On June 11, more than 1,000 people will sit down for dinner at the Metro Toronto Convention Centre to pay tribute to Buzz Hargrove, president of the Canadian Auto Workers, and to raise money for a shelter for homeless youth.
The guest list includes three former prime ministers (Jean Chretien, Paul Martin and Brian Mulroney), three retired Ontario premiers (William Davis, Mike Harris and David Peterson), judges, MPs, socialites and a who's who of Canadian business.
Hargrove is slated to retire within the next year and, coincidentally, he has just concluded his final round of contract negotiations with the Canadian divisions of the Detroit Three - General Motors, Ford and Chrysler.
He will leave Canada's largest private-sector union with reputation intact as a labour leader who held on to hard-won improvements in wages and benefits and fought just as hard to resist concessions. And, health permitting, he will undoubtedly enjoy a fine retirement.
Many of the workers he represented, especially those in the auto sector, won't be quite so fortunate. Just last week, GM Canada announced that it is closing its Oshawa truck plant, a decision that will cost 2,600 jobs by the end of 2009. Over the past five years, according to CAW economist Jim Stanford, some 25,000 positions have disappeared in Ontario's auto sector, not all of them unionized.
Hargrove was outraged by GM's latest cuts. "We are not going to allow this to happen," he told reporters. "We are going to do everything in our power and we have power. This is not going to happen without a fight."
Many observers attributed the GM move to market conditions.
The company operates four assembly plants in North America that produce pickup trucks and sport utility vehicles. Sales of these vehicles have tanked in recent months as the price of gasoline soared to $4 a gallon in the U.S. and about $1.30 per litre here, and GM is closing the four facilities that manufacture them.
But there is more to this than the recent spike in gas prices and the resulting drop in sales of gas-guzzling trucks and sport utility vehicles.
According to Dennis DesRosiers, Canada's leading auto-industry analyst, this country's share of output by the Detroit Three has risen dramatically in the past 20 years because we enjoyed two significant competitive advantages - a low dollar and lower health-care costs than south of the border.
GM Canada last year was responsible for 19.4 per cent of GM's North American production, versus 10.4 per cent in 1987. Twenty per cent of Chrysler output is based in Canada and Ford Canada's share stands in the mid-teens.
But Canada's competitive advantage has evaporated. The Canadian dollar has been trading at or near par for several months. Then, last year, the United Auto Workers and the three U.S. carmakers signed landmark collective bargaining agreements that fundamentally altered the landscape.
The once mighty UAW, having seen its membership plummet to 500,000 from 1.7 million since 1988, wisely decided that no concessions could well mean no jobs. The American workers gave up some of their health benefits and also accepted a two-tier wage structure that will see new hires earning about $14 an hour, about half of what an established employee earns.
As a result of these other retreats, total compensation per worker in the U.S. will eventually fall from the $70 to $75 per hour range to between $40 and $45 hourly.
The Detroit automakers were looking for similar concessions in Canada, but, last February, Hargrove signalled that the CAW would be marching to a different drummer. He rejected two-tier wages and he cleverly opened the Canadian round of negotiations with Ford, the weakest financially of the Detroit Three.
Ford, according to DesRosiers, was in no position to withstand a strike and settled for a deal that included a wage freeze for three years and a few other minor concessions from the union. Under the tradition of pattern bargaining in the auto industry, GM and Chrysler had little choice but to hold their noses and accept similar contracts.
The net result is that CAW members will continue to earn between $70 and $75 per hour in wages and benefits for the foreseeable future. That will make them the highest-paid autoworkers on the planet.
They will be exposed to the winds of ferocious global competition without the artificial advantages of a low dollar and a public health-care system, and without the hard-nosed, bare-knuckled Hargrove to defend their interests in future negotiations.
He will be enjoying retirement, hobnobbing with the high and the mighty who have become his friends over the years. The autoworkers he represented will be clinging desperately to their jobs. Or, having priced themselves out of the industry, driving taxis, flipping burgers or otherwise trying to make ends meet.
(D'Arcy Jenish can be reached at jenish@businessedge.ca)
