June 10, 2008 / 9:07 PM / in 9 years

Union wants Canadian government to set auto quota

TORONTO (Reuters) - The Canadian Auto Workers union called on the federal government on Tuesday to require all automakers to produce at least as many vehicles in Canada as they sell in Canada.

The move comes as the union’s blockade of General Motors of Canada’s headquarters in Oshawa, Ontario, moves into its seventh day in a protest against the planned closing of GM’s Oshawa truck plant.

“General Motors sold about 235,000 trucks in Canada last year, and that’s enough to keep our truck plant open,” CAW President Buzz Hargrove told delegates at a union convention in Toronto.

However, that idea has been tried before, from 1965 to 2001, with the Canada-U.S. Auto Pact, but was abolished after the World Trade Organization ruled it favored some countries over others, said Anthony Faria, an analyst at the Auto Research Centre at the University of Windsor.

“That is really not doable at all,” Faria said. “In essence, if the U.S. wanted to do the same thing, it would decimate the Canadian auto industry, which ships about a million units a year to the U.S.”

GM, struggling with a sharp drop in demand for pick-up trucks and SUVs amid soaring gas prices and an economic downturn in the United States, said it would close the Oshawa truck plant in September 2009, along with three other truck plants in North America.

“Americans used to buy a lot of that stuff (trucks and SUVs) with home equity loans, because it’s tax deductible. And now, for a lot of them, the home equity is gone and credit has also tightened up, and gas has gone to $4 a gallon,” Stew Low, a spokesman for GM Canada, told Reuters.

“So all of a sudden you’ve got these three things playing against each other and people are saying I‘m going to go buy something smaller and more fuel efficient,” Low said.

Hargrove said he understands the economic troubles facing GM, but the timing of the announcement -- just two weeks after the company and the union signed a three-year contract agreement in which GM said it would keep the plant open until 2011 -- was unacceptable.

“Following our bargaining, in spite of a written commitment to do otherwise -- to keep it open and invest in the future generation of half-ton trucks -- General Motors withdrew its commitment unilaterally, illegally, immorally, and undermining the relationship that we’ve built over the past 70 years or so,” Hargrove said.

GM said in a statement on Monday it would look into getting an injunction to force the union to end its blockade. Low said the company was still considering at its options, but didn’t want to tip its hand.

“It’ll play out through the rest of this week and we’ll just see where it goes,” he said.

On the sidelines of the CAW convention, Hargrove said if GM is successful in getting the injunction, union members would respect it.

“Our local people have said they are going to follow the law. They are not going to challenge the law, so if there is an injunction, that would mean they will live by it,” he said.

Hargrove said the union was also exploring its legal options. He said a clause in the collective agreement that said GM’s commitments were “dependent upon market demand” would not be an impediment.

“I don’t think there is any judge, any reasonable person even, that would look at the sales between May 16 and June 1 and say that triggered that clause,” he said.

“The clause also said if there is a substantive change in the market, GM must meet with us, the national union, well in advance, to discuss the changes and alternatives to backing away from the agreement,” Hargrove said.

Editing by Rob Wilson

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