March 25, 2008 / 9:26 PM / in 10 years

Canada auto union says won't accept two-tier wages

TORONTO (Reuters) - The Canadian Auto Workers union will not accept a U.S.-style two-tier wage deal when it meets with the “Big Three” automakers this summer for contract negotiations, union President Buzz Hargrove said on Tuesday.

<p>Canadian Auto Workers (CAW) President Buzz Hargrove listens to a question while speaking with journalists in Ottawa November 2, 2007. REUTERS/Chris Wattie</p>

“We are not accepting second-class workers in our workplaces,” Hargrove told reporters in Toronto.

“It’s my last set of negotiations and my legacy is not going to be that the sons and daughters of current workers that were hired over 20 years ago are going to come in at the same rate in 2008 as their parents did in ‘86 or ‘87.”

While the CAW indicated it would go on strike rather than accept the kind of two-level wage deal the United Auto Workers union accepted in the United States, the Canadian union did say it would seek ways to save the struggling Detroit-based automakers money, such as finding more efficient ways of delivering retirees’ benefits.

The CAW is scheduled to start negotiations with Chrysler, Ford Motor Co F.N and General Motors Corp GM.N in July. The union’s current contract expires September 17.

Hargrove and CAW Economist Jim Stanford are in the midst of a “road show” making presentations to auto industry investors and analysts to try to play down expectations that the union will accept the kinds of concessions granted by the UAW last November.

The U.S. union will allow new workers to be hired at wages as low as $14 an hour, compared with a regular rate of $28 per hour, and it will help establish a massive healthcare trust fund to take over retiree health-care liabilities.

Hargrove said Canada’s publicly funded healthcare system and a more productive workforce offset many of the gains made by automakers in the UAW deal.

Still, with the Canadian dollar at par with the greenback, Hargrove admitted the cost advantage enjoyed by CAW workers has eroded. But he said cutting wages would not address bigger issues such as the Big Three’s dwindling market share, the high price of oil or a slowing U.S. economy.

“We had up to a $20 an hour advantage, or $15 on average, for 10 years (when the Canadian dollar was well below parity with the U.S. dollar) and they never once asked the UAW to meet the costs that we have in Canada. That just wasn’t in the cards and they know that isn’t in the cards here.”

Hargrove argued that if wages were the main driver of where auto companies base production, everything would be Mexico.

The CAW has already made its presentation to investors in Detroit, and is heading to New York next and then to Montreal.

The CAW represents around 27,000 active auto sector workers in Canada.

($1=$1.02 Canadian)

Reporting by John McCrank; editing by Rob Wilson

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