The Canadian Auto Workers union has said it would not reopen its recent concession agreement with General Motors of Canada but would be willing to look at alternative measures to help reduce the burden of the company’s so called “legacy costs”.
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The union’s statement came after the Canadian and US governments rejected viability plans presented by GM and Chrysler with Ottawa suggesting that General Motors and the CAW should reopen recent bargaining talks.
The CAW and GM reached a new contract agreement on 11 March, aimed at cutting the struggling automaker’s costs and making it eligible for long-term government aid.
The deal took nearly C$1bn (US$790m) in legacy, or retiree, costs permanently off GM’s books through the elimination of inflation-based retiree benefit increases, transferring active employee bonuses to cover retiree healthcare costs, as well as other measures, the company said, according to Reuters.
GM said those lower costs would come on top of savings of more than C$7 an hour on its active labour costs.
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By GlobalDataIn saying it would not revisit contract negotiations with General Motors, the CAW pointed out the deal was reached ahead of a 31 March deadline that had been imposed by Canada and the United States for GM and Chrysler to present their viability plans, needed to qualify for long-term government aid.
“The UAW didn’t get their deals done by 31 March. Chrysler didn’t get a deal done with Fiat by 31 March . They didn’t get deals with their bond holders by 31 March. I don’t think they got final deals with their dealerships by 31 March,” Jim Stanford, the CAW’s economist, told the news agency.
“We got a deal done before 31 March and then on 30 March, they say, sorry, you’ve got to do it again. So it becomes a farce after a while and we’ve not heard any specific arguments about what is wrong with the deal.”
Canada and the province of Ontario followed US president Barack Obama’s lead on Monday in saying that GM and Chrysler did not go far enough in outlining viability plans, including a US demand that Fiat and Chrysler forge a merger deal. But the national and provincial governments did extend short-term bridge loans to help help the companies while they restructure.
Tony Clement, Canada’s minister of industry, said after Monday’s announcement that Ottawa was “expecting GM and the CAW to continue their discussions, particularly on the issue of legacy costs where it has become apparent there wasn’t as much progress as we would have liked to have seen.”
Richard Cooper, executive director, Canada, JD Power and Associates, told Reuters he doubted that GM knew what was wrong with the contract agreement but said the refusal of the CAW to consider reopening bargaining was short-sighted.
“If they are not prepared to do that, then are they prepared to lose jobs?”
The union – which has been trying to reach a similar contract agreement with Chrysler – has said it is willing to sit down with the federal and provincial governments, and the companies, to look at forming a ‘voluntary employee benefit association’ to cover retiree costs, like the one the United Auto Workers union has reached with automakers in the United States.
