Toronto, Ontario – General Motors and the Canadian Auto Workers Union (CAW) have reached a tentative agreement that the union said will generate substantial cost savings for the company, while protecting current base wages and pensions, and retaining an advantage for Canadian facilities over U.S. plants.

“Our objective coming into these negotiations was to minimize the pain felt by our members and their families, while ensuring that General Motors was well-positioned to receive government assistance to remain viable,” said CAW president Ken Lewenza. “At the same time, we understand that workers didn’t cause this crisis, which was caused by the global financial meltdown and ensuing credit freeze.”

The tentative agreement must be approved by a majority of CAW members currently employed by GM in Canada, which represents approximately 10,000 workers. Members will vote on March 10 and 11.

The agreement is contingent on the company receiving government financial assistance and recommitting to a proportional Canadian manufacturing presence, including specific product commitments in GM’s respective plants. Major features of the tentative contract include:

– The existing CAW-GM contract, which was signed last year, is now extended one additional year, with an expiration of September 2012.

– Base wages are frozen for the remainder of the contract, and quarterly cost of living adjustments for wages are suspended until almost the end of the contract, coming back into effect in June 2012.

– There will be no annual cost of living adjustments to pensions in this contract.

– Paid time off is reduced by an additional 40 hours per year, in addition to the 40-hour reduction in annual vacation pay already implemented, beginning in 2009.

– An annual $1,700 special bonus payment is diverted to help offset the cost of retiree health care benefits.

– Expenses for union-sponsored programs are reduced by about one-third, including training, child care facilities, wellness programs, and national coordinators.

– Significant changes are made to a range of health and non-wage benefits, including a new monthly co-pay premium, which will collect $30 per month from active workers and pensioners under 65, and $15 per month from pensioners over 65 and surviving spouses. Other health benefits affected by reduced caps or increased co-pays include dental, long-term care, life insurance and tuition benefits.

“Together, these changes represent a major sacrifice by our active members and retirees,” Lewenza said. “They will reduce active hourly labour costs by several dollars per hour, reinforcing Canada’s investment advantage relative to U.S. facilities. And they will significantly reduce the company’s legacy costs associated with pension liabilities and retiree health benefits. We committed that the CAW would be part of the solution to this crisis, and we have done just that. But 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.”

In a statement, General Motors of Canada said that the agreement marks a positive further step in GM Canada’s Restructuring Plan submitted to the Ontario and federal governments in February. “We compliment the CAW for their leadership to share sacrifices in these extremely challenging economic times,” the statement read. “GM Canada is committed to ensuring a viable, leaner and greener business for the future, which will allow us to continue providing high quality, fuel-efficient cars and trucks for our loyal customers.”

The CAW said that it will meet with another domestic auto company later this week, but would not specify if Ford or Chrysler would be first.

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