GM draws battle lines for upcoming contract talks

A General Motors logo is viewed at the North American International Auto Show in this January 12,...

A General Motors logo is viewed at the North American International Auto Show in this January 12, 2009 file photo in Detroit, Michigan. (AFP PHOTO/Stan Honda)

Terry Davidson, QMI Agency

, Last Updated: 10:47 AM ET

TORONTO - One of Canada's Big Three automakers has drawn its battle lines in anticipation of "tough" negotiations with the Canadian Auto Workers union, according to a source close to the bargaining.

Negotiators for General Motors Canada are heading into collective bargaining with the CAW this week determined to continue GM's post-recession rebound in the face of "growing labour costs," increasing production costs and a rising exchange rate.

GM's current contract with its employees, which was signed in 2008 (and amended in 2009), is due to expire at midnight on Sept. 17. GM of Canada, along with Ford of Canada and Chrysler of Canada, begin negotiations with the country's largest private-sector union Aug. 14.

"From a financial perspective, we're in a different place compared to when we did this in 2008," said the source, referring to the global recession that shook the North American auto industry.

"We can't add any fixed costs to our balance sheet, and we need to keep this focus as we head into discussions with our CAW partners," he said, adding that growing labour costs be a primary topic for GM during negotiations.

The source also talked of GM's preference for providing employees with profit sharing rather than annual pay hikes, and the need for flexibility around pay rates for new hires.

GM announced its 10th consecutive quarter of profitability earlier this month.

GM Canada, which will cut 2,000 jobs when the company shuts down its Chevrolet Impala and Equinox assembly line at its Oshawa, Ont., plant in June 2013, received over $10 billion in bailout money in June 2009 from the Ontario and Canadian governments. GM Canada represents 16% of General Motors' North American production.

The source called Canada "the most expensive place in the world to assemble a vehicle." He declined, however, to discuss dollar figures when asked by a reporter what it costs to assemble a vehicle in Canada versus the U.S., choosing only to say that GM's "total hourly compensation package needs to be competitive in North America."

This view is in stark contrast to a report the CAW published in April stating that Canadian auto workers' wages don't go as far as those of unionized workers in the U.S. due to higher consumer prices north of the border.

"Canadian auto workers have less real consumption possibility through their wage than our American equivalents do," CAW economist Jim Stanford told reporters at the time, insisting it is a "stereotype" that auto workers in Canada are "ridiculously expensive."

A history of labour disputes

Some examples of CAW labour disruption at GM Canada:

October 1984: Around 36,000 Canadian Auto Workers' members strike against GM Canada over the company wanting lump-sum employee payments and profit sharing rather than built-in wage increases. While this was a concession the American-based United Auto Workers eventually made, its Canadian counterparts would not, causing the split between the UAW and the CAW.

October 1996: About 26,000 unionized GM Canada workers pull the trigger on a strike over job outsourcing. After three weeks, the parties reach an agreement that beefed up union job protection.

September 2007: Around 73,000 UAW members stage a nationwide strike against U.S.-based General Motors after a breakdown in negotiations over job security, plant investment and vehicle production targets. The strike lasted only three days, but a ripple effect was felt as GM Canada shut down two Oshawa, Ont., plants for the duration of the strike.