Paul Weinberg

TORONTO, Aug 30 2005 (IPS) — Twenty years ago, the Canadian Auto Workers split from the U.S.-based United Auto Workers over disagreements about Canadian autonomy and concessions to employers.

But now the union faces “its biggest challenge” as the Big Three highly unionised North American automobile manufacturers – General Motors, DaimlerChrysler and Ford – lose more and more of their sales to Asian competitors, warns a union economist.

The Canadian Auto Workers’ (CAW) Jim Stanford says that unionised workers can never satisfy all of the demands for concessions in wages and benefits in the face of cheaper vehicle models from non-union, low wage regions, including China, “even if we could work for free for 50 years.”

“We don’t want to lose auto plants in Canada,” he added. “We have already lost three.”

This country’s auto sector is a major employer in the southern Ontario industrial heartland, with upwards of 149,000 people working in largely unionised plants owned by either the Big Three automakers in Detroit or their Canadian-based parts suppliers, according to the CAW.

Thousands of other workers in the steel and plastics industries are indirectly affected by trends in the auto industry.

Earlier this summer, the Toronto Globe and Mail reported that the market share in the U.S. for the largest of the North American trio, General Motors, fell from 27 percent a year ago to 25.4 percent.

Meanwhile, the market share for Ford Motor Co. has dropped from its traditional 25 percent to 13.9 percent – the worst performance of the Big Three.

Toronto-based auto industry consultant Dennis DesRosiers estimates that last year, 20.3 percent of cars and trucks purchased by Canadians were built outside Canada, a drop from about 25.5 percent in 1991.

But some experts say this trend is mostly due to new production from Detriot’s Asian competitors, particularly Japan’s Toyota, which have set up their own assembly plants in Canada, so far non-union.

In an opening salvo to the company’s entire North American unionised work force, General Motors chair and chief executive Rick Wagoner announced that he intends to cut 25,000 jobs by 2008 in order to save about 2.5 billion dollars.

GM has not specified which employees will lose their jobs, but CAW president Buzz Hargrove told one Canadian television network that CAW members working for separate companies in Ontario that supply parts to GM’s U.S. based plants will be affected.

“I was shocked and I knew immediately that you can’t cut 25,000 jobs in the U.S. and not have an impact on the Canadian operations,” Hargrove said.

Wagoner blames the high cost of paying for employees’ private health insurance premiums – amounting to more than five billion dollars annually for one million current and former workers and their families – for GM’s financial difficulties. This adds 1,500 dollars to the cost of each GM vehicle, which he describes as a “significant disadvantage versus foreign based competitors”.

But Stanford told IPS that Canada’s public healthcare system covers doctor and hospital costs, unlike the United States, where people must pay for all medical services, hence their greater reliance on private insurers.

The result is that in unionised plants in Canada owned by the Big Three U.S. automakers, “only 120 dollars per vehicle goes to health costs”, he said.

A professor in the school of industrial relations at Queen’s University says that the Big Three are foisting onto Canadian workers what are essentially “American issues” such as healthcare costs and funding workers’ pension plans.

“While the United Auto Workers is going to help the companies become productive, this is not an issue in Canada where the companies are already productive,” Pradeep Kumar said in an interview with IPS. “The auto industry is in better shape in Canada.”

Kumar points to an industry study by the Detroit-based Harbour Consulting, which recently rated GM Canada’s Oshawa, Ontario facility as the most productive vehicle assembly plant in North America.

So far, CAW has been unsuccessful in leveraging the superior Canadian productivity to convince U.S. automakers to invest in more plant capacity in Canada.

This demand is a non-starter at a time when too many cars are being manufactured worldwide for too few buyers, says Felix Pilorusso, president of Pilorusso Consulting in Toronto.

“The CAW’s position is, ‘yeah, we know the so-called big three employers are in trouble, but it has nothing to do with us’,” he says.

CAW has not revealed which one of the Big Three automakers it will negotiate with first to set a pattern for a standard industry contract for Canada.

But Palorusso predicts that CAW will first target DaimlerChrysler because that automaker would be reluctant to force a strike when several of its top selling vehicles, including the Dodge Charger and Dodge Magnum, are only built in its Ontario plants.

“And if the CAW can leverage that into a nice fat settlement, well then Ford Canada and GM Canada workers are going to get virtually the same. And from the UAW’s point of view in the United States, ‘why do we deserve anything less?'” he says.

Asian companies like Toyota and Honda are making inroads, explains Palorusso, because they have demonstrated greater imagination in engineering environmentally friendly features like fuel cell technology and more affordable, smaller sports utility vehicles that are less affected by climbing gasoline prices.

Now that the good times for the big three automakers are over, the CAW finds itself in a defensive mode, much like what many unions are experiencing in other sectors, says Kumar.

On the CAW’s 20th anniversary of independence from the UAW, the industrial relations professor is ironically advocating that the CAW return to a more coordinated form of bargaining with auto unions in other countries.

“Since these multinational companies can move around [from one low-wage jurisdiction to another] the unions have to not just look at their domestic interests, but also with regards to the international interests,” says Kumar.

*Corrects paragraph 24.