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WSJ(3/26) CAW Rejects Big Three's US Agreements
03/25 7:39 am (DJ)
Story 8223 (F, GM)
(From THE WALL STREET JOURNAL)

By Jeff Bennett and John D. Stoll

The head of the Canadian Auto Workers union signaled he plans to take a hard line against wage concessions in contract talks with Detroit's Big Three auto makers later this year, even though labor costs are now more expensive in Canada than in the U.S.

CAW President Buzz Hargrove said his union "firmly rejects" the kind of sweeping concessions and lower wages for new hires that the U.S.-based United Auto Workers union accepted last year.

"This will be the hardest negotiations we have had," he said. The auto makers, he added, are "going to fight like hell to get every penny they can out of us. That's the nature of the beast."

It is unclear how much leverage the CAW, which represents about 45,000 auto workers, will have. General Motors Corp., Ford Motor Co. and Chrysler LLC all have excess manufacturing capacity in North America and may have to close additional plants.

GM spokesman Stew Lowe said that the auto maker is optimistic heading into talks to replace its current contract, which like those with the other auto makers expires Sept. 16, and is not prepared to comment on specific demands. He said that GM's hourly-worker benefit costs rise about 10% annually.

"You have to look at every piece of the business and leave no stone unturned," Mr. Lowe said.

Detroit's Big Three consider Canada a key cog in their manufacturing footprint. Among other important products and parts, GM's redesigned Chevrolet Camaro, Ford's midsize crossover sport-utility vehicles and Chrysler's 300 sedan and many of its minivans are made there.

For years, labor costs in Canada were considerably lower than in the U.S., mainly because of a weaker Canadian dollar. But the Canadian dollar has strengthened over the past six years and is now above the U.S. currency.

Mr. Hargrove acknowledged CAW labor costs are now slightly higher than those of the UAW, and that the gap will widen as the auto makers take advantage of the cost concessions they won in the new contracts hammered out with the UAW last fall.

The UAW agreed to let auto makers pay new workers in certain jobs $14 an hour, almost half of what veteran workers get. The UAW also agreed to let the companies set up union-managed funds to cover the cost of health care for retirees.

Mr. Hargrove pointed out that Canada has a national health system, and Canadian plants are 10% more productive than U.S. plants.

He said the Canadian government has done a poor job in setting a labor-friendly agenda. At the same time, U.S. auto makers have focused significant effort on paring labor costs, including benefits and wages.

The U.S. auto makers are losing market share and billions of dollars in North America.Mr. Hargrove said he understands the need for further cost relief in Canada and promised to "find pragmatic solutions to real world problems." But, he said the CAW is willing to strike before it agrees to lower wages for some workers.

(END) Dow Jones Newswires
03 -25 -08 1939ET