Josh Rubin, Toronto Star
Oct. 16, 2019

The Canadian auto industry is breathing a tentative sigh of relief after the apparent end of a month-long strike at General Motors in the U.S.

GM and the United Auto Workers reached a tentative deal Wednesday.

The deal, which the UAW said offers “major gains” for workers, was hammered out after months of bargaining but won’t bring an immediate end to the strike by 49,000 hourly workers in the U.S. They will likely stay on the picket lines for at least two more days as two union committees vote on the deal, after which the members will have to approve.

It’s been a long-time coming for Canadian auto parts manufacturers, said the head of the industry’s main trade association.

“The word I’m hearing mostly is ‘finally,’” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association. With some estimates suggesting the strike has cost GM $2 billion (U.S.), Volpe said his members have also been feeling the pinch.

“Nobody I know is going out of business because of this, but it’s put undue strain on a lot of places at a time when they can least afford it,” said Volpe.

While ratification is traditionally a given once two sides reach an agreement, Volpe and his members aren’t letting their guard down yet. In 2015, UAW members rejected a deal their leadership had reached with the Fiat-Chrysler. That’s weighing on his mind.

“If it hadn’t been for 2015, I’d be really optimistic, but I’m not taking anything for granted. We’re not out of the woods yet,” said Volpe.

Volpe, who estimates as many as 10,000 people in Canada work for companies who deal with GM, laid the blame for the length of the dispute on both GM and UAW.

“People are calling this a generational strike. Any time there’s a strike of this length, it means both sides underestimated the other’s resolve,” Volpe said.

A tentative deal might also buy some more time for the 2,600 workers at GM’s soon-to-be closed assembly plant in Oshawa, suggested auto industry analyst Dennis DesRosiers.

“If this had gone on another two or three weeks, GM might’ve just said ‘let’s just keep Oshawa closed,’” said DesRosiers.

Work in Oshawa ground to a halt during the U.S. strike because many of the parts being used came from GM’s plants in the U.S. The Oshawa assembly plant is already due for a permanent idling by the end of the year. But that closure might get pushed later, DesRosiers argued.

“They might’ve actually bought an extra month for Oshawa now, just to help build inventory back up, assuming the demand is there,” DesRosiers said.

Once a deal is ratified, it won’t take long for Canadian parts manufacturers — or idled workers in Oshawa — to get back on the job, DesRosiers said.

“It could be a few hours for some places. Others, it might take longer to get the supply chain moving again, but I can’t see that taking more than a week or 10 days at the very most,” said DesRosiers.

Terms of the tentative four-year contract were not released, but it’s likely to include some pay raises, lump sum payments to workers and requirements that GM build new vehicles in U.S. factories.

Analysts say workers probably lost on average more than $3,000 in wages and had to live on $250 per week in strike pay.

“Everybody lost out on this. We did, they did,” said Mark Nichols, who works at GM’s transmission plant in Toledo, Ohio.

Nichols, who thought the strike would last only a week or two, said he’s ready to get back to work because his savings are running low. “I just hope it gets done,” he said.

The deal now will be used as a template for talks with GM’s crosstown rivals, Ford and Fiat Chrysler. Normally the major provisions carry over to the other two companies and cover about 140,000 auto workers nationwide. It wasn’t clear which company the union would bargain with next, or whether there would be another strike.

Early on, GM offered new products in Detroit and Lordstown, Ohio, two of the four U.S. cities where it planned to close factories.

It’s unclear if GM will be able to make up some of the production lost to the strike by increasing assembly line speeds or paying workers overtime. Many GM dealers reported still healthy inventories of vehicles even with the strike.

If all of the committees bless the deal, it’s likely to take several days for GM to get its factories restarted.

GM and the union have been negotiating at a time of troubling uncertainty for the U.S. auto industry. Driven up by the longest economic expansion in American history, auto sales appear to have peaked and are now heading in the other direction. GM and other carmakers are also struggling to make the transition to electric and autonomous vehicles.

Meanwhile, President Donald Trump’s trade war with China and his tariffs on imported steel and aluminum have raised costs for auto companies. A revamped North American free trade deal is stalled in Congress, raising doubts about the future of America’s trade in autos and auto parts with Canada and Mexico, which last year came to $257 billion.

Amid that uncertainty, GM workers have wanted to lock in as much as they can before things get ugly. They argue that they had given up pay raises and made other concessions to keep GM afloat during its 2009 trip through bankruptcy protection. Now that GM has been nursed back to health — earning $2.42 billion in its latest quarter — they want a bigger share.

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