The agreement to cut labour costs is part of the automaker’s restructuring plan in order to qualify for government aid. If negotiations fail, the company loses additional money from the Ontario and Federal Governments.
Pension Remains Obstacle In Negotiations
The Canadian Autoworkers Union (C.A.W) and General Motors had reached a previous agreement saving the company $9/hr in operating costs, which was to be used as a pattern for the other two automakers. The union then negotiated a deal with Chrysler that saved that automaker $19/hr in operating costs.
The C.A.W. and General Motors (GM) returned to the bargaining table, with legacy costs such as pension the major issue. The automaker has so far refused to compromise on pension for its 25,000 retired workers.
The Ontario, and Federal Governments have maintained their goal was to have a viable auto sector. In remarks published on ctv.ca Prime Minister Stephen Harper continued stating that opinion saying his government would do what was needed: “We have said, if all of the stakeholders in General Motors are prepared to do the things necessary to ensure the long-run viability of the company, we are prepared to work in concert with government of the United States to make sure that we preserve our share of the auto production in this country. "
Complicating matters is a GM pension shortfall estimated to be around $7 billion. A clause brought in during the early 1990's declaring the automaker too big to fail means the Ontario government may have to pay the shortfall.
Premier Dalton McGuinty believes negotiations will succeed. In comments published on ctv.ca he was positive negotiations between the union and GM would yield results: “We’re convinced that with goodwill and determination we can arrive at a solution here.”
If G.M. and the C.A.W. don’t reach a deal, the automaker could liquidate its assets and close its Canadian operations. Harper has not said whether his government will help Ontario pay for the pension shortfall.
Union Says GM’s Demanding Too Much
According to The Canadian Autoworkers Union General Motors is being greedy. In comments published on cbc.ca Union President Ken Lewenza said GM was asking too much: “There’s no way we can possibly reach those expectations, but we will continue to bargain and work as hard as we possibly can to provide the security for our G.M. membership both active and retired.” The union has reportedly offered the same deal as Chrysler.
If the two sides fail to reach an agreement G.M will be forced to liquidate its assets. The company still hopes it can resolve its financial problems without claiming bankruptcy.
