iPolitics ebook: Labour relations in Canada

Labour relations in Canada

’84 offers no headlights as Big Three, autoworkers face off Ontario’s latest labour battle heats up this week, with contracts, costs, and cars on the line. Beginning on Tuesday, the Canadian Auto Workers sit down in Toronto with Ford, General Motors and Chrysler to negotiate new three-year contracts.

The last time that Canada’s autoworkers negotiated with a resurgent Big Three on the heels of a global recession, it was 1984. It was a different era – and not just because of the short-shorts, cigarettes, and Ford Tempos on the auto plant f loors.

Changes in the business climate and in union-government relations have forced significant changes in Ontario’s labour movement that mean this year’s negotiations will be nothing like they were the year the CAW was born.

Former CAW National President Buzz Hargrove was an administrative assistant to Robert White, the head of the UAW’s Canadian operations, in 1984.

It was a year of incredible triumph for Canadian autoworkers – the union negotiated a new round of wage increases for employees, rejecting the profit-sharing formula that had been accepted by the UAW in the United States. The deal took four months of talks, culminating in a 12 day strike by GM’s 36,000 Canadian employees. It was the catalyst for Canada’s split from the UAW and the formation of the CAW. Hargrove looks back on the time with some nostalgia, remembering the union militancy, the hands-off policy of governments and the strength of manufacturing during the Auto Pact years.

“Circumstances have changed incredibly,” he said. “We’ve got to fight tooth and

nail to maintain past gains.”

The 1984 proposal is on the table again in 2012 – the companies want to pay profit-based wages. But the drama of 1984 – with its wildcat strikes and uncompromising negotiators – is unlikely to be repeated this decade.

“This is not 1984. We can’t simply say no and if you insist, we’re going to strike your plants. There has to be a different approach here,” Buzz Hargrove said.

“This is not 1984. We can’t simply say no and if you insist, we’re going to strike your plants. There has to be a different approach here,” Hargrove said.

Mike Moffatt, an economist at the University of Western Ontario, said the union has come to realize large wage increases are no longer sustainable. The departure of Sterling Trucks and Electro-Motive from Ontario have forced the union to reexamine its expectations.

“Over the last five or ten years, the CAW in general are just looking to preserve what they have. They’ve kind of seen the writing on the wall. Manufacturing jobs are starting to decline in Ontario and are starting to move to the U.S. where labour laws are a little more lax. So they’re really trying to prevent that slide.”

Hargrove now teaches at Ryerson University, and says there are a few things that sparked the evolution of Ontario’s labour movement. Today, when the two sides sit down, it’s the companies that have

Big Three, CAW contract talks to focus on Canadian competitiveness the upper hand, in the auto sector and beyond.

“It’s very concerning to me that the companies have such enormous power today,” he said. “They can now put demands on the table that they put on the table 20 years but couldn’t win. Today they can win. There’s a whole different set of rules today.”

Hargrove lays the blame on the government – both for the escalation of free trade agreements, and for recent interventions in the bargaining process.

“Anytime labour has any kind of power, government step in and take it away.”

That makes for a whole different environment, he said. It gives employers confidence and “scares the hell out of the workers.” When it comes to the Big Three, General Motors and Ford in particular have the ability to shift production to their U.S. facilities, shrugging off a short strike.

All of this has taken a toll on the union membership, according to current CAW National President Ken Lewenza. At GM and Ford, employment levels have decreased almost 50 per cent in the last 15 years, between restructuring, downsizing, and closures.

“When you experience that constant restructuring, that constant downsizing, and see the population of the workers in the auto industry shrink, the natural response is much different than it was in the 80s. We don’t have the same market share, the companies have many more options, and it’s a real challenging time for workers that manufacture and rely for export.”

Lewenza blames the Canadian dollar for the current situation, inflating the cost of doing business in the country.

