Lower Loonie Not Helping Business Case for Canada, GM Says
By Michael Yang, Bloomberg News
A weaker Canadian dollar won’t play a role in any decision by General Motors Co. to make new investments north of the border, according to a company spokesman.
“We’re looking long-term,” David Paterson, a spokesman for the Canadian unit of the Detroit-based automaker, told reporters Wednesday. “The Canadian dollar moves up and down, so we don’t make business decisions on that.”
A lower loonie doesn’t necessarily help the automaker either, Paterson said. “It may be good for exporting vehicles, but it also increases the price of the materials and imports you have to bring in. That offsets the benefits,” he said, after GM and its union met in Toronto to kick off labor negotiations.
The Canadian dollar is sitting at about 77 U.S. cents as talks begin for contracts expiring Sept. 19. The loonie was just above parity with the dollar in previous talks in the fall of 2012.
GM, Ford Motor Co. and Fiat Chrysler Automobiles NV are starting negotiations with Unifor, which represents about 23,000 workers at the companies, against a backdrop of declining production in Canada. Auto output in the country fell to 13 percent of North America production last year from about 17 percent in 2009 while output in Mexico has risen to about 20 percent, according to data from Ward’s Automotive Yearbook.
GM’s Oshawa plant is of particular concern to the union as the company plans to shutter one of its two production lines next year, trimming 1,000 jobs, and doesn’t have new vehicles scheduled past 2019. Paterson reiterated Wednesday that GM doesn’t plan to make a decision on the plant until the labor talks are done.
“We fully expect General Motors will change its mind,” Jerry Dias, Unifor’s president, said at the press conference. “The company budged in its negotiations with the United Auto Workers” last year, promising to invest in its U.S. operations as part of its labor deal. “There is no reason they won’t do the same this time,” Dias said.
The two sides remain “miles apart” on the first day of negotiations, though it has been a positive and constructive start, Dias said.
The union plans to meet with Ford and Fiat Chrysler on Thursday and will decide which company to begin more intensive bargaining with in early September.