Cars and Drivers

GM, Canadian Labor Union Reach Deal; Ford and Chrysler Next

Paul Ausick

Published: September 20, 2016 8:05 am

Last Updated: January 13, 2020 3:23 am

Negotiations between General Motors Co. (NYSE: GM) and the company’s Canadian autoworkers union, Unifor, led to a tentative deal just as the clock ran out Monday night. Some 4,000 GM workers at two Canadian plants would have been affected by a strike while another 2,500 at a third plant would not have been.

As is common practice in the auto industry, the deal is expected to be a model for negotiations between Unifor and the Canadian operations of Ford Motor Co. (NYSE: F) and Fiat Chrysler Automobiles N.V. (NYSE: FCAU). There are more than 20,000 union autoworkers at the two companies’ Canadian plants.

A significant issue in the negotiations was further GM investment in its Canadian operations and commitments from the company. According to Automotive News, the deal included investments in the Oshawa, Ontario, plant which had been expected to build no more new vehicles after 2019.

In a statement issued early Tuesday morning, GM Canada said:

The agreement will enable significant new product, technology and process investments at GM’s Oshawa, St. Catharines and Woodstock facilities, placing those operations at the forefront of advanced manufacturing flexibility, innovation and environmental sustainability. This agreement is subject to member ratification. We will be working with government on potential support, and will provide further details on the investment at the appropriate time, while respecting Unifor’s ratification process.

Automotive News cited Unifor President Jerry Dias who said that GM has committed “hundreds of millions” of dollars to the Oshawa plant. The plant is expected to become the only facility in North America capable of building both cars and light trucks. Dias said, “The fear of a closure in 2019 is over. The facility clearly has a bright future.”

Among other issues included in the agreement is a wage increase for all employees, as well as a signing bonus and lump-sum payments. Some 700 temporary workers will also be added as full-time employees.

In exchange, GM gets a defined contribution pension plan for new employees, although current workers will continue to be covered by the legacy defined benefit pension.

Negotiations with either Ford or Chrysler will begin as soon as the union decides which automaker to tackle next. As with the GM deal, Unifor’s primary objective is to secure commitments from both to maintain and grow Canadian facilities. The union intends to demand investments by Ford in two engine plants in Windsor, Ontario, and Chrysler’s assembly plant in Brampton, Ontario.

GM shares traded up about 0.6% in Tuesday’s premarket session, at $31.90 in a 52-week range of $26.69 to $36.88. The stock’s consensus 12-month price target is $36.47.