CAW deal seen bringing GM closer to Canadian aid

Mon Mar 9, 2009 3:49pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By John McCrank

TORONTO (Reuters) - General Motors Corp is a step closer to securing billions of dollars in emergency loans in Canada after striking a tentative cost savings deal with the Canadian Auto Workers union.

If ratified, the deal with GM Canada will lead to savings of "several dollars an hour on the active labor side and substantial cost reductions on the legacy liabilities," Jim Stanford, an economist for the CAW, said on Monday.

"We are confident that this agreement preserves an investment advantage in Canadian plants and that's what we committed to do, and now the government should come through with its financial assistance," he said. The weaker Canadian dollar lowers costs as well, he added.

The agreement, reached early on Sunday, would freeze wages, transfer more healthcare costs to employees, cut paid time off, and eliminate cost of living adjustments for retirees and suspend them for active workers. It would also divert employee bonuses to cover legacy costs such as retiree healthcare benefits, and reduce expenses for union-sponsored programs.

The deal should help GM Canada qualify for up to C$7 billion ($5.4 billion) in requested loans from the governments of Canada and the province of Ontario, said Charlotte Yates a labor expert at McMaster University in Hamilton, Ontario.

"It must be enough, because GM has said it's enough for them to go forward, and... (GM) is the one that has the information and actually is in control here," Yates said.

Tony Faria, an auto analyst at the University of Windsor, agreed that the deal should be enough to allow GM to qualify for the loans, but said it could have been better.

"I don't think either the federal government, or the Ontario government wants to push GM and Chrysler over the brink, but I'm not sure they got all the savings they could have and should have gotten out of these concessions."   Continued...