September 7, 2012 / 7:48 PM / 5 years ago

CAW sees signs of "constructive dialogue" in auto talks

TORONTO (Reuters) - The Detroit Three automakers want to avoid a strike and seem willing to engage in “constructive dialogue,” the head of the Canadian Auto Workers union said on Friday, two days after threatening to shut them all down if no deal is reached soon.

“There’s signals of more constructive conversations,” and dialogue, CAW President Ken Lewenza said in an interview.

“I still believe in the next six or seven days, one of the companies, if not all of the companies, will come and say the last thing we need is a work stoppage. Now how do we get a deal,” Lewenza said.

The CAW, which represents about 20,000 workers at Ford of Canada, General Motors of Canada and Chrysler Canada, said on Wednesday it could stage a simultaneous strike at all three if it does not get a new contract deal by September 17.

The union’s strike captains will meet in Toronto on Monday to advance plans for a triple strike.

It is an unprecedented strategy for the union, which had been expected to announce a lead company on which it would focus negotiations in order to set a pattern for the other two.

A triple strike would halt Detroit Three vehicle production in Canada, along with the engines and transmission systems that are used in both Canadian and U.S. auto production plants.

Any disruption to parts supplies would quickly ripple through the supply chain because automakers keep inventories lean, using a just-in-time system, to control costs.

The shutdown would result in lost production of about C$200 million ($200 million) daily at the companies and their suppliers, said CAW economist Jim Stanford.

“OPEN, CONSTRUCTIVE” TALKS CONTINUE

“We continue to have an open and constructive dialogue with our CAW partners,” said GM spokeswoman Adria MacKenzie. “We are optimistic that we can continue to work together to overcome challenges, find creative solutions and improve our competitive position.”

Negotiations formally began on August 14, but have made little progress since then. The union charges that the three automakers are mounting a “coordinated effort” to push back against union efforts to secure modest gains for its members after the turnaround in the companies’ fortunes.

“It appears that the progress in recent dialogue is really attributable to the CAW’s willingness to engage in some constructive dialogue,” said a company source close to the talks.

“They are a little bit more willing to explore some of their options and try to look for some constructive creative solutions.”

The automakers have repeatedly argued that Canada is the most expensive place in the world to make cars and that costs must come down.

Lewenza admits there are risks associated with a simultaneous work stoppage, such as scuttling the country’s chances for long-term manufacturing investment, but said the union had no other options. None of the companies had shown a “willingness to get a deal,” he said.

“This is our last tool in our toolbox,” he said. “We’re doing everything to avoid a strike.”

A triple strike would cost the union C$4 million to C$5 million in strike pay each week, said Stanford, which it would draw from its C$90 million strike fund.

Further funds are available from loans “so the union has the ability to withstand a long stoppage if necessary -- though that is obviously not our goal,” Stanford said.

Tony Faria, a University of Windsor professor and auto industry expert, said the strategy of a simultaneous strike threat is puzzling because it dissipates the union’s ability to pressure each company. It also raises real risks for future investment in Canada.

“It’s one thing for the companies to stomach, for a period of time, a strike in Canada. When that strike affects their U.S. operations ... the companies are not going to put up with it,” he said.

The CAW has told the automakers that it is flexible on some issues, Lewenza said. It is open to fixed cash bonuses, such as the return of a C$1,700 Christmas bonus, for example, versus wage increases.

The union won’t budge, however, on its opposition to changes to defined benefit pension plans or pension eligibility, a permanent two-tier wage system, or profit-sharing.

The automakers want the CAW to accept the same type of deal they reached last year with the United Auto Workers, Lewenza said, though profit-sharing has not been offered.

The UAW contract had no wage increases and preserved a two-tier system, in which newly hired workers start at about half the full hourly wage. It also included a profit-sharing formula and signing bonuses.

($1=$0.977 Canadian)

Editing by Frank McGurty; and Peter Galloway

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