If Unifor has trouble persuading the Detroit Three to invest more in Canada, it will largely be due to factors out of its control.
Unifor, which represents 23,000 or so Detroit Three workers in Canada, kicked off labour negotiations last week with General Motors, Ford Motor Co. and Fiat Chrysler Automobiles.
Union chief Jerry Dias has not been shy about characterizing this round of negotiations as critical to the future of the Canadian auto industry, saying it could cease to exist should it fail to secure new products and investments at GM’s Oshawa assembly plant, Ford’s Windsor engine plants and FCA’s Brampton assembly plant.
He’s not wrong.
Canada has lost more than 50,000 jobs in the auto sector since the turn of the century. That number would be sure to rise significantly should one or more of those plants – and the supplier factories that support them – close.
While he signaled last week that initial talks with Ford and FCA were productive, Dias said Unifor and GM are “miles apart,” though he’s confident the two sides will reach a deal by the Sept. 19 deadline. But the fact remains that it will be tough to do so, largely due to factors outside the union’s control.
New auto production capacity has been shifting away from Southern Ontario and the U.S. Midwest to Mexico for years, and it’s easy to see why: Far cheaper labour costs and access to numerous foreign markets thanks to more than 40 free-trade agreements, among other factors, have made Mexico more attractive for investment.
And it certainly does not help that the previous administration in Canada, led by former Prime Minister Stephen Harper, showed little interest in keeping the auto industry afloat in the country.
Canada, to be sure, has several advantages it can tout: Like the U.S. Midwest, it offers a work force that is more highly educated and trained than its Mexican counterpart, and its plants are among the most productive on the continent. And as Dias notes, a low dollar and a socialized health care system can help keep labour costs down, at least a bit.
But this southward manufacturing trend has been in place for years, and it’s apparent that the automakers don’t see Canada as the manufacturing hub it once was.
While Unifor can strike if GM fails to place new product in Oshawa, GM holds most of the leverage in this situation. It is the one that ultimately decides where product goes, and although GM has said it has made no decision about the future of the Oshawa plant, its fate does not look bright.
As of now, GM has no future product commitments for Oshawa, and Mexico’s competitive advantages are not going away any time soon.
That could spell trouble for auto manufacturing in Canada, even as Unifor fights to stop the bleeding.