Unifor President Jerry Dias’ top goal in negotiations with General Motors was to buck a trend: the shift of auto investments away from Canada toward Mexico.
On that, it appears he will be successful. But how?
Should GM workers ratify the four-year tentative deal on Sunday, the flex line at the Oshawa, Ontario, assembly plant will be given a new lease on life, reportedly with final assembly on pickups from Indiana. And the St. Catharines, Ontario, engine and transmission plant will receive more production on an engine currently produced in Mexico.
Altogether, Unifor says GM is expected to invest $554 million in those operations.
Several details about the deal, including the logistics of shipping pickup bodies more than 400 miles from Fort Wayne to Oshawa, are still unknown. And while one of Oshawa’s lines will close next year, it appears Dias was largely successful in stopping the bleeding of jobs away from Canada, at least temporarily.
But in order to buck that trend, he had to give in to another: the shift away from traditional pension plans.
The tentative deal with GM would put new hires on defined-contribution plans, which shift much of the costs and risks of pension plans away from the company and toward workers.
Dias said Unifor negotiators had no choice but to give up defined-benefit pensions. He said GM hasn’t hired over the last four years largely because of the costs and risks associated with the plans and said it was worth giving up traditional pensions in order to save and secure Canadian auto jobs.
“It boiled down to if we wanted the investment, then the (defined-benefit) plan had to go,” Dias told Automotive News on Wednesday.
He acknowledged that Canadian auto workers are the “last standing” on defined-benefit plans, and it’s true.
“There’s been an erosion of traditional pension plans” in recent years, said Kristin Dziczek, director of the Industry, labour and Economics Group. Unifor’s U.S. counterparts at the UAW have been forced to make concessions on pensions, as have other North American unions in other industries.
Ford, FCA implications
Because the GM deal, if approved, will set the pattern for subsequent deals with Ford Motor Co. and Fiat Chrysler Automobiles, similar pension concessions appear likely to become the new normal across the Canadian auto industry.
And for automakers such as GM, that could be a financial godsend. That’s because Canada’s auto manufacturing base is old, frankly. About 95 percent of workers at the St. Catharines plant are eligible for retirement, for instance, while more than half can say the same at Oshawa.
As these legacy workers retire, either on their own or through voluntary buyouts, GM is set to gain by shouldering fewer liabilities and risks associated with pensions.
While the concession will no doubt be a tough pill to swallow for some in Unifor, it was a savvy move on Dias’ part. As he said, GM had no interest in hiring in Canada under the old pension plan.
A defined-contribution plan, despite its potential drawbacks for workers, makes Canada a more attractive place to invest in an increasingly global marketplace. Without the concession, it’s possible there would’ve been no deal to secure Oshawa or St. Catharines, further contributing to Canadian auto manufacturing’s death spiral and potentially leading to thousands of job losses.
But thanks to concessions on both sides, that might not be the case. Factoring in governments at the federal and provincial levels that appear eager to work with the industry, Canada might now find itself in decent shape to secure future investments -- and good-paying jobs -- from automakers and suppliers.
And that’s just what Dias wanted.