The Canadian Auto Workers union says the new collective agreements it has negotiated with the three big U.S. automakers will protect workers by improving the competitiveness of the Canadian manufacturing operations.
CAW president Ken Lewenza says the tentative contracts reached over the past week with Ford, General Motors and Chrysler will better position their operations in Ontario to combat pressures such as the high value of the loonie.
Some auto-sector analysts had expressed concern that the automakers might rethink their medium-to long-term commitments to manufacturing vehicles in Canada after the pattern deal was reached with Ford.
But Scotiabank senior economist and automotive analyst Carlos Gomes said Thursday that the new contracts improve competitiveness, adding they will likely attract additional investment from existing producers.
"I think it makes us competitive going forward. But the reality still is that if you look at what's happening in the industry, all of the new plants are going in primarily to Mexico or the U.S. South," he said.
Lewenza said Thursday he would have liked to see long-term investment commitments by the automakers, but he believes those decisions will be announced in the coming years as they prepare for updates towards the end of the decade.
The federal and Ontario governments need to adopt strategies that protect the Canadian auto sector by counteracting enticements offered by jurisdictions seeking to lure relocations, he added.
The deals reached with the Detroit Big Three allow the automakers to hire new employees at lower pay and benefit rates for a 10-year phase-in period, while keeping hourly wages for current employees steady over the life of the fouryear contract.
Existing workers will instead receive $9,000 over four years in a ratification bonus and payments in lieu of cost-of-living increases.
New hires at Ford, GM and Chrysler factories in Canada will begin their careers at $20 an hour, down from the $24 starting wage under the previous deal, and take 10 years to reach peak pay levels of $34 an hour instead of six years.
New employees will also receive hybrid pension plans instead of pure defined-benefit plans for current employees.
"In all three collective agreements, the new wage progression positions us much better than we were positioned before bargaining," Lewenza said.
CAW members at Ford voted in favour of their agreement on the weekend by a margin of 82 per cent. General Motors workers ratified the deal by a margin of 73 per cent, the union announced Thursday.
Chrysler workers will vote on Saturday and Sunday.
Lower starting wages should make the Big Three automakers more competitive with Honda and Toyota's operations in Canada, Lewenza added.
The CAW leader said he expects the Japanese manufacturers will reduce their wages for new hires to keep them "in the ball park" with their North American rivals.
A leaked memo to employees from Honda in April said it pays virtually the same $35 per hour maximum hourly compensation as GM. Honda's base wage is $30.90 per hour compared to $33.91 for GM. But bonuses erase the gap.
The main difference with the Big Three is that the Japanese automakers rely heavily on contract workers to adjust to demand and don't have legacy retirement costs.
