GM’s Union Workers in Canada Vote to Ratify Agreement

General Motors Co. (GM) employees represented by the Canadian Auto Workers ratified a four-year contract that follows a union agreement with Ford Motor Co. (F) that reduces the cost of new workers while committing to some new jobs and investment.

The vote was 73 percent in favor, the Toronto-based union said yesterday in an e-mailed statement. The agreement covers about 5,600 GM workers in Ontario, including those from a vehicle-assembly operation in Oshawa that makes the Chevrolet Impala and the Cadillac XTS, as well as from a plant in St. Catharines that makes V-8 and V-6 engines.

Talks between the CAW and the three major U.S. automakers began last month with the companies saying labor costs in Canada are too high and the union facing job cuts.

Ford was the first company to reach an agreement on Sept. 17 that set a pattern exchanging most cost-of-living raises for bonuses, extending the amount of time for a new employee to reach full pay, and shifting new workers to a cheaper retirement plan. Detroit-based GM reached a similar accord Sept. 20 and Auburn Hills, Michigan-based Chrysler Group LLC did so this week.

Under the new contract, GM workers will receive C$2,000 ($2,039) lump-sum payments in the contract’s second, third and fourth years in lieu of cost-of-living raises, as well as a C$3,000 ratification bonus. The hourly rate for new hires will fall to C$20.40 from C$23.80 and the time to reach a base salary of C$34 will now be 10 years, instead of six.

Retirement Plan

The contract alters retirement plans for new hires, moving half the pension into a defined-contribution plan where workers pay a set amount into a pension fund while the eventual payment depends on the fund’s performance. The rest will come from the union’s defined-benefit plan, which guarantees a certain amount at retirement, and obliges the company to make up the shortfall if the pension fund underperforms.

The GM accord also calls for an Oshawa plant that had been set to close in 2013 to remain open one more year and another Oshawa factory to add a third shift of 900 workers. An engine and transmission plant in St. Catharines, southwest of Toronto, will get 100 new jobs.

The agreement will create, maintain or extend a total of 1,750 jobs and calls for GM to invest C$675 million in its Canadian plants, the union said at a Sept. 20 news conference.

A ratification vote for CAW members at Chrysler is scheduled for Sept. 29 and Sept. 30.

To contact the reporter on this story: Ari Altstedter in Toronto at aaltstedter@bloomberg.net

To contact the editor responsible for this story: Jacqueline Thorpe at jthorpe23@bloomberg.net

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