CAW may target more than one automaker if two-tier wage offer fails

The Canadian Auto Workers says it may target more than one of the three big U.S. automakers with strikes if negotiations in which the union has proposed key concessions fail.

"Right now there's a potential for a strike at all three," CAW secretary-treasurer Peter Kennedy said in an interview Thursday.

He said the union will make the determination about which automakers to target as the countdown continues to a strike deadline at 11:59 p.m. Monday.

The union was awaiting a response Thursday to its latest proposal that includes cutting wages for new employees at the Canadian operations of General Motors, Ford Motor and Chrysler.

The union is prepared to allow a plan that would see new employees earn less when they are hired and take longer to reach the top end of the wage scale.

"What we proposed ... is a grid system where people start at a lower wage but over time they grow into the prevailing wage in the plant," Kennedy said from Toronto.

However, he declined to confirm reports that it is proposing to start newly hired workers at lower wages for the first 10 years of their employment at the three big North American automakers.

New hires currently start at 70 per cent of the top wage and take six years to reach the $34 per hour rate. That starting rate could be reduced to 60 per cent or $20.40 per hour and take eight to 10 years to reach the maximum.

CAW president Ken Lewenza has said the union opposes a permanent two-tier system -- such as one accepted by the United Auto Workers union for employees at the automakers' U.S. plants.

Instead, Kennedy said the union is proposing a Canadian solution to the problem of fixed costs that doesn't "create a second class permanent workforce in the workplace."

"But they have blinders on and don't recognize quite frankly that this is a different country and we fundamentally reject the notion of a permanent two-tiered system."

Having two people working side by side earning different salaries with one having no hope of getting to the top would create "dissension and turmoil" that won't be good for the union or the companies, he added.

The union also proposed changes to the pension plans for new hires requiring them to make contributions to the plan that would pay defined benefits received by all employees.

It also agreed to change provisions for new employees that would eliminate full pensions for employees with 30 years of service, something the companies are seeking for existing employees as well.

In exchange, the union is seeking firm investment commitments for Ontario's auto sector.

"We've looked at the numbers, we're having them corroborated independently and we think that it keeps us in the ballpark with the UAW in terms of all in costs for the workers and as such we should be compensated in terms of investment and securing jobs in Canada for the future."

But University of Windsor professor Tony Faria said he doubts the CAW's current proposal goes far enough to be accepted by the auto makers who want concessions from existing employees.

"The companies were pretty clear going into the contract negotiations, essentially they want exactly the same contracts they have with the UAW," he said.

The companies want employees to contribute to the pensions, health-care and prescription drug benefits. They also want the elimination of the "30-and-out" retirement provision, or at least limit the provision to older workers.

While the union may accept no rate increases and the elimination of cost of living allowance, it is seeking guaranteed bonuses and the return of the Christmas bonus, said Faria. The companies want bonuses tied to profits.

The CAW has proposed changes mainly to new employees because its negotiators are wary of getting any contract ratified that dramatically affects existing workers, he added. Contracts in the U.S. barely passed last year and that was before the auto markers reported large profits.

"The CAW bargaining committees have to walk a very tight line in between what they can give versus what the workers are willing to ratify."

Kennedy described the talks as the most difficult he's seen in more than 20 years, including the restructuring in 2009 to save GM and Chrysler from bankruptcy.

"We have one company today that is seriously looking at our proposal and they have given us some indication that they could work with that so we are optimistic in that regard. But on the other hand, we have two companies that their feet are just in cement at this point in time," he said, unwilling to name the receptive company.

Faria said Chrysler would benefit most from lower starting rates since it will be hiring people if it proceeds with a third shift at its Brampton, Ont., assembly plant. Ford has the smallest footprint in Canada with just four to five per cent of global production.