TORONTO – The Canadian Auto Workers (search) union reached a tentative agreement with General Motors Corp. (search) just minutes before a strike deadline late Tuesday, averting a walkout by 17,000 members and capping weeks of heated negotiations with North America's Big Three automakers.
The three-year contract with the world's largest automaker, which comes on the heels of agreements with Ford Motor Co. and DaimlerChrysler AG, was reached after General Motors withdrew a demand for shorter worker breaks at its Oshawa assembly complex outside of Toronto.
GM faced a strike deadline of midnight Tuesday, one both sides wanted to avoid. The last walkout by the Canadian division of General Motors Corp. was in 1996 and lasted 22 days.
CAW president Buzz Hargrove called off the strike, but said the union and GM would continue to put the terms of the contract on paper.
A General Motors spokesman did not immediately return a call seeking comment.
Hargrove estimated there would be some 1,000 fewer GM employees in Canada at the end of the three-year contract, but said most would be through voluntary retirement and attrition. He said the union had to face the grim decline in the North American market share of the Big Three automakers, which has dropped by 13 percent since 1996.
"I've always believed that you have to work with the cards you're dealt," he said. "The challenges we face didn't happen by chance; they happened because of the declining market share of General Motors, Ford and Chrysler and the threat of loss of jobs."
He blamed that loss on Asian imports, namely from Japan and Korea, and protectionism by Asian governments.
"Our major problem is imports and lack of ability to export into the emerging growth markets of Asia," Hargrove said. "They ship into North America at their leisure and they close their markets to anything built in Canada and the United States."
Another major sticking point between the CAW and General Motors was removed earlier in the day when GM pulled its proposal to trim two minutes from the work breaks of assembly workers at its two car plants and one truck plant in Oshawa, east of Toronto. Those employees will continue to get two, 10-minute breaks and 25 minutes for lunch.
The CAW already has deals with Ford and DaimlerChrysler (search), and GM has accepted the wage and benefit framework of those agreements. Under the CAW's so-called pattern bargaining with North America's top three automakers, the union reaches financial terms with one company, then demands the other two accept the same deal.
The first agreement, with Ford, allowed for wage improvements of roughly 1.5 percent in the first year of the deal, followed by 1 percent gains in years two and three. It was accepted by a majority of workers on Sept. 18 and a similar agreement was ratified by DaimlerChrysler employees over the weekend.
The DaimlerChrysler deal announced Sunday shaves 1,000 union positions from the company's Ontario plants over the next three years, but no current employees will lose their jobs as positions will be cut through early retirement and attrition.
Detroit-based GM had argued that the pension package agreed to in the other deals would cost it more because the company has more than twice as many retirees than the other two automakers, plus more workers eligible for retirement within the next three years. There are nearly 20,000 retirees at GM and up to 5,000 eligible to retire within the next three years.
On Monday, Fitch Ratings lowered its assessment of General Motors debt further into junk status, saying the automaker has made little progress in reducing costs and is vulnerable to high gasoline prices.
The decision makes it costlier for GM to refinance debt or borrow more. The automaker has $136 billion of senior debt and more than $100 billion in other debt, Fitch said.