GM’s $421 Million Investment Deal Wins Approval By Canadian Union

September 26, 2016, 5:48 AM UTC
General Views of General Motors Co. Oshawa Assembly Plant
The General Motors Co. (GM) assembly plant stands in this photo taken with a tilt-shift lens in Oshawa, Ontario, Canada, on Monday, Aug. 8, 2011. General Motors of Canada Ltd. will pump $2.535-billion into a trust fund that will finance health-care costs for its retirees, eliminating a key legacy cost that the auto maker said hobbled it in the fiercely competitive North American auto market, according to The Globe and Mail. Photographer: Brent Lewin/Bloomberg via Getty Images
Brent Lewin/Bloomberg via Getty Images

Canada’s Unifor union has ratified a deal with General Motors that will see C$554 million ($420.84 million) invested in local plants, the labor group said on Sunday as it prepares for related talks with Fiat Chrysler Automobiles NV.

The deal was ratified after 64.7% of workers voted approve it, Unifor said in an evening statement.

Unifor, which represents some 4,000 GM (GM) workers, reached the deal on Monday. The four-year deal granted job security and wage increases, but less favorable pensions than before.

GM’s Canadian arm also pledged to eliminate the C$2.3-billion deficit in the pension plans for unionized workers and retirees, the union said.

The ratification is expected to affect some 16,000 Unifor workers with Fiat Chrysler Automobiles NV (FCAU) and Ford Motor Co (F), whose contracts also are up for negotiation.

Under a process called patterned bargaining, Unifor’s agreement with GM will be used as a template for talks with the other companies, which are expected to agree to similar terms.

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Unifor has said it will negotiate next with Fiat Chrysler, and has set a tentative strike deadline of midnight Oct. 10.

Fiat Chrysler did not immediately respond to a request for comment.

Unifor President Jerry Dias said the union will be in talks with Fiat Chrysler on Monday, and that a significant issue will be the future of the company’s plant in Brampton, west of Toronto.

“We need some clarification,” he told Reuters by telephone late on Sunday afternoon, before the ratification results were released. “We need some answers. We ultimately need some commitment.”

Unifor has said it will ask Fiat Chrysler to upgrade an outdated paint shop at the plant, which makes the Chrysler 300 and Dodge Challenger and Charger sedans.

Dias said he does not expect talks with Fiat Chrysler to be easy, but it will be hard for the company to ignore the GM precedent.

GM spokesman Tom Wickham said in a statement the company is “pleased,” and that it is working toward “potential support agreements” with federal and provincial governments to “optimize the competitiveness” of its Canadian operations.

In the GM deal, the union gave up defined-benefit pensions for new hires. Dias has said concessions were necessary. Canada’s once-thriving auto industry has been losing investment to the Southern United States and lower-cost Mexico.