Canada: auto workers close to deal with General Motors as strike deadline looms

A potential strike by 17,000 workers for General Motors Corp. in Canada loomed Tuesday as both sides remained deadlocked over a proposed three-year contract. Proposed job cuts at some Ontario plants were the main sticking point for representatives of the Canadian Auto Workers, said CAW president Buzz Hargrove.

The automaker now faced a 50-50 chance of a strike at midnight Tuesday, he said. "We really did think we'd have this thing done late this morning or early afternoon, but it's become more difficult than we had anticipated," a worn-looking Hargrove said in a break from talks at a downtown hotel. "There's a lot of very difficult issues related to job security at all locations."

GM plans to cut up to 1,050 jobs in St. Catharines over the period of the contract, while the CAW has demanded work-security guarantees at a transmission plant in Windsor and a parts depot in Woodstock, he said. GM's Canada spokesman, Stew Low, said he didn't want to predict whether the company would be facing its first strike by Canadian employees since 1996. That lasted for 22 days.

The automaker earlier removed from the table a 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, 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.

General Motors, however, has said the pension package agreed to in the other deals will 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 close to 20,000 retirees at GM and up to 5,000 eligible to retire within the next three years.

GM estimated the deal would cost an additional $59 million (Ђ49 million) a year to implement compared with its competitors, or $179 million (Ђ149 million) over the life of the three-year contract, Hargrove said.

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, AP reports.

The decision makes it costlier for GM to refinance debt or borrow further. The automaker has US$136 billion (Ђ113 billion) of senior debt and more than US$100 billion (Ђ83.3 billion) in other debt, Fitch said.