Canada is now labelled by the

companies as the most expensive labour in the world. That partly goes back to 1984, when it negotiated a better paying contract with the Big Three than the United States.

But it’s also the result of external forces that the CAW had no control over, according to Kristin Dziczek from the Automotive Research Group in Michigan.

“They don’t negotiate what the currency rate is. They don’t negotiate what health care costs are in other countries, or what companies are doing to improve productivity across the range of their plants.

These are external forces that weigh on their negotiations this fall.”

Queen’s University labour analyst George Smith said in 2012, both the companies and the unions are forced to take a more mediated approach in talks.

“I think there’s a different tenor to negotiations. It’s not longer a winner take all situation. It’s obvious that even if you win in the short term – company or union – that in the long term, that could be a loss,” he said.

Smith added, “You’ve got to look at these things in the context of long-term survival and long-term health, of both the organization and the employee base.”

Between the decline of Canadian manufacturing, recent government intervention in contract talks, and the departure of big companies like Electro-Motive in London, the union has to tread carefully.

Hargrove maintains the CAW needs to fight – but only as much as the membership are willing.

“Those big changes have everybody worried about people trying to hang onto their job firstly and that always makes it very difficult for bargaining.”

There isn’t much that Stephen Harper and Dalton McGuinty agree on, but they both beamed at a recent announcement at Oshawa’s General Motors plant, sharing the stage with a brand new SUV. On July 24, GM announced an $850 million investment in research and development, part of its $10.5 billion bailout agreement with the federal and provincial governments in 2009. And everyone wanted in on the celebratory photo op.

“The ripple effects will be felt far and wide,” Harper told the crowd. “That is how

“This is nxot 84. We can’t simply say nonsist, we’re going to strike ye,” Hargrove said. we win in a competitive world.”

McGuinty praised GM for “your commitment, your perseverance, your groundbreaking ideas and willingness to do whatever it takes to fuel the continuing recovery.”

GM Canada President Kevin Williams assured them the company isn’t taking

this second chance for granted.

“Our gratitude is deep, and it’s driving us every day,” he said. “We’re excited for our future and the possibilities ahead.”

This is the new, cautiously optimistic face of GM, Ford, and – to a lesser extent – Chrysler. The Big 3 are in much better shape than they were just three years ago.

But that actually complicates the current automaker contract negotiations with the CAW. The talks get underway in Toronto on Tuesday and, if anything, profits make it more difficult to strike a deal, according to Kristin Dziczek, a director at the Center for Automotive Research in Michigan. That’s because profits create certain expectations from employees.

“There’s leadership and membership when you’re talking about negotiating a contract. You can negotiate anything at the table, but if it doesn’t get ratified, you don’t have an agreement. Historically, when a company’s fortunes are good, it is very difficult for the negotiators to come to anything that might look like a concession.”

The current contract expires at midnight on September 17 and CAW National President Ken Lewenza is expected to announce a strike target around Labour Day. In a late July interview, Lewenza said the internal meetings have been tough so far.

“We have an ambitious agenda, but at the same time common sense has got to prevail at the end of the day,” he said. “So far, the discussions have been very very tough and very difficult.” xMike Moffatt, an economist at the University of Western Ontario, thinks the CAW will try to hammer out an agreement with Chrysler first – because GM and Ford

could more easily withstand a strike – and then use what they gain in those negotiations to get a deal done with the other two companies.

Though there could be a short strike, he said workers don’t need to worry about a dramatic departure of any of the companies, Electro-Motive style. They’re too invested in Canada, he said, citing GM’s research and development announcement.

“It’s not a matter of them picking up and leaving, but when a new model comes out, where’s that new model going to be produced? Those kinds of things down the road.”

Looking at what the UAW and the Detroit 3 agreed to in their own contract negotiations last year, Dziczek says the key feature was flexibility, which the CAW will be asked to consider as well.

“I think that there’ll be a lot of push towards flexibility and towards meeting what companies call their competitive labour cost situation.”

