September 15, 2012 / 3:07 PM / 6 years ago

CAW "hopeful" one of Detroit 3 to accept its new hire proposal

TORONTO (Reuters) - Two days ahead of a strike deadline, a senior official at the Canadian Auto Workers said on Saturday the union is hopeful one of the Detroit Three automakers will accept its proposed concessions on compensation for new hires, clearing the way for contract negotiations to address other issues.

The union, which represents some 20,000 workers at Fiat SpA’s Chrysler Group LLC, Ford Motor Co and General Motors Co, is trying to reach three-year agreements before a contract and strike deadline of 11:59 p.m. EDT on Monday (0359 GMT, Tuesday).

CAW National Secretary-Treasurer Peter Kennedy told Reuters he hoped a morning meet with one of the companies, which he did not name, would lead to a conclusion of “discussions on our proposal, with respect to the new employee, and then move full speed from there to try and get the rest of the issues cleared up.”

“In the case of at least one of the companies, you can see the finish line,” he said. “That’s just on this one issue. There’s still a lot of outstanding issues. I wouldn’t want anybody to think that we’re close to a deal here.”

Kennedy could not be reached later in the afternoon to discuss that meeting. GM said it continues to have open and constructive talks with the CAW while the other two companies were not immediately available for comment.

Jerry Dias, assistant to CAW National President Ken Lewenza, said in the early afternoon that nothing has been “buttoned down” on the new hire rate.

“We’re making different inroads in different areas with different companies,” he said.

Dias said talks with Ford were the “most respectful” but would not say whether negotiations with Chrysler and GM were farther apart on key issues.


On Thursday, the CAW offered the automakers key concessions on wages and pensions for new hires, yielding ground that might not overly upset current union members who must ratify any contract agreement.

In return, the union wants automakers to commit to investing in Canadian plants and allocating new product, ensuring members’ job security.

Under the CAW proposal, new hires would start at lower wages than the approximate C$24 ($24.78) an hour they currently get and be paid less than current workers for a longer period of time.

This is the so-called “two-tier” wage scale that the three Detroit automakers and the United Auto Workers in the United States have used for the past several years to bring labor costs closer to those of foreign automakers.

The CAW is adamant that new workers must over time reach the same pay scales as existing workers. It may be willing to extend its “earn-in,” the time it takes new hires to reach the highest end of the pay scale, from six to as many as 10 years, a union source close to the talks told Reuters earlier this week.

“It’s critical to moving forward as we’ve been saying from the outset. We’re prepared to discuss and be flexible and entertain alternatives - except a permanent two-tier, second-class worker,” Kennedy said.

Current employees do not contribute to their pensions but under the union’s proposal, new workers would do so. The new workers still would be entitled to a defined-benefit pension, not a defined-contribution pension.

The union also has said it could relax the “30-and-out” provision for new hires. Instead of being allowed to retire after 30 years under any circumstances, they would be able to retire after 30 years only if they were above a particular age.


The more promising tone comes after the Lewenza said late on Friday that all three companies had rejected the proposal, insisting on permanently lower wages for new employees.

“Somebody ultimately put pencil to paper and did some costing ... and said, ‘Hey, this is a good proposal and we can work with it,” Kennedy said of the shift.

The talks, which began last month at a downtown Toronto hotel and are now going around the clock, have been challenging, with labor costs a key sticking point.

Automakers adamantly argue that Canadian labor costs are the highest in the world and must drop to match those of the UAW or future production and investment will be put in question.

The union counters that its members deserve some payback from the now-profitable automakers after the their concessions in 2009 during a North American auto sector meltdown that pushed GM and Chrysler into bankruptcy.

CAW workers at the Detroit Three earn an average of C$34 in a base hourly wage, compared with an average $28 for UAW employees, the CAW says.

Including benefits such as pensions, health care and overtime pay, the CAW’s total average labor cost is about $60 an hour, according to the Center for Automotive Research in Ann Arbor, Michigan. That compares with $58 for U.S. workers at Ford, $56 for GM and about $52 at Chrysler.

The CAW says that the companies also want to permanently eliminate the cost of living allowance, move current and new hires to a defined contribution pension plan from a defined benefit pension plan, and eliminate the “30-and-out” pension.

The automakers have not publicly discussed what they propose to bring Canadian labor costs in line with those of the United States.

Canada’s auto industry has suffered five plant closures and the loss of a third of its assembly jobs in the past decade as costs climbed along with a stronger Canadian dollar.

Reporting By Susan Taylor; Editing by Bill Trott

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