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CAW wants product commitments from Detroit Three

Current contracts between the union and Detroit automakers expire in September

Published: July 11, 2012, 2:00 PM

The current contracts between the Canadian Auto Workers (CAW) union and the Detroit Three automakers – Chrysler, Ford and General Motors – are due to expire on September 17 of this year.

Some informal discussions between the parties are already under way, but formal negotiations are not expected to begin until August.

When they do, CAW president, Ken Lewenza says the union wants the Detroit automakers to make new product commitments to Canadian factories as part of any deal.

"The first thing we will try to do is get the investment necessary to secure future product," Lewenza reportedly told The Detroit News.

It promises to be a tough sell as circumstances have conspired to make Canada "the most expensive place in the world to build a vehicle," according to GM Chairman and CEO, Dan Akerson.

That's a big turnaround from a few years ago, when the low value of the Canadian dollar, relative to the US greenback, made building vehicles here a highly attractive proposition.

Now, with the loonie consistently at or near par with is the U.S. dollar, Canadian factories have become uncompetitive, particularly in comparison with new plants that have sprung up in Mexico and the southern U.S. states.

According to the Michigan-based Center for Automotive Research, Canadian auto workers are now paid about (US) $60/hour, including benefits, compared to about $50/hour for their American counterparts.

It's not just the change in exchange rate that has reversed Canada's previous cost advantage. The positive impact of this country's public medicare system were largely nullified by the last United Auto Workers (UAW) contract in the U.S., in which responsibility for the cost of unionized retirees' health care was transferred from the companies to a union-run trust.

The reality of Canada's lack of competitiveness has been reinforced by the closing of both Ford and GM assembly plants here since the last CAW contract was signed.

GM has announced the pending closure of another assembly line in Oshawa next year and Chrysler plans to cease production of one minivan model (Chrysler Town & Country) in Windsor.

All of which means that this summer's negotiations between the CAW and the automakers will be for very high stakes. It's no exaggeration to say that the outcome will be crucial to the future of the auto industry in Canada.