Magna International Inc. Chairman Frank Stronach has agreed to set aside years of adversarial relations with the Canadian Auto Workers union and open 43 Canadian parts plants to organizing drives.
In a statement issued today, Magna said the CAW would be welcome to organize Magna plants in exchange for a no-strike pledge and maintenance of a culture that pays workers based on financial and operational performance.
About 18,000 hourly workers in Canada could be affected by the decision.
The traditional, confrontational model of labor relations is unproductive and wastes energy that would be better focused on creating the conditions which would be fair to employees and would ensure that Magna remains competitive, Stronach said in the statement.
Magna intends not to stand in the way of CAW organizing, but workers must approve representation plant by plant, the statement said.
With this agreement, Magna and the CAW will develop a new way of working together, CAW President Buzz Hargrove said in a statement. It will strengthen the CAWs ability to support auto parts workers at an incredibly challenging time, but in a way that also strengthens Canadas auto industry.
For Magna, the effort makes sense for two reasons:
1. If Magna lands more business from unionized competitors to serve the Detroit 3, it may be pushed by customers to recognize the union to win that work.
2. The proliferation of two-tier wages for new hires has been accepted by the UAW in its contracts with General Motors and Chrysler LLC. Hence, Magna would be able to negotiate those sorts of competitive agreements with its unions.
U.S. plans unclear
Its not clear what Stronachs plan means for Magnas U.S. plants.
UAW President Ron Gettelfinger said today he met more than a year ago with Magna executives about the possibility of a neutrality agreement. The UAW has since been preoccupied with the Detroit 3 talks, he said after a meeting in which local UAW leaders agreed to take the new tentative Chrysler contract to the rank and file for ratification.
The plan grew out of a Stronach initiative in the fall of 2005 to reach a framework of fairness. It is designed to help Magna improve productivity and labor relations in the face of growing offshore competition.
According to the Magna statement, key terms of the deal include:
- Preservation of Magna's fair enterprise culture, including the sharing of the companys financial success through equity ownership
- Comprehensive no strike, no lockout provisions with unresolved collective bargaining issues to be settled through arbitration
- Dispute resolution processes that preserve Magnas open-door process, fairness committees, employee hot lines and employee advocates
- Competitive wage and benefit principles
- Tying annual wage adjustments to a manufacturing inflationary index with plant-specific performance measures and competitive considerations
- Secret ballot voting on workplace issues
- Depoliticization of the workplace and labor-management relations.
Membership would swell
The deal would give the CAW access to thousands of additional members. The CAW, like the UAW, has seen its membership at the Detroit 3 plunge over the past two decades.
Stronachs plan is a 180-degree turn for Magna. In a 1999 interview, Stronach said that if unions wanted a role in the business they should buy a plant and run it exactly as they wish.
Magna has said the current labor-relations systems in North America is the auto industrys biggest handicap.
Stronach called for a new framework of fairness that would include profit-sharing instead of rigid wage formulas.
In an earlier agreement, workers at a Magna plant in Windsor, Ontario, gained the right to strike after six years.
Organizing Magnas plants will not be a cakewalk for the CAW even with Magnas plans to take a hands-off approach. Magnas plants tend to be relatively small, in rural areas, and its employees enjoy profit-sharing -- issues likely to complicate a union drive.
Magna, of Aurora, Ontario, ranks No. 4 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $23.88 billion in 2006.