TORONTO (Reuters) - The Canadian Auto Workers union said on Thursday it will begin exploratory discussions with General Motors of Canada to find cost savings to help the company qualify for government loans in Canada and the United States.
CAW President Ken Lewenza said the union -- which represents about 33,000 workers in the auto industry -- aims to first reach an agreement with GM, and then with the Canadian arms of Chrysler and Ford Motor Co, by the end of March.
He said the CAW would be able to find significant savings for the companies that would give Canadian plants a competitive advantage over factories in the United States, without lowering wages. He would not speculate on how.
Lewenza added that he expected the negotiating to be tough.
“We shouldn’t kid anybody,” he told reporters. “Collective bargaining is about power and today we do not have a lot of power, other than the fact that we have a legal three-year collective agreement that was ratified last May with about C$300 million ($233 million) worth of cost savings for each one of the companies.”
The labor agreements reached in May froze wages, shifted more health care costs to employees, and deferred cost of living allowances for the first year of the contracts, among other initiatives.
“What we are committing to is that, at the end of our bargaining here ... we will have a cost advantage to ensure that there is no incentive to take work out of Canadian plants,” said CAW Economist Jim Stanford.
He said that when comparing costs between the automakers’ U.S. and Canadian operations, higher productivity in Canada and the lower Canadian dollar should also be taken into account.
The Canadian units of GM and Chrysler are seeking as much as C$10 billion in aid from the Canadian and Ontario governments to help them survive the industry-wide crisis.
GM’s plan, submitted to Ottawa last month, called for “changes sufficient to achieve legacy cost reductions and align active worker wages and benefits to benchmark levels.”
It proposed a 10 percent cut in executive salaries, and reduced pay and benefits for salaried employees.
GM and Chrysler have already received a combined $17.4 billion from Washington, and asked on Tuesday for nearly $22 billion more in emergency funding. That amount could increase to about $30 billion if the auto market deteriorates further.
Ford says it is in better shape than its two domestic rivals
and will not likely need to ask for immediate assistance in either country.
Reporting by John McCrank