Auto dealers group was Lee Chatfield's landlord when he was House speaker

GM-Unifor deal includes $520M-plus investment in plants

Michael Martinez, and Melissa Burden
The Detroit News

Oshawa, Ontario — Canadian auto workers union Unifor has a tentative contract agreement with General Motors Co. that not only breathes new life into the at-risk Oshawa Assembly Plant east of Toronto, but signifies a testament to the importance of the automotive industry across Canada.

Oshawa Assembly, Tuesday

The proposed deal would pump more than $520 million into two plants in Canada, according to two sources familiar with the company’s plans, and includes promises for new products, wage increases and the conversion of temporary employees to full-time status.

Industry experts at the start of negotiations generally agreed the union faced a steep uphill battle, as automakers have increasingly turned their attention from Canada to invest in the U.S. and Mexico. They agreed that plant closures in the midst of record profits for the Detroit automakers would be a staggering blow.

“If you lose GM in Oshawa, you’ve really struck at the heart of the Canadian auto industry,” said Dimitry Anastakis, professor of Canadian history at Trent University in Peterborough, Ontario. “It certainly seems like a big win for the union … and some stability for the industry.”

Canada lost more than 53,000 automotive jobs from 2001 to 2014, according to a study by Ontario’s Automotive Policy Research Centre. Tony Faria, professor emeritus in the office of automotive and vehicle research at the University of Windsor’s Odette School of Business, said assembly production in the country peaked in 1999. Despite some year-over-year gains, it has declined steadily since. This new contract could help reverse that trend, he said.

“This was an ongoing decline that had to be stemmed if we were going to have an auto industry in Canada,” Faria said. “One contract doesn’t mean we’ve turned the tide necessarily, but this is a step in the right direction.”

The Detroit automaker plans to spend about CA$400 million on the flex line at its Oshawa Assembly Plant and more than CA$120 million at the St. Catharines Propulsion Plant as part of investments in the four-year agreement reached late Monday with the Unifor union, according to the sources who asked not to be identified because the plans have not been made public.

Unifor President Jerry Dias did not name the new vehicles slated for the Oshawa flex line, but said the plant will be capable of building cars and trucks and that more workers will be needed at the facility; a consolidated line that produces the Chevrolet Equinox is slated to close in 2017.

“I expect we’ll be able to build pretty well anything within the General Motors portfolio,” Dias told The Detroit News on Tuesday.

Oshawa Assembly employs about 2,400 hourly workers. About 750 build the Equinox and 1,650 build the Chevrolet Impala, Buick Regal and Cadillac XTS sedans on a two-shift line.

The investment at St. Catharines is slated to include moving some powertrain work from Mexico, Dias told reporters early Tuesday in Toronto. It also will include new transmission work and extended production of the V-6 engine built in the facility, according to one source familiar with the plans.

Workers in Oshawa on Tuesday did not have details about the proposed agreement, but were still relieved that their plant is no longer at risk of closing.

“Morale is higher,” 36-year-old Darryl Donnithorne said leaving the plant Tuesday afternoon. “It’s been really stressful the last couple months.”

Donnithorne said, despite working a 6:30 a.m. to 2:30 p.m. shift, he stayed up Monday night to watch updates.

Clay Thompson, 45, also stayed close to the TV and computer. “It was all that was on anybody’s mind,” he said. “I’m happy with the deal we got; product was the main thing.”

GM in a statement issued early Tuesday said the agreement includes new product, technology and process investments at Oshawa, St. Catharines and its parts distribution facility in Woodstock. The company said it will work with government for possible support for the projects.

It’s not clear if the investment for St. Catharines includes any additional jobs. The facility employs about 1,400 hourly workers who build V-6 and V-8 engines, six-speed transmissions and other components.

GM’s nearly 3,900 Unifor members who work at Oshawa, St. Catharines and Woodstock will vote Sunday on whether to ratify the four-year agreement. The deal, which averted a strike that could have disrupted production in Canada and the U.S., will include wage increases for current and new employees who top out at $34 an hour, and a signing bonus. About 700 temporary workers would be boosted to full-time.

“It’s a total win for Jerry Dias and Unifor,” said Faria. “They got everything they were looking to get going into the talks; every box right now is checked.”

A decision on which automaker Unifor bargains with next — Ford Motor Co. or Fiat Chrysler Automobiles — is expected soon.

Restructured incentives by the Canadian government likely played a hand in securing investment for the GM plants, said Kristin Dziczek, director of the industry, labor and economics group for the Center for Automotive Research.

The company has said for two years that it would not make any investment or product announcements for Oshawa until negotiations were completed. The company faces overcapacity issues in North America, and issues such as higher energy costs in Ontario than the U.S. The lower U.S. dollar is a factor.

The federal government in Canada may be looking to change its Automotive Innovation Fund from a loan-based incentive for automaker projects to a grant-based system.

Philip Proulx, who is Canada’s press secretary for innovation, science and economic development, said the government is reviewing the fund and “has been engaging with” the automakers to determine the best way to alter the fund, which was extended through 2021.

Proulx said “the federal government was not involved” in the discussions between Unifor and GM.

Ontario has been “working closely with General Motors and Unifor, and will provide further information regarding potential government support at the appropriate time,” according to the office of the Minister of Economic Development, Employment and Infrastructure, which is headed by Brad Duguid.

One negative part of the tentative deal, Dias said, is that new hires will move to a defined contribution pension plan. Legacy members of the union have a defined benefit pension plan, which guarantees them a certain amount of money. In 2012, the union put a deal in place where new hires would have a hybrid plan with some guaranteed money, but the new deal would reverse that.

“I think there’s a sense of relief for a lot of people,” said Joel Smith, an organizer for Unifor Local 222 which represents Oshawa workers. “This is something that needed to come to a head; it needed to be decided one way or another. The indication is we have a future, which is something we didn’t have a week ago.”

Staff writer Michael Wayland contributed.