Labour costs are higher in Canada than at any other Ford operation in the world, according to Ford’s vice president of communications, Lauren More. She warned that needs to change.

“Labour costs at Ford of Canada need to become competitive now to sustain its manufacturing operations in Canada and to position the company for consideration for future investments. We have the potential to either improve or erode Canada’s labour cost competitive position during these negotiations.”

GM Canada expressed the same focus on competitiveness in a statement from communications director Faye Roberts, who emphasized that even amid a

recovery, “The North American auto industry today faces extremely challenging competitive conditions.”

The only company who refused to comment for this piece was Chrysler.

Silence is golden in contract negotiations, according to Queen’s University labour relations professor George Smith. If rhetoric reaches a fever pitch in the media, that signals a strike. A media ban is an indication things are going well.

“If they stop the rhetoric on both sides, that allows them to find the settlement without having to save face because they’ve told the media, No way we’re going to agree to this.”

He said it’s a good thing if both sides go in willing to make concessions – even though the changes may be counter to the CAW’s original principles.

“I don’t think that’s an indication the labour movement is dying. Au contraire, I think it shows that they’re willing to adjust to circumstances at the time.”

But Lewenza did outline a few things that are off the table. Importantly, he says moving to a profit-sharing model, that would mean wages increase in good times and decrease in tough times, is a no-go.

“Reducing wages is not going to happen. We earned that over successive bargaining. Reducing pensions is not going to happen. And quite frankly, reducing health care benefits is not going to happen.”

Lewenza knows full well the companies will resist adding to their fixed costs, and doesn’t anticipate major gains.

“But again, we’re not going to, at this particular time, going to make any more sacrifices. We don’t have a lot of space,

but we’re going to make some tiny tiny progress.”

That progress might be a wage increase, or something as simple as a return of Christmas bonuses, which were cut in the recession.

The thing to watch for in 2012 is if the CAW can get promises that production of new models will happen in Canada, Moffatt said. That will keep the membership – and Ontario – happy.

“If they stop the rhetoric on both sides, that allows them to find the settlement without having to save face because they’ve told the media, No way we’re going to agree to this.”

“Not just the leadership of the unions but the members see the writing on the wall,” he said. “They see the figures, how many manufacturing jobs have been lost in Ontario. So if they can get some kind of guarantee that they will be able to produce in the future, I think they’ll be happy with that.”

“It would help the automotive industry in Ontario if they could get a promise that whatever they’re going to produce next is going to be produced in Windsor or Oshawa.”

The government’s close ties with the car companies has observers talking about whether they would get involved in an auto strike, should it come to that this fall.

That’s the topic of the next installment in this series.

Will government play third wheel in CAW, Big Three talks?

National President of the Canadian Auto Workers union Ken Lewenza, centre, speaks at a press conference flanked by Assistant to the CAW President Jerry Dias, left, and National Secretary Treasurer Peter Kennedy following a meeting discussing contracts with General Motors in Toronto, Tuesday. CP/Michelle Siu The federal government stayed up way past its bedtime when confronted with a pair of Air Canada labour disputes just before the March Break earlier this year. It was 1:30 a.m. when the Conservatives voted to force the disputes to binding arbitration and keep the planes flying.

“Our government took decisive action to ensure the economic recovery is not harmed and stays on course,” Raitt said in a statement announcing that the bill had become law.

It was the second time Air Canada employees had been sent back to work in a year. In June 2011, Raitt introduced legislation to force back to work the airline’s striking service employees, who are represented by the Canadian Auto Workers.

The growing number of examples of government intervention in labour strife has everyone wondering whether Raitt will see fit to get involved in this summer’s CAW-Big Three automaker talks. The negotiations enter their second day on Wednesday, beginning with a meeting between the CAW and Ford. On Tuesday, the union met with General Motors in the morning and Chrysler in the afternoon.

