Union concessions on labour costs to General Motors of Canada made earlier this month will save the automaker almost C$1bn ($819.1m), it has emerged.
The deal with the Canadian Auto Workers (CAW) also closes the ‘per hour’ active worker cost gap to the company’s non-union competition in the United States based on current exchange rates, Arturo Elias, president of GM Canada, said in a letter to a Canadian parliamentary sub-committee looking at the automotive industry, according to Reuters, which obtained a copy.
The letter said the company was “able to achieve unprecedented reductions to our legacy costs including the permanent removal of pension indexation (or cost of living) increases, freezing pension benefit rates at today’s level, freezing other escalators such as dental expenditures, and, the introduction of new monthly cash contributions for health care”.
“These changes will reduce GM Canada’s future obligations by close to C$1bn (Canadian) and represent a significant shared sacrifice by GM Canada’s active and retired hourly workers.”
According to Reuters, Elias said active labour cost concessions included extended wage freezes, more worker contributions to health care costs, new drug and dental fees, the elimination of 40 hours of paid time off each year, the reduction or elimination of special bonuses or payments, and further cuts to various legal and family care benefits.
The deal was ratified by the automaker’s 10,000 unionised workers on 11 March and is on condition GM gets emergency loans from the governments of Canada and the automaking province of Ontario.
Elias also said company executives had taken a 10% salary cut, no bonuses would be paid and salaried employees were also seeing benefits cut.
Elias said GM would keep 17 to 20% of its North American production in Canada under its restructuring plan while new investments would include six new vehicle launches, including the first hybrid cars made in Canada.