(Adds detail on size of investment, analyst comment)
By Allison Lampert
Sept 20 A tentative labor deal with General
Motors Co sends a clear signal to Ford Motor Co and
Fiat Chrysler that Canada's autoworkers union is
determined to secure new investment in local plants, the union's
president said on Tuesday.
The deal includes pension concessions by the union, Unifor,
and a rare shift in work from Mexico to an Ontario facility,
averting a strike that would have shut some of GM's Canadian
plants and affected some top-selling vehicles, such as the
Under pattern bargaining, the first deal typically sets a
template for the other automakers' contracts. A second target
company will be selected shortly.
"We have been absolutely straightforward with the automakers
that we want investment in Canada," Unifor National President
Jerry Dias said in an interview. "This shows that to the other
Unifor wants Ford to keep its engine plant operating in
Windsor, Ontario and called on Fiat Chrysler to upgrade a paint
shop at its Brampton, Ontario plant.
The GM deal, reached early Tuesday, will ensure "hundreds of
millions" in investment, Unifor said, including new jobs and
higher wages. GM is expected to invest about C$400 million
($303 million) in Oshawa and C$120 million at the St Catharines
powertrain plant, the Globe and Mail reported. Union members
vote on the deal on Sunday.
The union agreed to a pure defined contribution plan for new
workers, the first such plan under the master agreement that
covers most assembly workers at GM, Ford and Fiat Chrysler.
Veteran employees have defined benefit pensions and those hired
since 2012 have a hybrid plan.
The deal is positive for the Canadian auto industry, which
has lost jobs to lower-cost markets in the United States and
Mexico. While GM agreed this year to move some truck production
from Mexico to Michigan, it is rare for an automaker to shift
production from Mexico to Canada.
"It's a big deal," said analyst Sam Fiorani at AutoForecast
Solutions. "The drawback for Canada has never been the quality
of the labor, which is high. It's the energy costs."
Any change in Ontario's policy to lower its energy costs for
automakers would "be a huge win for Canada," he said.
GM Canada said it will look for government funding to
support its investments. GM spokesman Tom Wickham declined to
give further details.
The federal government recently agreed to offer automakers
grants rather than loans, which helped both sides reach a deal,
according to a source directly involved in the talks.
Canada industry ministry spokesman Philip Proulx declined to
comment on specifics on funding, adding "we are in the process
of reviewing the terms" of the fund.
The Ontario government said it will "provide further
information regarding potential government support at the
Dias did not say what vehicle model or models would be built
in Oshawa, but said the car plant would become capable of
A four-year contract covering some 20,000 Canadian
autoworkers at the three automakers expired on Sept. 19.
($1 = 1.3208 Canadian dollars)
(Additional reporting by Allison Martell, Ethan Lou and Jeffrey
Hodgson in Toronto; Editing by James Dalgleish)