Canada auto union up against costs it cannot control

Tue Sep 6, 2016 12:00am EDT
 
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By Susan Taylor

TORONTO, Sept 6 (Reuters) - Canada's autoworkers' union, which steps up pressure in contract talks by naming a strike target on Tuesday, may see its ability to win concessions undermined by outside factors, ranging from high power rates to manufacturers' increased reliance on more costly imported parts, industry experts say.

The top priority for the union, named Unifor, is to persuade Fiat Chrysler Automobiles, Ford Motor and General Motors to pledge to produce new vehicle models in Canada. It will also seek a modest pay raise and shorter pay progression for new hires.

A four-year contract covering some 20,000 Canadian workers at the three companies expires Sept. 19.

"All of those other issues, combined, overwhelm the effect of Unifor," said Tony Faria, a University of Windsor professor who studies the industry, referring to labor costs.

Unifor estimates that, on average, labor represents about 4 percent of the cost of each vehicle its workers produce, versus 55 percent for parts and supplies.

Approximately 50 percent of the parts in Canadian-made vehicles are produced in the country, said Flavio Volpe, Automotive Parts Manufacturers Association of Canada president.

Many Canadian-based parts suppliers did not survive the 2008 financial crisis and resulting recession, he said.

High electricity rates in the province of Ontario are another thorn.   Continued...