GM, Canadian Union Reach Tentative Pact, Ending Strike
Bargainers reached a tentative agreement Tuesday ending the unexpectedly long strike against General Motors Corp. in Canada, clearing the way for what is expected to be a quick and peaceful resolution of labor talks in GM’s far larger U.S. operations.
The 20-day strike--the second major walkout for GM in North America this year--idled 46,000 auto workers from Oshawa, Ontario to Casa Grande, Mexico. But analysts said there was little financial damage to GM and that it preserved its flexibility to increase efficiency.
Still, the dispute means GM lost production of 49,000 vehicles in the strike’s first two weeks, according to Ward’s Auto Reports. The company could lose more than $150 million in profit, analysts estimate, though that could be recouped as idled plants resume operations and run on overtime.
The labor dispute also showed GM’s ability to take a strike with relatively little financial damage. The company had built up significant stockpiles of key components, enabling it to keep most of its assembly plants open despite their reliance on Canadian parts.
As in Canada, job security is the key issue in the U.S. talks. But the tone of negotiations in Detroit has been much mellower than those in Toronto, and labor experts expect GM and the United Auto Workers to settle, perhaps as early as this week.
“A quick settlement in the U.S. is a foregone conclusion,” said Maryann Keller, an analyst with Furman Selz.
“There does not appear to be anything in the [Canadian] contract to prevent that.”
The agreement had been seen as imminent since the weekend, and over the last two days GM shares gained $1.50 to $54.625 on the New York Stock Exchange.
The Toronto settlement with the Canadian Auto Workers came after several intense days of bargaining that focused on GM’s desire to sell two uncompetitive parts plants and contract the building of more components to outside suppliers.
The union agreed that GM may sell the plants in exchange for financial protection for the 3,500 workers. The union also said it won limits on GM’s outsourcing--the farming out of work to nonunion firms.
“I am absolutely elated by the outcome of these negotiations,” CAW President Basil “Buzz” Hargrove said.
“I do not believe this in any way inhibits GM the opportunity to build quality cars, quality trucks and quality parts.”
GM executives also expressed satisfaction with the agreement. They said the company won recognition that its operations are different from those of competitors and that it must have the flexibility to manage its business accordingly.
“It’s a good agreement,” said GM chief negotiator Dean Munger. “It suits our business needs and fits the union’s needs.”
GM also agreed to pay spousal benefits to same-sex couples, continuing a trend that began in the entertainment and technology industries and has been spreading to more traditional employers.
If the three-year contract is ratified by CAW members today, GM will turn its full attention to the UAW in hopes of getting a new contract covering its 216,000 hourly workers in the United States.
The strike shuttered four Canadian assembly plants and put 26,000 union members on the picket lines.
The most important plant to be closed was the Oshawa truck plant, which makes the highly profitable full-size, extended-cab C/K pickup truck.
The strike also closed a Cadillac plant in a Detroit suburb, but the company had a large inventory of those luxury cars. Four other plants in the United States were partly shut down.
As the parts flow from Canada was cut off, GM was forced to lay off 19,900 workers in U.S. and Mexican plants. But during the 17-day strike in Ohio earlier this year, the company laid off 177,000 workers and closed 26 assembly plants.
The Canadian strike had long been anticipated from the time CAW began rattling its sabers this summer, when GM said it planned to sell two parts plants and outsource thousands of other jobs.
The talks broke off when no progress was made on these issues. The negotiations were stalled until last week, when GM Chairman and Chief Executive John F. Smith made a surprise visit to Toronto to meet with Hargrove and outlined a framework for new talks.
Hargrove said that the tentative agreement preserves the Canadian pattern agreement worked out with Chrysler Corp. on Sept. 17. Chrysler agreed not to sell any plants for three years and to replace any outsourced jobs with new jobs.
In reaching a compromise, the CAW will allow GM to sell the two parts plants, but the new owner must accept the terms of the three-year labor agreement.
Workers also will be offered lucrative early-retirement packages.
Those who remain will for nine years be guaranteed the same pension benefits as GM employees.
On outsourcing, Hargrove said the company had agreed to retain 1,800 jobs that it had previously planned to move outside.
But the company said it retains the right to outsource in the future under certain conditions.
As with the Chrysler contract, the workers will get yearly raises and cost-of-living increases that amount to 10% over three years. They also will get greater health-care and pension benefits.
