Every night, before going to bed, every auto worker in Canada who relies on a union-negotiated paycheque should get down on his knees and thank God or some other deity for Buzz Hargrove.
And if this year's calendar says it's April 13 or May 15 or Sept. 4, he or she should say an extra prayer or two of gratitude. Why those days? Because they are, in order, the Monday after Easter, the Friday before Victoria Day and the Friday before Labour Day - regular working days for most people in the private sector, but paid holidays for members of the Canadian Auto Workers who toil at General Motors' operations in Ontario. They're also paid not to work between Christmas and New Year's (though, in turn, they give up a few days, such as the public holiday in early August).
The extra holidays remain intact in the new, cheaper version of GM Canada's deal with the CAW, negotiated over the weekend. So does the child care subsidy (up to $2,400 per kid per year) and the car purchase discount (up to $2,600), which GM Canada - despite being on the brink of crisis - generously extended last spring to some 30,000 retired workers. Of course, current GM workers who think their jobs might vanish will want to hold off on buying that new GMC Sierra, to take advantage of the $35,000 vehicle voucher they would receive as part of their $100,000 restructuring allowance.
Then there's the pension plan, GM's Achilles heel. The pensioners won't get any increase between now and at least 2012. But the old "30-and-out" system stays; production workers with three decades of service can retire well before 65 and draw $3,500 a month, or more if they're skilled tradesmen. And the shrinking contingent of employees still won't have to contribute a dollar to the fund.
So why should they thank Buzz Hargrove? The former CAW chief retired last year. He didn't negotiate this deal. But he did instill backbone and an attitude that the union could always make the auto makers buckle at the bargaining table. And now, even though he's gone and the auto industry is in the worst crisis since the invention of the car radio, the CAW seems to have done it again.
That's not to say GM workers didn't give up a lot last weekend. They did. They'll get five fewer scheduled paid absence days, nicknamed "spa days." ("It's an unfortunate acronym," confesses Jim Stanford, the CAW's chief economist.) A worker with 10 years of service at GM will have to make do with four weeks of holidays, down from six weeks just a couple of years ago. They'll lose an annual bonus, their wages are frozen until 2012, and they'll have to stump up $360 a year in new health care premiums. Retirees will pay more for their health benefits.
These are real sacrifices. The question is, to what effect?
Before this deal, the Detroit Three's labour costs in Canada were just less than $70 an hour. Roughly half of that is wages; the other half is benefits, legacy costs such as pensions or mandatory government costs (such as employment insurance premiums). The new deal is expected to shave the total cost by about $7 an hour, or an estimated 10 per cent.
That's nice, but in an industry where sales are off more than 40 per cent, it hardly seems like enough, especially given the leverage GM enjoyed. The company had a gun to the CAW's head. It could credibly use the threat of bankruptcy. It had government on its side: Ottawa and Queen's Park are demanding cuts to the labour bill as a condition of receiving billions of dollars in taxpayer loans. And GM Canada knows that the union knows that if the company goes down, the pensioners are in trouble - the fund has a massive deficit. The CAW couldn't even threaten to strike.
Yet it still managed to keep the cuts to $7 an hour. What a feat. And as far as the union is concerned, it has done its part and now it's over to you, taxpayers.
"We fully understand that the industry will not be secure until governments confirm a financial assistance package for the industry, and until consumers start buying vehicles again," said Ken Lewenza, Mr. Hargrove's successor as CAW chief.
Place a big checkmark beside the first one, as the federal and Ontario governments have already pledged $4-billion in loans to GM and Chrysler and have shown a willingness to consider billions more.
But what about the second? What about the consumer? At its peak, the U.S. market, in which the vast majority of Canadian-made vehicles are sold, could be reliably counted on to soak up between 16 million and 17 million vehicles per year. The latest figures are below 10 million (adjusted for seasonal patterns). The big unknown is how large the rebound will be. If the new "normal" rate is 15 million cars, the CAW will probably be fine (provided the C-dollar doesn't go racing back to parity).
But if it's 12½ million, or 12? The Detroit Three will be asking for more concessions because they didn't cut enough fat this time. And they'll have only themselves - not their workers - to blame.
CLARIFICATION
General Motors of Canada Ltd. offers restructuring allowances of $100,000 or more, including a vehicle voucher, to some union employees with high levels of seniority who leave the company. Employees with less seniority can receive smaller amounts. A Tuesday column could have been interpreted to say that all employees were eligible for the larger amount.