The Canadian Auto Workers union has said it would find cost cutting measures to remain competitive with General Motors and Chrysler in the US after the companies reached agreements in principal with the UAW.
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“We are going to measure what the UAW just recently concluded in bargaining and then we’re going to measure it to what the Canadian operations are, then we’re going to maintain our competitive advantage,” CAW president Ken Lewenza told Reuters.
The automakers are due to present their viability plans to the governments of Canada and the province of Ontario on Friday.
Lewenza said he was not keen to speculate on what the CAW might do to save money. He added that the union had yet to see the terms and conditions the companies need to meet to qualify for Canadian loans.
Last May, in bargaining with the Detroit-based automakers, the CAW said it saved the companies C$900m over the three years of the contracts without lowering wages.
Instead, it froze wages, took on more healthcare costs, and deferred cost of living allowance payments for the first year of the agreements.
Lewenza told Reuters the union would look at what it had done over the past couple of years to cut costs for the automakers, and it would also try to find ways to improve productivity.
But that may not be enough this time, according to Richard Cooper, executive director, Canada, of JD Power and Associates.
“I think there’s going to be a quite a lot more concessions that they are going to have to make in order to make the whole thing viable, he told Reuters, adding that wages and benefits would definitely have to be on the list.
“I don’t think just enhancing productivity will do it.”
Lewenza called for the Canadian government to make sure that the companies maintain a healthy job count in Canada as a condition of giving them any loans.
“The only way that you can repay the loans, which we are committed to do, not just as a company, but as CAW members, is to have a manufacturing footprint in Canada that is profitable,” he said.
Chrysler said on Tuesday it planned to start talks with the CAW next week and GM said it planned to reach a deal on a new contract with the union by the end of March.
