy benefit. The reviews are in , at least in Europe, and economy is only comparable to the competitors turbo engines but the lack of low down and mid range torque is a huge hit to driveability.

  • avatar
    tomLU86

    One thing I didn’t see mentioned.

    The UAW agreed to “two tier” wages. So you had 2 workers doing the same job: One was paid $30, the other $18 max. This significantly reduced US labor costs.

    This was the UAW’s way of ‘protecting’ the wages of the workers who were at GM and Chysler before these companies failed. This reduced hourly US costs.

    My understanding is Unifor would not agree to 2-tier wages. That’s probably the biggest factor in the decline of Detroit Three production.

    The Federal/Provincial incentives may not be as generous as the US/Mexico.

    So, despite the fact that (at least for GM’s plants) the Canadians did a superlative job, the bottom line is…the bottom line.

    IN GM’s case, Canada and Ontario also helped bail out GM. In return, GM did what it promised–very little more.

    Now, in the US, the 2-tiers are narrowing considerably, since the 2-tier system was one of the big irritants that led to the GM strike.

    So, it would seem that Unifor was correct on principle. (I think Unifor still allowed temporary workers for less, as did/does the UAW. But after X days or months, they must be hired, or they must be let go for Y days or months before being brought back)

    The net effect of Detroit’s diminishing footprint will be an ever bigger presence of Asian vehicles north of the border.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • Inside Looking Out: No one said it stays in business. Most likely not.
  • 86er: Pinstriping would be great, so I could finally source some for my stellar blue over olympic white ’96...
  • Hummer: Lol @ being called a Troll by mini Goebbels. TTACs very own propaganda ministry making sure the record is set...
  • Inside Looking Out: Is “elegant” with tongue in cheek?
  • conundrum: Even better than the vehicle was the C/D review of it, back when folk could write and have fun. It made me...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Matthew Guy
  • Timothy Cain
  • Adam Tonge
  • Bozi Tatarevic
  • Chris Tonn
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber