Canadian Auto Workers Announce Tentative Labor Deal With GM
22 Maggio 2009 - 6:43PM
Dow Jones News
DETROIT (Dow Jones) -- The Canadian Auto Workers said Friday it
struck a tentative deal with General Motors Corp. (GM) that clears
the way for the auto maker to win more government aid.
The deal, which marks the third time in a year the union has
agreed to cost cuts, will freeze pension increases until 2015 while
protecting benefits of existing retirees. It comes a day after GM
reached a concessionary labor deal with the United Auto Workers in
the U.S.
The agreement provides clarity on GM's financial position that
was needed to move forward with a federally-funded restructuring in
the U.S.
GM is depending on U.S. government funds to carry it through an
increasingly likely bankruptcy filing that would come by June
1.
CAW President Ken Lewenza said Friday a bankruptcy filing by GM
is now "very likely," though the company is doing all it can to
pull off an out-of-court restructuring. The labor deal would still
stand in bankruptcy court, he said.
The Canadian government followed U.S. President Barack Obama in
shooting down an earlier round of concessions and demanding deeper
cuts as a condition of winning federal support. Lewenza said the
government signed off on the labor deal later Thursday.
"The consequences of saying no would have been disastrous,"
Lewenza said. "Government support comes with a price. And, for us,
that price is a growing list of demands."
Workers will vote on the contract Sunday and Monday.
The Canadian government has promised GM $3 billion to help it
restructure. Negotiations between the Canadian government and GM
continue on commitments by GM to keep jobs in Canada.
Canada also has provided aid to now-bankrupt Chrysler LLC, which
earlier struck a similar labor with the CAW.
In addition to the pension freezes for GM workers, the CAW has
agreed to forgo cost-of-living increases and require retirees to
cover more of their own medical costs.
GM's pension fund in Canada continues to run at a $6.5 billion
to $7 billion shortfall. The CAW said it will likely take 10 years
for GM to fully fund its pension obligations.
Lewenza said the deal will save GM $8,600 per member over the
life of the contract.
-By Sharon Terlep; 248-204-5532; sharon.terlep@dowjones.com.