Auto analysts split on Unifor's strength in GM contract talks

Two auto industry analysts are split on Unifor's decision to pick General Motors as the target company in upcoming negotiations for a new collective agreement.

The union, whichrepresents more than 23,000 Canadian autoworkers, announced its decision to bargain with GM firstTuesday morning. Isthis a move from a position of strength or weakness for the union?

• Unifor selects General Motors as its bargaining target
• GM workers in Oshawa, Ont. brace for 'the fight of our lives'
• Invest in Canada, Unifor tells Detroit Three ahead of contract talks
• Unifor expects Ford to bring new product to Essex Engine

GM remains non-committal about the future of its Canadian operations. The capacity of itsOshawa plant could be reduced in 2017 and could close completely in 2019. Heading into this round of negotiations, the company maintained it would not recommit to Canada until after a deal had been signed.

Unifor national president Jerry Dias says the union will not sign any deal without that commitment to new product, creating the possibility for what he called a "dust-up."

At a press conference announcing the decision to pick GM, Dias said the union's demand for new product can be considered "a line in the sand."

Oshawa plant 'doomed'

Ian Lee, a business professor at Carleton University in Ottawa, sees this positionas a last desperate act in a losing battle to save the plant.

"I think the plant in Oshawa is doomed," Lee said. "I think this is an act of desperation on [Unifor's] part because they've run out of runway, they've run out of options."

The Canadian auto sectorlost 53,000 jobs in the last 15 years, according to the Automotive Policy Research Centre. Work is shifting to plants in Mexico and the southern U.S. notably with Ford Motor Co. deciding to build a $2.5-billion engine plant in Mexico earlier this year.

Lee expects the trend of Canada losing out to these lower-cost jurisdictions to continue despite Unifor's positioning at the bargaining table.

"The ship has sailed," he said. "When a multi-billion dollar plant has gone into Texas or Tennessee or Georgia, automakers are not going to close that plant down to come to Canada."

Lee said there has been a failure of both Unifor and the Ontario government to recognize it is too expensive for companies to build vehicles in Ontario.

Uniforhas bargaining power in negotiations

Dennis DesRosiers, an automotive industry consultant in the Toronto-area, does not see this negotiationin the same light. He saysUniforhas significant bargaining power with GM.

GM builds the Chevrolet Impala, Buick Regal, Cadillac XTS and Chevrolet Equinox in Oshawaand the Chevrolet Equinox and GMC Terrain at its CAMI Assembly plant in Ingersoll, Ont.

But the engines, transmissions and powertrains built at St. Catharines Powertrain are too important for the company to withstand a long strike, DesRosiers said. Among other products, theplant builds V-8 engines used in two of its best-sellers the Chevy Silverado pickupand the Chevrolet Camaro.

"If Canadians don't produce the engines, GM doesn't produce the cars in the United States," DesRosiers said. "There's going to be an awful lot of rhetoric at the table, but at the end of the day Unifor is going to be the perceived winner in all this."

Unifor says it has a strong strike mandate from its members and has promised to strike if a deal isn't reached by Sept. 19. DesRosiersdoesn't think it will come to that though.

"It would be really painful for GM to shut down Canada for any length of time if Unifor were to take a strike," DesRosiers said. "Someone is going to have to hold their nose here and I suspect it's going to be more on the GM side than the Unifor side."