TORONTO -- Canada's auto workers' union warned its Big Three employers on Tuesday not to cut labor costs in their struggle against the hot competition from Asian rivals that is hurting North American automakers' profits.
Canadian Auto Workers president Buzz Hargrove acknowledged the severe toll imports are having on the auto industry, but he said the union will focus on the company willing to offer the best chance to get what it wants with the least sacrifices.
"You can't whip the lead horse, every farmer knows that," Hargrove said at a press conference in Toronto as initial contract talks started with General Motors Canada. "You have to reward the lead horse. We (Canada) are the lead horse and we are entitled to make improvements."
The talks with GM will be followed by Ford Motor Co. of Canada on Wednesday and DaimlerChrysler Canada on Thursday, before one of the automakers is picked in September to negotiate a deal that will be a blueprint for reaching agreements with the other two.
Hargrove said negotiations are likely to be tough, with a union agenda that includes seeking better current and future pension benefits, increased wages and more vacation.
The autoworkers' three-year wage contract expires in September. In 2002, when GM Canada was picked as the target company, the threat of plant closures dominated talks and the CAW won big investment promises from the automakers.
GM Canada, which described its relationship with the CAW as being at a high point, said on Tuesday it understands the union's demands and will look for cost-savings elsewhere.
"I don't object to real wage growth and I don't object to changes in the pension as long as we find the cost offsets to fund those kinds of things," said Al Green, vice president of personnel and operations for GM Canada. "That will be our mantra during the bargaining."
The talks start on the day Ford, hurt by a steep loss in its North American operations, reported a 19 percent drop in second-quarter profits. It also warned that it expected its global automotive business to post a loss this year.
Ford, GM and the U.S. arm of German-based DaimlerChrysler have seen their margins squeezed by competition from Asian carmakers in the U.S. vehicle market and a slowdown in sales of sport-utility vehicles because of high gasoline prices.
Hargrove urged the industry to try to force open other markets to stem job losses and shrinking investments in the North American auto industry.
"It's bit like being at war and the other side has all the rockets, all the missiles, and all the guns," Hargrove said. "We're simply ducking and folding our hands over our heads trying to protect ourselves instead of launching an offensive in those markets and other parts of the world."