Photographer: Jeff Kowalsky/Bloomberg

GM to Move Work to Canada From Mexico in Labor Deal, Union Says

  • Agreement includes GM investment in Oshawa, St. Catharines
  • ‘Turns tide of what has transpired in the auto industry’

Canada’s auto union reached a tentative agreement with General Motors Co. that the labor group says secures production, saves jobs and stems a wave of investment to cheaper locations such as Mexico.

GM will invest C$400 million ($300 million) to upgrade its flex line and build a new vehicle in Oshawa, Ontario, and C$120 million in its engine and transmission plant in St. Catharines, Ontario, according to a person familiar with the deal. The investment would render Oshawa the only plant in North America to build both trucks and cars, easing fears of potential closure in 2019, said Jerry Dias, president of Unifor. The agreement would also stabilize the future of St. Catharines by moving work from Mexico, he said.

“Today’s announcement really turns the tide of what has transpired in the auto industry in this country for over a decade,” Dias said at a press conference in Toronto after a deal was reached early Tuesday, avoiding a strike.

GM will work with the government on potential support and provide further details on the investment after respecting Unifor’s ratification process, Jennifer Wright, a spokeswoman for the Detroit-based automaker, said in an e-mailed statement. Representatives for the union and GM declined to comment on the amount of investment.

Wage Increases

Unifor, which represents more than 23,000 auto workers at GM, Ford Motor Co. and Fiat Chrysler Automobiles NV, made securing investment and production at Canadian plants the focus of negotiations amid the steady loss of jobs to regions such as Mexico and the U.S., even amid near-record North American auto sales and a weaker Canadian dollar.

“This is the first time that I can remember where there has been a migration of product from Mexico to Canada,” Dias said. A vote on the tentative agreement, which also includes wage increases across the board and signing bonuses, is scheduled for Sunday.

The union has agreed to move to a defined-contribution pension plan for new hires, moving away from a hybrid plan that combined defined benefits and defined contributions, Dias said.

Output Falls

GM plans to close one of its two Oshawa production lines next year and wasn’t committing to production of new vehicles beyond 2019 before the labor negotiations finished, putting 2,500 jobs at stake. The closure is still planned and the union is concentrating on securing investment on the remaining line, Dias said. The plant makes the Chevrolet Impala and Equinox vehicles, along with the Buick Regal and Cadillac XTS.

Canada’s auto output fell to 13 percent of North America production last year, from about 17 percent in 2009, according to data from Ward’s Automotive Yearbook. Output in Mexico rose to about 20 percent during the same span. Canada lost more than 53,000 automotive jobs from 2001 to 2014, according to a study by the Automotive Policy Research Centre.

The tentative agreement, which will serve as a template for Ford and Chrysler, will add jobs in Canada and not lead to any losses, Dias said.

Philip Proulx, a spokesman for Canadian Innovation Minister Navdeep Bains, said GM could submit a request for project funding under the government’s auto innovation fund. "We will look closely at any request they could submit.” he said.

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