Auto labor talks begin in Canada

TORONTO (AP) -- The Canadian Auto Workers union and the Detroit three automakers have started negotiations on new labor contracts amid charges that Canada is the most expensive place in the world to produce a vehicle.

The CAW began negotiations with General Motors and Chrysler on Tuesday. They meet with Ford on Wednesday.

GM CEO Dan Akerson said in June that Canada was the most expensive place on earth to build a car these days and noted that the exchange rate advantage of the Canadian dollar is gone. The Canadian dollar has traded around par with the U.S. dollar in recent years after trading well below 90 cents for many years.

Chrysler CEO Sergio Marchionne has also said wage rates are uncompetitive in Canada.

CAW President Ken Lewenza disputed the claim that Canada is the most expensive place in the world to make a vehicle, but acknowledged Canadian auto workers cost more than U.S workers.

"We are a couple of bucks higher than our competitors in the United States and consistently on par with other automobile manufacturers like the Germans, the Japanese and others," Lewenza said.

Lewenza said the higher Canadian dollar is a problem, but noted that GM and Ford are earning record profit margins on their North American business and that Chrysler has come back to profitability far faster than anyone hoped in 2009.

"Yet they have the nerve to say Canada is a terrible place to invest," he said.

Stacey Allerton, Ford's leader negotiator and vice president of human resources, said their labor costs are significantly higher in Canada than any other jurisdiction in which Ford operates. Allerton said the total labor cost in Canada is $79 an hour, compared to $64 an hour in the U.S. and $48 in Germany.

Carlos Gomes, a senior economist and auto industry specialist at Scotiabank, said Canadian auto workers do have a higher cost structure than workers in U.S. and Mexico, but said historically Canadian plants have been productivity leaders, reducing some of the difference. Akerson, the GM CEO, also said in June that Canadian plants are still some of the company's most productive.

Lewenza noted the union made major concessions during the last round of talks in 2009 and said they now want to share in the profits now that the industry is profitable. The current contracts expire Sept. 17. The union will focus talks on one of the automakers before then with the idea of setting a template deal for all three.

Lewenza said GM told the union on Tuesday morning that it was looking for a sustainable wage package and talked about reducing hourly compensation. Lewenza said the union won't accept a two-tier wage system in Canada.

Southern Ontario, where the Canadian auto sector is based, has seen the Detroit Three automakers cut thousands of jobs in the last decade as the parent companies restructured.

The CAW represents about 4,500 workers at Ford, 8,000 workers at General Motors and another 8,000 at Chrysler.

The Canadian and Ontario government's worked in tandem with the U.S. government on auto bailouts in 2009 to maintain Canada's share of North American auto production. Gomes said Canada's share of North American production peaked at 3.2 million cars in 1999, about 17.4 percent of North American production. In 2011, Canada produced 2.1 million vehicles, about 16 percent. Gomes noted the average since 1990 has been 16.1 percent.

The Detroit automakers found southern Ontario attractive because of a low Canadian dollar, Canada's universal health care system and Ontario's proximity to the U.S. But the development of the oil sands in Western Canada has meant a higher Canadian dollar, which has hurt manufacturing in central Canada.

Premiers of Canada's Western provinces criticized Ontario Premier Dalton McGuinty earlier this year when he said he would prefer a lower Canadian dollar over a rapidly growing oil and gas sector in the West.