The Canadian Auto Workers union has made a major breakthrough in its bid to organise workers at vehicle parts giant Magna International Inc. by reaching a tentative deal on a first contract at a major Magna seat making plant in Windsor, Ontario.

Negotiations on a deal concluded Thursday and ended more than two years of battling that included the dispute becoming a key issue in contract talks between the CAW and DaimlerChrysler Canada Inc. in 1999.

Details of the first contract will not be made available until about 700 workers at the Integram Seating division of Magna's Intier Automotive Inc. unit vote on the tentative agreement on Saturday.

But the three-year contract will include clauses and regulations that are found in agreements with other car parts makers, said Hemi Mitic, an assistant to CAW president Buzz Hargrove.

Mr. Mitic said he hopes the deal at Integram will help the CAW organise other Magna plants in Ontario. The union has made efforts to organise workers at two key Magna stamping facilities in the province, including its hydroforming plant in St. Thomas, Ontario.

The deal marks a return to Magna for the CAW, which has been struggling to unionise workers at Magna plants for years and actually was the bargaining agent for employees at a small plant in St. Catharines, Ontario, for several years until that plant was decertified in the mid-1990s.



A ujnion bid to organise the Toyota Motor Manufacturing Canada Inc. assembly plant in Cambridge, Ontario, was defeated earlier this year.

Magna has fought hard to keep the CAW and its US counterpart the United Auto Workers from establishing themselves at its North American plants.

The vehicle components giant has argued that its unique human resources philosophy, which includes a worker complaint hotline, annual profit sharing payments and a share ownership plan make the union unnecessary.

News of the deal came just one day after Magna reported strong third-quarter financial results in what is normally a weak quarter because of summer shutdowns at North American auto makers.

Magna reported profit from operations of $US99 million in the quarter, up from $89 million a year earlier, based on sales of $2.51 billion versus $2.35 billion in the three months ended Sept. 30, 2000.

Profit and sales jumped despite lower vehicle production volumes at major customers in both North America and Europe.

The results represent the strongest third quarter in Magna's 44-year history and “set us apart fro our U.S. supplier peer group, president and chief operating officer Jim Nicol told analysts during a conference call on Thursday.

Nonetheless, Magna is preparing for a downturn in production in the rest of the fourth quarter, especially in North America, where production is expected to decline from year-earlier levels despite the major positive impact no-interest financing is having on sales.

Magna's capital spending has been trimmed back to between $US500 million and $US525 million for 2001, compared with earlier expectations of between $US600 million and $US650 million.

“We're scrutinising capital expenditures probably harder than at any time in our history," said Nicol.

But neither he nor other company officials would reveal their plans for capital spending in 2002 or their expectations for the European and North American vehicle markets.

To view related research reports, please follow the links below:-

Magna Corporate Profile

The Global Automotive Interiors Market, 2001-2010

Automotive regional report: North America (download)

Automotive Aftermarket in North America to 2004