Canada auto deals secure plants for now, longer-term uncertain

Mon Nov 7, 2016 6:08pm EST
 
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By Allison Lampert

MONTREAL (Reuters) - Concessions by Canada's main auto union in their latest contract talks should help halt a years-long erosion in Canada's share of North American auto production, but the longer-term fate of some plants is still uncertain, industry watchers said on Monday.

The union, Unifor, took a hard line on some issues with its own members on salary and pensions to secure critical new investment in contract talks that ended Sunday, winning about C$1.6 billion ($1.2 billion) in commitments from General Motors Co (GM.N: Quote), Fiat Chrysler Automobiles FCHA.MI and Ford Motor Co (F.N: Quote).

"It's certainly kept Canada in the game," U.S. labor analyst Arthur Schwartz said. "But are they going to fight again in four years?"

Canada's auto sector has been under long-term pressure as major automakers shifted their investment spending to lower-cost jurisdictions like Mexico and southern U.S. states.

Given industry pressures, the outcome of the talks was a best-case scenario, said Flavio Volpe, president of the Toronto-based Automotive Parts Manufacturers' Association.

The union, negotiating on behalf of 23,500 autoworkers, made concessions for new hires in all three contracts by allowing defined-benefit pensions and a 10-year wage progression that was particularly unpopular with some Ford workers.

But while Ford's C$700 million investment secures the production of engines for popular pickup trucks, industry analysts said there is no guarantee the commitments by GM and Fiat Chrysler will keep all of their Canadian plants open beyond the life of the contract.

“Of the three, the best one that came out was Ford,” said Joe McCabe, AutoForecast Solutions Chief Executive, by phone on Monday. “GM and Chrysler sort of put them (plants) on life support.”   Continued...

 
Ford and Lincoln vehicles are parked outside the Oakville Assembly Plant, as workers with UNIFOR attended a ratification vote nearby, in Oakville, Ontario, Canada November 6, 2016. REUTERS/Chris Helgren