October 16, 2007

New agreement between Magna and CAW union aims to change confrontational model of labour relations and eliminate strikes

Aurora, Ontario – Automotive systems and parts manufacturer Magna International Inc. has announced the signing of a historic agreement with the Canadian Auto Workers Union (CAW). The company says that the Framework of Fairness Agreement (FFA) is a set of principles which establishes the needs of workers and business to be competitive, and represents a new labour model that aims to preserve the key components of Magna’s Fair Enterprise system, while ensuring proper checks and balances.

“The traditional, confrontational model of labour relations is unproductive and wastes energy that would be better focused on creating the conditions which would be fair to employees and would ensure that Magna remains competitive in the global automotive industry,” says Frank Stronach, Chairman of Magna’s Board of Directors. “Magna recognizes that the CAW has the ability to be an important ally in addressing the many competitive challenges our industry is facing, ensuring the needs of employees and society are balanced against the needs of our other stakeholders, namely customers, investors and other business partners. We are pleased that the CAW is willing to embark with us on this groundbreaking agreement.”

The FFA will be introduced to employees in Magna’s Canadian manufacturing divisions over a period of several years. Magna divisional employees will have the opportunity to vote on approval of a new contract under the terms of the FFA, and join the CAW. If the majority of workers in a facility vote in favour, the plant will be covered by a new Magna-CAW national collective agreement.

Key terms and conditions of the FFA include preservation of Magna’s Fair Enterprises culture and operating principles, including sharing of the company’s financial success through equity ownership; comprehensive no-strike, no lock-out provisions with unresolved collective bargaining issues being settled through final offer selection arbitration; progressive concern resolution; competitive wage and benefit principles; a concept tying annual wage adjustments to a manufacturing inflationary index, plant-specific performance measures and competitive considerations; secret ballot voting on workplace issues; and de-politicization of the workplace and labour-management relations.

“We have been encouraged by the fact that CAW leadership have demonstrated an understanding of the difficulties that manufacturers face in this competitive, global environment,” said Don Walker, Magna co-CEO. “This agreement will likely give the CAW increased membership and representation within Magna’s Canadian divisions, while at the same time allowing us to maintain our competitiveness, through our entrepreneurial and flexible operating philosophy as we continue to work hard to support our customers and win new business.”

“With this agreement, Magna and the CAW will develop a new way of working together,” said Buzz Hargrove, president of the CAW. “It will strengthen the CAW’s ability to support auto parts workers at an incredibly challenging time, but in a way that also strengthens Canada’s auto industry. Magna and the CAW have established an effective working relationship through our existing unionized facilities, and through our participation in joint industry initiatives like the Canadian Automotive Partnership Council. The Framework of Fairness takes our relationship to the next level.”

Once the FFA is fully implemented, it will cover up to 18,000 Magna production employees in about 45 manufacturing facilities in Ontario.

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