TORONTO — Canadian Auto Workers members voted 86 percent in favor of a cost-cutting deal with General Motors Canada as the automaker bids to qualify for more government loans and ensure its future in Canada.
Union leader Ken Lewenza said Monday in a news release that the new deal should provide a much-needed sense of security.
Mr. Lewenza has said the deal allows GM Canada to meet the cost benchmarks set by the Canadian government, namely making cuts to become competitive with non-unionized Toyota Canada. The deal also stipulates that GM’s car-assembly and parts plants in Ontario will stay open.
“This has been a grueling restructuring process, and no one has felt that more than our members and retirees,” Mr. Lewenza said in a statement. “Although we were forced to make a number of important sacrifices, the support we received from our members is proof that they recognize the incredible challenges the industry is facing, but more importantly that they are prepared to stand by each other and stand with their union.”
Mr. Lewenza said hours earlier that there was much anxiety in the final day of voting.
Workers at three GM plants in southern Ontario cast ballots Sunday on the latest concession package. Workers at the GM plant in the southern Ontario community of Oshawa voted Monday.
The North American auto industry has been battered by the recession, which has cut demand for cars and trucks sharply, leaving the companies with assembly-plant overcapacity that needs to be shut down.
In addition, the credit crunch has made it difficult for consumers to finance car purchases, squeezing demand further. At the same time, changing consumer tastes and high fuel prices have hurt demand for SUVs, pickups and other big vehicles, the mainstay market of the Detroit Three - GM, Chrysler LLC and Ford Motor Co.
According to the CAW, the tentative deal with GM Canada provides that the start rate for new hires will be 70 percent of the established rate with increases of 5 percent per year for six years. New hires will be entitled to the same retiree health benefits, funded either through a new Health Care Trust or by the company.
The deal freezes pensions until 2015, eliminates semiprivate hospital coverage and ends tuition assistance for workers joining the company after Jan. 1, 2010. The CAW also said a $3,500 vacation compensation payment has been cut to offset other costs, including pensions.
Under the contract, the union and the company have committed to negotiate a Health Care Trust agreement to provide retiree health care benefits in the future, much like the automaker’s terms with U.S. workers. GM Canada also agreed to restructure its underfunded pension plan and move to funding the plan on a solvency basis comparable to the plans at Ford and Chrysler within a year.
Mr. Lewenza said the deal delivers reductions of 15 to 16 Canadian dollars ($13 to $14) in the average hourly labor cost of GM’s Canadian workers on top of a previously negotiated 7 Canadian dollars ($6) cut. He said the concessions reached will make GM competitive with Toyota, which is what the governments had requested.
CAW members had ratified a deal with GM in March, less than a year after settling a three-year wage-freeze contract, but Canada’s federal and Ontario’s provincial governments said two weeks ago that the deal did not do enough to cut costs.