Even a short strike could harm economic growth: Moody
September 17, 2012
by CANADIAN PRESS
TORONTO — Negotiations between the Big Three North American automakers and their Canadian workers are drawing closer to a line in the sand drawn by the union.
The Canadian Auto Workers has threatened job action, possibly against all three companies, if there is no agreement by midnight eastern time today (Sept. 17).
CAW president Ken Lewenza told a Toronto news conference that Ford has shown a “clear willingness” to reach a new contract and the union will work around the clock to achieve that, hoping to use a Ford agreement as leverage with General Motors and Chrysler.
Though Lewenza did not say if Ford has agreed to a union proposal that would lower wages for new hires but still allow them to progress to full pay over time, he suggested the company isn’t dead set against the idea.
“Ford isn’t philosophically opposed to anything other than to say, ‘Folks, keep your costs down, keep it manageable,’ and (then) we can share in the success with the company together.”’
He said Ford “hasn’t promised anything” but added the company has indicated it agrees in principle to some of the union’s issues, which he said are being reviewed for possible “tweaking.”
Chrysler appeared miffed by the union’s move, a spokeswoman saying the company was “very concerned.” GM and Ford had little comment.
Lewenza expressed confidence a deal could be reached by the union’s strike deadline and said the union would ignore its deadline if a breakthrough was close; if not, the CAW will put its near-21,000 members on strike at one or all of the automakers’ plants.
The automakers entered the bargaining round seeking a permanent wage reduction for fresh employees, similar to a deal the companies reached in the US. But the CAW has been adamant it will never agree to a pay structure that creates “two tiers” of employees.
A debt ratings agency that covers the auto industry believes that even a short strike by Canadian auto workers could be “painful” and hurt the country’s weak economic growth for months to come.
“Even a one-week walkout could jeopardize Canada’s increasingly listless growth, shaving 0.25 percentage point from September GDP while disrupting North American supply chains and retail spending into the fourth quarter,” Moody’s
Analytics senior economist Mark Hopkins said.
Moody’s said the auto industry is one of “the few bright lights on the Canadian manufacturing landscape.”
Transportation equipment accounted for more than three-quarters of the growth in Canadian manufacturing in the 12 months through June. The resurgence of the Big 3 has helped drive a sharp acceleration in Ontario manufacturing, more than offsetting the slowing pace of shipments from Quebec and BC, Hopkins wrote in a report.
Ratings service DBRS said it believes a strike won’t likely be long or have a significantly harmful effect on General Motors or Ford.
DBRS said the risk of a strike is “manageable” even though it will have some impact on the automakers’ U.S. operations because of the inter-relationship between the operations on both sides of the border.
© 2012 The Canadian Press