TORONTO - A study by the Canadian Auto Workers says Canadian auto plants are more efficient than their U.S. and Mexican counterparts, a finding the union calls "a valuable ace in Canada's hand" as the North American industry restructures and Canadian autoworkers face pressure to cut their wages and benefits.
But industry analysts say it's likely politics will trump productivity when the automakers decide which plants in North America will stay open and which will close.
"To the extent that they can get the vehicle manufacturers here to say, `Yes, they are more productive and that is an issue,' then certainly that supports the CAW case," said Bill Pochiluk, president of industry adviser AutomotiveCompass.
"But the other side, frankly, is the political side where everybody has to been seen to be doing their best."
The Detroit Three carmakers -- GM, Ford and Chrysler -- have cut thousands of jobs and shut down plants to cope with a drastic decline in their business caused by the U.S. recession and the credit crunch that has made it harder to finance a car purchase.
GM and Chrysler have received a multibillion-dollar bailout by the U.S. and Canadian governments but must come up with a broad restructuring plan to get that money. Meanwhile, autoworkers in Canada and the United States face the prospect of even more cuts as the industry struggles to recover.
The CAW has already agreed to a three-year wage freeze with the Detroit Three, a concession worth about $900 million over the lifetime of the contract. But most industry observers expect demands from the industry for more concessions.
Industry analyst Dennis DesRosiers said the study, which also suggests unionized auto plants have higher labour productivity than non-union plants, is simply a justification for the union's "outrageous benefit plans."
"In a perfectly competitive marketplace, all excesses will have to be shed and there's nothing that unions can do about it," DesRosiers said. "They have zero control over the situation, although cutting benefits and wages would help."
The study, by CAW economist Jim Stanford, says average productivity is more than 11 per cent higher in Canadian than in U.S. plants, and about 35 per cent better than in Mexico.
The CAW has been criticized for so far refusing to make new concessions on salaries and other labour costs as General Motors and Chrysler struggle to restructure.
But Stanford argues in the report that the high productivity in Canadian plants offsets any concerns about the hourly costs of CAW members.
"Higher productivity has at least as beneficial an impact on production cost competitiveness as do lower hourly labour costs," says the report, released Monday.
Tony Faria, an auto industry specialist at the University of Windsor, has estimated that once new contracts negotiated by both the CAW and the UAW come into effect, Canadian employees of the Detroit Three will cost their employers about $27 an hour more than their American counterparts.
But Stanford has argued that CAW workers actually cost their employers $7 an hour less.
The UAW agreed in their most recent contract negotiation to move to a two-tier wage system, under which new employees will make substantially less than their more senior counterparts. CAW president Ken Lewenza has so far said he's willing to work with the troubled automakers, but won't clarify what concessions he's willing to make.
Pochiluk said productivity will be an important factor in deciding which plants stay open and which close, but the CAW will have to show that they're willing to make concessions if they want to win over their employers.
In the United States, the United Auto Workers have already made several concessions to the struggling automakers, including all but ending a much-derided job-bank program that let laid-off workers collect up to 95 per cent of their salaries.
UAW leaders have also agreed to let the cash-starved automakers delay billions of dollars in payments to a union-administered trust set to take over health care for blue-collar retirees starting in 2010.
Pochiluk pointed out that CAW members have "less to give away" -- the Canadian union doesn't have a job-bank program and health-care costs aren't an issue under Canada's publicly-funded system.
"But like any good negotiation everybody has to lose something. The sooner they do that, the better for everybody," he said.
The CAW report found that CAW-represented auto plants are the most productive, on average, of all plants in North America.
"It is no accident that unionized Canadian auto plants are the most efficient on the continent," Lewenza said in a statement.
"Our productivity advantage is a reality that must be recognized by both the automakers and governments in the difficult months ahead."
The union said its analysis is based on government and industry data, including the Harbour Report, a leading survey of auto productivity.
The report found that, based on average hourly labour costs in Canadian auto assembly plants, Canada's productivity advantage "reduced the Canadian industry's labour expenses in 2007 by almost $400 million."
The study says the most productive plant in North America is the Chrysler supplier park in Toledo, Ohio, followed by GM's number one and number two car plants in Oshawa, Ont. The joint-venture CAMI plant in Ingersoll, Ont., and Chrysler's plant in Brampton, Ont., also make the top 10.
