Unifor aims for more plant investments in labour talks with FCA
Securing investments at key plants is again Unifor’s top priority in the latest round of labour negotiations with the Detroit 3, this time with Fiat Chrysler Automobiles.
Negotiations between Unifor and FCA resumed this week after General Motors workers ratified a four-year contract on Sunday. Talks are centreing on the automaker’s Brampton, Ontario, Assembly Plant, which the automaker and industry analysts say is in desperate need of investments at its paint shop.
Unifor set a deadline of 11:59 p.m. Oct. 10 to reach a new contract agreement. The union would be prepared to strike if an agreement isn’t reached.
Intrigue surrounding the talks rose Tuesday when FCA said CEO Sergio Marchionne would skip his scheduled Thursday appearance at the Paris auto show. FCA would not say why Marchionne will skip, though the timing coincides with the labour talks, just as they did last year when he canceled an appearance at the Frankfurt auto show due to talks with the UAW in the U.S.
FCA, in a prepared statement, said: "FCA Canada is committed to working collaboratively with Unifor to develop an agreement that balances the needs of Unifor and our employees, while enhancing the Company’s competitiveness in Canada. As negotiations are now beginning in earnest, the Company can offer no further comment."
A potential deal with FCA and Unifor will be patterned off the new contract with GM, which includes $554 million in investments, the first wage gains for Canadian workers in about a decade and a defined-contribution pension plan for new hires.
Tony Faria, co-director of automotive and vehicle research at the University of Windsor, said that while it is likely that FCA will agree to invest in the Brampton plant, it is unclear how large that investment would be.
“Whether it’s going to be a patchwork that shores things up in the short term or a significant investment is the question,” Faria said.
Unifor President Jerry Dias, in an interview last week with Automotive News, said the Brampton plant is in dire need of investment. He reiterated the union’s vow to strike FCA should it not commit long term to the Brampton plant, as well as the Etobicoke Casting Plant and the Windsor, Ontario, Assembly Plant.
“If I really prioritize my biggest concerns in Canada, the GM Oshawa plant was the No. 1 problem,” Dias said. “The No. 2 problem is that there’s been a cloud hanging over Brampton.”
Unifor secured a key victory Sunday when about 65 percent of GM workers ratified the union’s tentative deal with the company. The deal includes about $400 million Canadian in investments at the beleaguered Oshawa, Ontario, assembly plant, which will continue producing the Chevrolet Impala and Cadillac XTS in addition to doing final assembly on the Chevrolet Silverado.
The contract also secures a $6,000 Canadian signing bonus for workers, in addition to two 2 percent wage increases over the life of the four-year contract and three $2,000 Canadian lump-sum payments. New hires will remain on a 10-year progression before achieving full wages, but workers will receive a raise each year under the new contract as opposed to wages being frozen in place for the first three years under the old deal.
Dias said last week that both FCA and Ford Motor Co. have expressed concerns to him over the deal’s economics.
“Both of them are concerned about the costs for the new employees,” Dias said. “Ford is making the argument that their business case for [investments in its Oakville, Ontario, assembly plant] was based on the previous wage grid. So they’re not exactly amused that the grid has been changed significantly. And Chrysler’s making the same argument, of course, about the investment that they just put in Windsor.”
FCA has spent about $3 billion to develop the new Chrysler Pacifica minivan and to retool the Windsor plant for its assembly. FCA said this year that it would hire about 1,200 workers at the plant.
Faria said the framework set in place by the GM contract could provide FCA with a few headaches when it comes to those new workers. He said Unifor and FCA could butt heads over whether these new hires should be put on a defined-contribution benefit plan.
Under the GM deal, new workers are on a defined-contribution pension plan, which shifts risk largely away from the employer and toward the employee. Under the contract, new hires must contribute 4 percent of their earnings toward the plan, which GM will match.
“FCA may well argue that [hires at Windsor] should be treated as new hires under the contract and be put on a defined-contribution plan,” Faria said, potentially setting up a showdown over pension plans.
Faria also said FCA, which has the smallest cash flow and highest debt load of the Detroit 3 automakers, is likely to try to negotiate smaller lump-sum payments than GM workers will receive. But he said pattern negotiations mean the wage gains Unifor secured with GM will be similar to those it will receive with FCA.
Ultimately, Faria expects FCA and Unifor will agree to a deal because the automaker can ill-afford to have Canada production shut down.
“I don’t think FCA wants or can afford a strike of any length at all,” he said, noting that a loss in Pacifica production could be damaging to the company. According to the Automotive News Data Centre, FCA has 67 days of Pacifica inventory available as of Sept. 1.
Should the two parties agree to a tentative deal without any major surprises, Faria said workers would be likely to ratify it. But he said he was “surprised” the GM ratification vote was not more lopsided than it was.
“It wouldn’t surprise me if FCA workers voted less enthusiastically for the contract,” Faria said.
Unifor represents about 9,750 FCA workers in Canada. The Brampton plant produces the Chrysler 300, Dodge Challenger and Dodge Charger; the Windsor plant makes the Dodge Caravan and Pacifica, while the Etobicoke plant builds aluminum die castings and pistons.