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O, Canada: the contract negotiations. (Auto by the Numbers).

On September 17, 2002 at midnight, all production-related labor contracts between the Canadian Auto Workers (CAW) and General Motors, Ford, and DaimlerChrysler will expire. Given the looming labor negotiations between the Big Three and the CAW (and the definite possibility of a strike), it is essential for suppliers to understand the players, timing and possible effects of any labor stoppage.

Labor contract negotiations are slated to begin in mid-July. These essentially affect over 47,000 CAW members working with Big Three facilities in Canada. Currently these members provide approximately 16% of the Big Three's North American vehicle production output, as well as 15.2% of engine and 8% of transmission assembly output. Additionally, there is selected sourcing of chassis and body components for various offerings. Depending upon when a contract is signed, it may take up to 3-4 days to ratify the contract, another day to return to work, and up to three days to refill an engine or transmission supply line. Thus, a significant impact on all vehicle and powertrain production in Canada, and other facilities supported by Canadian-sourced components, is possible given a stoppage. Although Canada continues as an important site for vehicle and powertrain sourcing, the Big Three have taken strategic steps to spread the risk between U.S., Canada and Mexico. Significant exposure still exists, though, as many fa cilities are the sole production source for popular offerings.

The three main issues (CAW concerns) to be tabled this year are Big Three facility rationalization, growth of non-CAW/UAW production, and the perennial issues of outsourcing, wages and benefits. As the Big Three rationalize facilities, Canada will lose DCX-Pillette Road, Ford-Ontario Truck, and GM-St. Therese. The CAW feels the reductions are over-reaching and Canada-centric on a broader scope, as Mexico is viewed as an outsourcing threat for vehicle and powertrain assembly. Further erosion in CAW standing comes as non-CAW/UAW vehicle production is projected to grow from 24% (CY2000) to 35% in 2007. A similar scenario exists for powertrain and component production over the time period. In short, the CAW will be looking for replacement investments, workforce and benefits maintenance, and help in organizing non-union suppliers in Canada.

By early September, a target OEM will be named. At present General Motors has the highest potential to be chosen because it has both the deepest pockets and the fewest issues with the CAW. In an aim to pattern the agreement for DaimlerChrysler and Ford, GM may relish the opportunity to again be the chosen one. DaimlerChrysler is expected to be second, and Ford is likely last on the list, as it's labor issues are more acute and potentially viewed by the CAW as the most difficult to solve.

Work stoppages or "strikes" may be all encompassing as the CAW's leader, Buzz Hargrove, is noteworthy for achieving precisely orchestrated work stoppages that affect an entire company. With this in mind, the attached sourcing matrix illustrates CSM Worldwide's view of the potential effects should the CAW strike a given OEM. Our view is not only that of production in Canada, but also of engine/transmission and component production that emanates from U.S. and Mexican sources which would also likely be affected by a work stoppage in Canada. Suppliers should be ready for any eventuality with respect to the looming talks, as our analysis outlines a 30-50% chance of some type of stoppage. Despite a stronger market, negotiators will need to think longterm, as several issues are pervasive and far-reaching. It should be an interesting fall.
GM, Ford and DCX Powertrain and Vehicle Assembly Operations

Effects of a Potential Work Stoppage in Canada



 Estimated Total
Plant Product Daily Build Rates

General Motors

Flint, MI 3.8L Series II V6 1800
Romulus, MI 4.3L GIE V6 850
 4.8L, 5.3L, 6.0L GEN III V8 4800
St. Catherine's, Ontario 4.8L, 5.7L GEN III V8 500
Tonawanda, NY 3.1L/3.4L 60-Degree V6 2300
 8.1L Mark VIII V8 450
Oshawa #1 Monte Carlo/Impala 1350
Oshawa #2 Century, Regal 1050
Oshawa Truck Silverado, Sierra 1350
Windsor, Ontario 4T40E/4T45E Transmission 3458
Other GMT800 Stampings -

Ford

Essex, Ontario 3.8L/4.2L V6 2200
Romeo, MI 4.6L SOHC V8 3100
 4.6L DOHC V8 200
Windsor, Ontario #2 5.4L SOHC V8 2000
Oakville Windstar 1040
Ontario Truck F-Series 420
St. Thomas Crown Vic, Grd. Marquis 960
Windsor, Ontario #2 4.6L Head Assembly 100
Other Engine Castings (Aluminum) -

DCX

Kenosha, WI 2.7L DOHC V6 1300
Mack Avenue 3.7L V6/4.7L V8 Modular 2500
Toluca, Mexico 5.9L V8 OHV 600
Trenton, MI 3.9L V6 / 5.2 V8 OHV 500
Saltillo, Mexico 5.7L V8 Hemi 250
Brampton 300M, Concorde, Intrepid 970
Pillette Road Ram Van 210
Windsor Town & Country, Caravan 1325

 Estimated Daily
 Volume Loss Due
 to a Canadian
Plant Work Stoppage

General Motors

Flint, MI 650
Romulus, MI 55
 835
St. Catherine's, Ontario 500
Tonawanda, NY 1100
 70
Oshawa #1 1350
Oshawa #2 1050
Oshawa Truck 1350
Windsor, Ontario 3458
Other -

Ford

Essex, Ontario 1008
Romeo, MI 1007
 24
Windsor, Ontario #2 100
Oakville 1040
Ontario Truck 420
St. Thomas 960
Windsor, Ontario #2 100
Other -

DCX

Kenosha, WI 500
Mack Avenue 61
Toluca, Mexico 62
Trenton, MI 135
Saltillo, Mexico 50
Brampton 970
Pillette Road 210
Windsor 1325

Source: CSM Worldwide
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Comment:O, Canada: the contract negotiations. (Auto by the Numbers).
Author:Fedewa, Eric
Publication:Automotive Design & Production
Article Type:Statistical Data Included
Geographic Code:1CANA
Date:Aug 1, 2002
Words:892
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