TORONTO – Canadian Auto Workers members have voted in favour of a cost-cutting deal with General Motors, a key hurdle for the automaker that was a condition of billions in government loans.
The union said Monday night that its members voted 86 per cent in favour of the deal over two days of voting at its four locations in Ontario.
CAW national president Ken Lewenza said this new deal should provide a much-needed sense of security to the workers and retirees.
“Although we were forced to make a number of important sacrifices, the support we received from our members is proof that they recognize the incredible challenges the industry is facing, but more importantly that they are prepared to stand by each other and stand with their union,” Lewenza said in a statement.
GM is working towards having a restructuring plan by June 1.
The agreement freezes workers’ pension benefits until 2015 and slashes labour costs by $15 to $16 an hour through cuts to benefits. The union has also agreed to negotiate a health-care trust, which it will administer to cover retirees’ benefits.
Under the deal, the company also agreed that it would give up its special status under Ontario law – a status that has allowed it to underfund its pension plan since the 1990s – and begin topping it up immediately.
The company must now turn its attention to completing its restructuring plan to present to governments in Canada and the U.S. by next Monday.
GM Canada’s parent company, General Motors Corp. (NYSE:GM), has so far been unable to reach an agreement with its bondholders, and it is widely assumed the company will be forced to file for bankruptcy protection in the United States to work out a solution.
Meanwhile, federal Industry Minister Tony Clement said Monday that any money lent from the federal government to the struggling company will not go towards topping up GM Canada’s pension shortfall, which is approximately $7 billion.
He implied that the pension plan will be the responsibility of the Ontario government, which has also agreed to provide emergency funding contingent on an acceptable restructuring plan.
“The fact of the matter is, we’re each taking a role and responsibility in the areas where we have those roles and responsibilities. That’s what a true partnership can be about,” Clement told reporters after an infrastructure announcement in Toronto.
“I want to commend Ontario for taking the lead role in negotiating some of the aspects of the CAW agreement when it pertained to pensions. I think that was a very positive thing Ontario did – they recognized their role and responsibility and they acted it,” he added.
Ontario said there won’t be an agreement on who will be responsible for covering the plan’s shortfall – the company, provincial taxpayers or federal taxpayers – until a final restructuring plan is presented.
Ontario Premier Dalton McGuinty said previously that the province has no plans to bail out GM pensioners. He warned in April that the province’s pension guarantee fund isn’t big enough to cover the automaker’s retirees if the company goes under and the best way to protect workers is to keep the company afloat.
The province’s auto strategy is in flux after Economic Development Minister Michael Bryant quit Monday to head up a new Toronto business agency. McGuinty will take over the file.
Tony Faria, co-director of the automotive research centre at the University of Windsor, said though GM may be forced into bankruptcy in the United States, he expects GM Canada will avoid the same fate.
This would leave the company in the same position as rival Chrysler, which filed for bankruptcy protection in the U.S. but not in Canada late last month.
This decision didn’t protect Chrysler’s Canadian operations, however. When the company decided to shut down its U.S. plants for 30 to 60 days while it restructured, many of its parts suppliers shut down their operations in response. This in turn forced Chrysler Canada, which relies on many of the same suppliers, to shut down too.
Lewenza said he has been told the company hopes to keep its factories operating even if GM files for court protection from creditors in the United States and Canada.
“They (GM) indicated to us that they are doing everything in their power to work with suppliers to keep the parts flowing if GM goes into Chapter 11 and if they go into CCAA protection in Canada because the Camaro is under incredible demand,” he said.
“The product is under demand and to lose production time as a result of this restructuring would be a double pain, first on our members of course, but second on GM’s turnaround plans.”
GM has cut its Canadian workforce heavily, with the recent closure of a pickup truck plant in Oshawa eliminating 2,600 jobs. It now employs about 7,500 hourly workers in Canada, and plans a shutdown next year of a transmission plant in Windsor which employs 1,400.
