CAW contracts give the Detroit 3 options in Canada
Despite vast changes altering the global auto industry, it's good to see that labor and management in Canada can still hammer out their differences in productive ways -- unlike, say, politicians in Washington.
In other words, the system still works.
Even though Canadian Auto Workers President Ken Lewenza threatened to strike all of the Detroit 3 simultaneously, no one thought the union would be so foolish. And the CAW was not foolish.
The settlements were achieved with a tried-and-true pattern agreement, although while GM and Ford agreed to hire workers over the course of their contracts, Chrysler just agreed to maintain the number of shifts at its Canadian factories.
While workers won bonuses and more jobs, analysts say that over time the agreements, which can reduce wage and pension costs, could make Canada a more competitive place to build and export automobiles by lowering total labor costs.
Lower labor costs give General Motors, Ford Motor Co. and Chrysler Group the option of sourcing more vehicles in Canada for the North American market.
For Canada, balancing automotive trade with its biggest trading partner has been a challenge. The 1965 Canada-United States auto pact was supposed to accomplish it. So were the 1989 Canada-United States Free Trade Agreement and the broader 1994 North American Free Trade Agreement.
All three worked for a while. But currency fluctuations, changes in consumer preferences and advancements in manufacturing technology can prompt automakers to re-source parts, components and vehicles in ways not foreseen by diplomats who write treaties.
The four-year labor pacts forged by the CAW and the Detroit 3 should help level the playing field by reducing the cost disadvantage to producing cars and trucks in Canada.