Border Skirmish

By Alexander L. Taylor III

Canadian autoworkers strike

The Canadian auto industry is virtually the mirror image of its larger U.S. counterpart, with plants stretching along the Great Lakes from Windsor, Ont., to Montreal. They are owned by Detroit's Big Four automakers, and 80% of the cars built go to the U.S. The auto-manufacturing operations of the two countries have long been operating together like a piston and a crankshaft.

Last week that close partnership came undone. Even as the United Automobile Workers union was celebrating the successful end of contract negotiations with the Ford Motor Co. and the ratification of another agreement with General Motors, its Canadian branch went on strike against GM. Blue-and-white picket signs went up in front of the Windsor transmission plant, just a short drive from GM's Detroit headquarters, as workers shut down all 13 Canadian GM plants.

So intertwined are the operations in the U.S. and Canada that the 36,500 Canadian GM workers can disrupt production throughout the GM system in both countries. The Windsor trim plant, for instance, produces seat backs, seat cushions and sun visors for every domestic GM assembly plant. Since GM, like other automakers, has adopted new materials-handling techniques that keep inventories low, it could run out of vital parts in just a few days. Even worse, its dealers in both the U.S. and Canada could find themselves quickly short of new models, in part because new-car stocks are still depleted by the seven-day U.A.W. walkout in the U.S. a month ago.

The Canadian economy will also be pinched. Automobile production has been one of the economic bright spots in a country with 11 1/4% unemployment and a currency that has lost 13% of its U.S. dollar value since 1980. A strike that lasts 2 1/2 months could cost Canada $1.5 billion and wipe out its current trade surplus.

In prior years, Canadian autoworkers have usually gone along with the U.S. contracts. This time the goals of the two countries' workers are very different. U.S. employees, concerned about production's shifting to nonunion plants overseas, gave up their customary wage demands in exchange for job-security guarantees. But no Canadian auto plants have been closed, and no Canadian GM workers are on layoff. Robert White, the aggressive head of the Canadian U.A.W., has let it be known that his members do not want the profit sharing or lump-sum payments that are part of the just approved U.S. agreement. In addition, he claims that Canadian labor costs are $7.50 an hour less than the $22.50 an hour that GM pays in the U.S., because of the shrunken value of the Canadian dollar and the fact that the Canadian government picks up most healthcare costs. As a result, White argues, GM can afford a richer settlement in Canada than in the U.S.

As the week drew to an end, bargaining on a new contract continued at the Royal York Hotel in Toronto. For GM, time is critical. Production has been halted on three Pontiac models produced solely in Canada: the 6000, Grand Prix and Bonneville. GM concedes that Canadian-made parts are already in short supply at nine U.S. assembly plants, and shutdowns in those operations could come as early as this week. For want of a sun visor, a whole car can be lost, and the strike may soon begin costing GM $30 million a week. --By Alexander L. Taylor III. Reported by Paul A. Witteman/Windsor

With reporting by Paul A. Witteman/Windsor