Pension issue threatens GM Canada's survival

Wed May 13, 2009 5:07pm EDT
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By John McCrank and Randall Palmer

TORONTO/OTTAWA (Reuters) - Pension issues are stymieing efforts to reach a new concession deal between the Canadian Auto Workers union and General Motors Corp that is needed to keep the automaker's Canadian operations from liquidation, the head of the union said on Wednesday.

The two sides have until Friday to strike a new cost-cutting deal or the automaker could miss out on billions of dollars in government loans needed to keep GM Canada afloat.

"We're not making much progress at all," CAW President Ken Lewenza told Reuters during a break in the negotiations, which have been ongoing since Sunday.

"We're talking to each other, but we've got some major issues," he said."

A GM spokesman was not immediately available for comment.

The biggest hurdle involves the cost of pensions for GM's retired workers, Lewenza said.

GM Canada has been making vehicles for around a century and has about five retirees for every active worker.

Complicating matters is a pension fund shortfall at GM Canada estimated to be as high as C$7 billion ($6 billion).   Continued...

<p>A GM inflatable sign is seen during the Barrett-Jackson auto auction in West Palm Beach, Florida April 11, 2009. REUTERS/Carlos Barria</p>