General Motors nailed down a key piece of its North American restructuring plan on Sunday (8 March), reaching a tentative agreement with the Canadian Auto Workers (CAW) that trims hourly labour costs at its Canadian operations and meets demands from governments in the country that have been asked to bail out the company.

“What we’re trying to do is keep the Detroit Three and this company afloat for the long-term,” CAW president Ken Lewenza told just auto, adding that reaching a deal created no joy among the union’s bargaining team.

The deal would cut labour costs by several dollars an hour, Lewenza said, although neither he nor other union officials would give a specific figure.

Among the key concessions agreed to the union are:

  • – cutting in half the two weeks of special paid absences (which have developed the unfortunate moniker of SPA weeks) they receive annually;

  • – extending their contract by one year to September, 2012, and a wage freeze that was agreed to when a new contract was signed last year;

  • – diverting C$1,700 in annual bonuses every member was to receive to help pay for health care costs for retirees;

  • – suspending cost of living adjustments for active workers until June 2012 and for retirees until the contract expires;

  • introducing new co-payments of $30 monthly for active workers and $15 for retirees to defray health care costs and other non-wage benefits.

The deal came as the company seeks about $7bn in assistance from the government of Canada and the province of Ontario, where General Motors of Canada in Oshawa employs about 12,000 people and operates two assembly plants, one joint-venture vehicle factory and two components facilities.

Among those, a pickup truck plant and a transmission factory are scheduled to close this spring and next year respectively.

The governments offered GM Canada $3bn late last year, but the company said in January it didn’t need immediate help, seeking instead longer-term relief, including government assistance with its underfunded pension plans.

The plans have a shortfall of at least $4.5bn, based on 2007, but that number has almost certainly grown because of the collapse in stock prices on global equity markets in recent months.

Lewenza urged the governments to come up with money now to keep GM Canada operating but he acknowledged that its fate is tied to that of its parent, which has received US$13.4bn from the American government and seeks as much as US$16.6bn more to stay out of bankruptcy protection.

“If we go down in the United States, we’re going down in Canada, too,” he told a news conference in Toronto.

Voting will be conducted at GM’s operations Tuesday and Wednesday, then the union will open talks with Chrysler Canada which also seeks a bailout, or Ford Canada which says it can survive without government money.