GM reaches cost-cutting deal with union

The Canadian Auto Workers (CAW) union reached agreement on Monday with General Motors to reduce labour costs, paving the way for authorities to further fund the ailing United States car giant.

About 10 000 CAW members “voted overwhelmingly in favour of a new collective agreement, ratifying the deal by 86%”, the union said in a statement following the tentative agreement reached with GM on Friday.

The cost-cutting move, which involves about a $15 to $16 wage cut an hour, was demanded by Ottawa and the Ontario government as part of a joint bailout of GM, to try to make the company more competitive with Japanese and European carmakers.

“Although we were forced to make a number of important sacrifices, the support we received from our members is proof that they recognise the incredible challenges the industry is facing,” CAW president Ken Lewenza said.

GM said it “welcomed” the ratification of the new agreement, praising “the shared sacrifices” of employees and the CAW’s “leadership and professionalism”.

“The ratification of the new agreement is a critical step toward GM Canada’s successful restructuring into a stronger, more viable company,” the carmaker said.

The company has asked for a loan of $3-billion from the Canadian and Ontario governments, and billions more from Washington, to keep it afloat as it restructures its North American operations.

Ottawa had set a May 15 deadline to reach a deal, but the talks continued until Friday and votes were cast over the weekend.

GM is expected to present Ottawa and Washington with its restructuring plan by June 1.

The agreement, which also includes major benefits, wages and pension concessions but keeps plants open in Ontario province, came days after GM secured a similar cost-cutting deal with its unionised American workers.

Last month, US carmaker Chrysler struck an agreement with its Canadian employees to trim compensation by $19.

But that agreement did not prevent Chrysler to file for bankruptcy protection. Many analysts predict a similar scenario for GM this week.—Sapa-AFP

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