The top U.S. automaker General Motors (GM, Financial) witnessed a production stoppage at the CAMI plant in Canada this month where the company’s popular Chevrolet Equinox brand (also the top-selling crossover in the U.S. and Canada) is built. A meeting was held between the Dearborn, Michigan-based automaker and the union party representing 2,500 workers that have gone on strike at the southern Ontario automotive assembly plant.
The CAMI plant employs roughly 2,750 people. The union negotiators demand from the company is a long-term job commitment at the Ingersoll industrial unit. General Motors of late moved 625 jobs from Ontario to Mexico. That’s not it. The company reallocated production of GMC Terrain crossover to Mexico. This caused frustration among the union members.
General Motors and Unifor issue
The Unifor Local 88, represented by the national and local delegates had presented to General Motors a new offer during the meeting between them. The faster the company assents to their offer, the faster the workers can get back to the plant and resume work. However, the union said that “some progress” has been made to labor negotiations. The president of Unifor 88 Dan borthwick said that he was pleased from the company’s response.
Besides the labor issue, Unifor discussed matters including economic issues and an assurance that CAMI assembly plant should be regarded as the leading manufacturing unit of Chevy Equinox. The union said that they will not agree to any contract unless these matters are resolved and CAMI is recognised as the leading producer of Chevy Equinox. Unless this happens, CAMI plant will keep losing jobs to Mexican assembly plants because of their lower wages. Mike Van Boekal, chairperson of Unifor Local 88 said:
“The Bargaining Committee will not accept a deal without a commitment to address shop floor issues, improved wages & benefits and a new investment at our facility.”
Managing the struggle
General Motors is looking to shorten the period of strike because it will not only hamper the production of Chevy Equinox but also shift customer’s fondness to a competitor’s SUV. This has also left the US dealers in a difficult spot. They can only hope that the company quickly gets rid of the labor issue before low inventories starts adversely impacting operations.
Again, the two production departments in Mexico for the production of Equinox will not be able to compensate for the production loss as the CAMI plant produces 872 Equinox a day. Canada wants stiff labor standards to be included in the North American Free Trade Agreement (NAFTA) so that workers in Mexico are paid higher wages. A massive change has been brought about for Canada autoworkers since 1996 through NAFTA which was implemented in 1994.
General Motors had recently shifted the production of GMC Terrain from CAMI to Mexico in January, costing 400 jobs. This left the plant with only the Equinox. In fact General Motors invested $649 million retooling the manufacturing unit to prepare it for the 2019 model. The news was welcomed by the Canadian plant. However, the production of Equinox in Mexico puts CAMI in a dubious spot regarding its future prospects with respect to the Equinox. Would be interesting to see how General Motors handles the situation without further hampering production.
Disclosure: I do not hold any position in the stock mentioned in the article.
