The Canadian Auto Workers union and General Motors began negotiating a new contract with a friendly handshake on Tuesday, but the goodwill could fade as GM attempts to hold down cost increases, the Associated Press (AP) reported.

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CAW President Buzz Hargrove and GM Canada vice president Al Green reportedly shook hands over a long table lined with dozens of CAW and GM negotiators and a closed-door meeting began immediately afterwards.


AP said the CAW is scheduled to begin negotiations with Ford and DaimlerChrysler later this week – the Big Three’s contracts with the CAW expire on September 20.


The CAW represents about 17,000 GM workers in Canada, or a little less than half of the 41,700 CAW members who work for the Big Three in Canada, the news agency noted.


AP also noted that GM has been struggling with falling U.S. market share and lost $1.1 billion in the first quarter and has said Canadian labour rates are the second-highest of the 18 countries in which it makes vehicles, right after the United States.

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The base hourly wage for a GM assembly line worker in Canada is $24.44, according to the CAW. Under the current contract, which was negotiated in 2002, labour rates have grown 5.7% per year, GM reportedly said, compared to 2% for foreign automakers in North America.


“Since GM Canada exports 90 percent of its production, labour costs are of significant concern to the company,” GM told AP in a statement.


According to the Associated Press, the CAW says its wages and benefits are justified because the country’s productivity levels are among the highest in the world – the union also says the Big Three also save hundreds of millions of dollars because of Canada’s national health care system.