Hourly workers at General Motors’ Canadian operations will receive a 3% wage increase immediately and in 2003, followed by a 2% wage hike in 2004 under a tentative three-year labour contract reached with the Canadian Auto Workers union yesterday, the Detroit News said.

The newspaper said the deal covers 18,700 GM workers and also includes enhanced job and income guarantees, three new paid holidays and 28 hours of extra holiday time during the contract, plus a $US632 signing bonus upon approval.

For GM, the union agreed to new work rules that will allow the automaker to extend productivity gains at its Canadian factories, the Detroit News said.

GM agreed to invest $506 million for new projects in Canada between now and 2005, including a new paint shop at a factory in Oshawa, Ontario. GM plans to expand production of the Chevrolet Silverado pickup in Oshawa to include a crew-cab model, as well as build a new generation Buick Regal sedan in Oshawa, the Detroit News said.

The CAW told the Detroit News that the moves would allow GM’s three Oshawa, Ontario, assembly plants to eventually operate three production shifts each.

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The Detroit News said that GM workers would hold ratification votes Saturday and Sunday and, following those, the CAW would announce on Monday whether it would target Ford or Chrysler to match the deal in the next round of bargaining.

The newspaper said the talks with Ford are expected to focus on the automaker’s plans to close an Oakville, Ontario, assembly plant and move production of full-size pickup trucks to the United States.