The stakes in 2012 are high — the North American companies are on the rebound, but Canada’s dollar is high and its costcompetitiveness is low. The future prospects of Ontario’s automobile plants are in

question.

The auto plants fall under provincial jurisdiction, and Raitt’s office said in a statement that the minister won’t be commenting on the negotiations.

“The minister continues to following the negotiation process and is interested in seeing the response from the province,” spokeswoman Ashley Kelahear said.

That’s good news for CAW National President Ken Lewenza. He believes Raitt will respect the constitutional boundaries.

“I think the federal government will watch it very closely. Needless to say, they have a significant investment in the industry,” he said. “But the auto talks are of provincial labour responsibility. So the federal government can’t order workers back to work or limit our bargaining skills.”

Former CAW National President Buzz Hargrove is less confident Ottawa will take a hands-off approach, after seeing the government intervene in the Air CanadaCAW dispute last year. He wonders whether they’ll come up with a justification, if push comes to shove.

“I would not be a bit surprised. They’d have the argument that, ‘We’re part owners here, we put a lot of money in to help the companies through a tough period and therefore we’re getting involved.’ ” Ironically, the government would almost have a better justification for getting involved in an automaker dispute. George Smith, a Queen’s University labour relations professor, noted the economic health of the Big Three is, arguably, more important than Air Canada’s. But constitutional law dictates that it’s not Raitt’s place.

“I’m sure there will be back-room discussions, but all of this will be handled

under the Ontario Labour Code with Ontario conciliators and an Ontario head of government who’s been very reluctant to get involved,” Smith said.

Just as Ontario Premier Dalton McGuinty steered clear of this winter’s Electro-Motive dispute in London, he’s unlikely to play a role in an autoworker strike — even if the federal Conservative government wishes he would.

“So far, the Conservative government has shown a reluctance to put pressure on the provincial government,” Smith said.

“They’ve respected those constitutional boundaries.”

Smith added that a fast and amicable settlement would be best for both the union movement and the companies. Ontario PC Leader Tim Hudak recently authored a white paper that proposes sweeping labour law changes in the province, an effort to strip power from the unions and make Ontario more competitive. Public disputes could help him to build momentum.

“If there is a protracted strike and if there is a demand, there’s no question that government intervention is on the table now, because of what the feds have been doing. And that may play into Hudak’s hand.”

Observers are divided on how likely a strike is, but no one is predicting a major shutdown at this point. The average number of hours an employee spends on strike has declined markedly over the last 30 years in Canada, from 10.6 hours in 1976 to 0.3 hours in 2010.

“A strike is the last tool. We have to prepare for it, build solidarity in membership to prepare for it,” Lewenza said. But our objective is to get the job done, and

hopefully we can get the job done without government interfering. But you never know today.”

Mike Moffatt, an economist at the University of Western Ontario, thinks government intervention would only be likely in the event of a prolonged strike.

“Maybe if there were a strike at Chrysler that was running for three, four, six months, at that point the government may decide to intervene. But until then, I think they’re going to take a hands-off approach.”

The CAW is increasingly conscious of the need to balance their demands with the realities of 2012, given the current government climate. They are starting to look at other ways of staying relevant and holding on to public goodwill. In the works is a merger with the CEP. The CAW has also drafted a National Auto Policy that proposes best practices from around the world.

Hargrove said what needs to happen is more community involved like what happened in London during the Caterpillar lockout, when the CAW went to City Hall and got the mayor on side, and handed out leaflets to ordinary people, getting other union workers to support them.

“We got to do a better job working with community groups. We’ve got to be more supportive of social action groups that are working on behalf of those that have no power in society.”

But it doesn’t always go smoothly.

The CAW’s Local 444 in Windsor staged a pro-choice demonstration that drew about 100 people in June. But the event infuriated some pro-life members of the union, who turned up for a counter-protest across the street.

All stories by Sonya Bell All photos by The Canadian Press Design by Jessie Willms iPolitics, 2012