Subject: The CAW and Magna: What if Magna Builds an Assembly Plant?
Date: Sat, 3 Nov 2007 17:33:35 -0400
From: The Bullet <[EMAIL PROTECTED]>
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A Socialist Project e-bulletin .... No. 71 .... November 3, 2007
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The CAW and Magna: What if Magna Builds an Assembly Plant?
Sam Gindin
In the discussions of the proposed Magna-CAW (Canadian Auto Workers)
'Framework of Fairness' deal, the focus has been on Magna as a components
company. But what if Magna opened an assembly plant? Under the language of
the 'Framework of Fairness', it too would be part of the deal. This might
fit the union goal of adding CAW members and dues, but it might not be as
welcome from the perspective of standards in the CAW Detroit Big Three
plants (GM, Ford, and Chrysler).
This issue has not received much, if any, discussion but it needs to be
addressed. In raising this, we do not want to suggest that the CAW
negotiators might have been trying to sneak something by the members in the
CAW's assembly plants. The deal was clearly intended to be about Magna
component plants, even if the language does not say so. We are, however,
less sure about Magna's intentions. This raises two questions. Is Magna
likely to expand its operations into assembly? If so, how would the
CAW-Magna 'Framework of Fairness' deal affect the Big Three?
Magna: From Parts to Assembly
Frank Stronach, the head of Magna, has long proclaimed an ambition to
expand his auto components empire into car assembly for the North American
market. Magna has for some time now been developing the capacity for such a
breakthrough, and has been building the engineering experience for doing so
through its Steyr plant in Austria, where it assembles specialty,
low-volume cars on contract primarily for Daimler, but also other companies
like the Saab unit of General Motors.
On August 29, 2006, a Globe and Mail story reported that the CAW was
'offering a radical new agreement' to Ford and that it 'could involve Magna
International Inc'. CAW President Buzz Hargrove confirmed the story and the
proposed six-year agreement included a longer phase-in period for new hires
(starting at 75% of the normal wage rate and getting to the full wage in
six years), postponement of some time off through the life of the agreement
and reductions in the number of job classifications to just two for each of
production and skilled trades. This announcement came on the heels of
Stronach's earlier announcement that Magna was working on the Framework of
Fairness agreement with the CAW which recently came to fruition (a similar
deal is in the works with the American United Auto Workers, UAW).
Speculation about Magna's future role as a major auto assembler took a
giant leap forward in the spring of 2007, when Daimler announced its desire
to sell its North American operations and Magna was, for a while, the most
likely buyer. The CAW came out in strong support of Magna, arguing -- in
spite of Magna's anti-union record -- that 'the union would not feel as
threatened' by a Magna takeover (Financial Post, March 31, 2007).
Daimler-Chrysler was eventually taken over by the US buy-out firm Cerberus,
but the saga of Magna's possible entry into assembly did not end. On July
17, 2007 -- at the very height of the negotiations over the Framework of
Fairness agreement -- the Financial Post reported that the CAW thought
Magna was on the verge of building an assembly plant in North America and
concerned that every effort be made to ensure it be built in Canada.
According to CAW economist Jim Stanford, the CAW was open to 'unique
contractual provisions' and 'prepared to offer...a competitive and
"high-performance" labour agreement to secure an investment.' Magna did not
confirm discussions with the CAW, but Mark Hogan, Magna's International
President did admit that such a factory was 'in the offing.' While CAW
President Hargrove declared that he was 'quite willing' to negotiate
'non-traditional' labour deals when factories are built from scratch, he
denied that anything was on the table at the time.
Magna Assembly and the CAW
If Magna follows through on this goal of moving into assembly, the degree
of competition and uncertainty in the industry rules out Magna trying this
on its own. Magna would only do so in some partnership with a major
automaker; one of the global assembly companies would subcontract a
particular model to Magna for final assembly.
Any such partnership would not be with the Japanese auto companies, who are
doing fine as is. Nor, given their non-union workforce, do they need to
subcontract assembly to escape union standards. The alliance might be with
a European-based producer looking for an entry into the North American
market. But in any such first entry, that producer would likely be very
wary about turning its management over to someone else, especially someone
themselves still in the early stages of becoming an assembler operations.
Magna's partner would, therefore, most likely be one of the Big Three.
Outsourcing a new low-volume model to Magna for assembly might be a way to
save on internal resources, use some of their current excess capacity for a
new 'experiment', and involve Magna in the process of getting a lower-cost
'non-traditional' agreement from the union (i.e. a union that agrees to not
quite act like one in compromising its workplace structures and range of
potential actions).
It matters very much that the partnership is most likely with one of the
Big Three rather than one of the Japanese companies. This affects the
likelihood of unionization. The CAW would be expected to use its existing
power and influence within either of the Big Three to insist on union
recognition at the new operation and a ramp-up to Big Three standards for
the workers. This was a key factor in the unionization of CAMI, which was a
joint venture between Suzuki and GM. The CAMI workers maintained the right
to strike and the steward system and ultimately lagged behind the Big Three
by only 2-3 years. (It further raises the question of why not use the
union's pressure at the Big Three to insist that any of their suppliers --
like Stronach -- not be allowed to deny workers their right to a free vote
to choose their representatives).
This is where the Magna-CAW new Framework of Fairness deal comes in. That
deal would trump any unionization drive or alternative agreement. The
agreement in the new assembly plant, if workers voted for the CAW, would
come under the new Magna-CAW deal and it would be based on Magna's
company-union structure, not the CAW pattern (See Framework of Fairness
agreement, p. 5, Part B, #1 and p.23, #2). The wages might be higher than
in the rest of the Magna chain, but the core elements of that deal -- the
permanent strike ban, the absence of a steward body, and the explicit
commitment to the priorities of Magna's philosophy -- would remain. (Note
too that about 20% of Magna's workforce is currently 'temporary' with lower
wages and much lower benefits; this two-tier structure has not been
mentioned in the CAW literature on the new deal, and it would presumably
remain in place.)
The CAW's 'foot-in-the-door' at Magna, one of the union's main arguments in
its defense of this deal, might then be the Magna Model's
'foot-in-the-door' confronting Big Three workers already facing immense
pressures. The implications of such a precedent, especially if it has been
legitimated by the union itself, are -- to put it mildly -- frightening. In
this light, CAW President Hargrove's statement at a press conference that
he would 'make a similar arrangement available to General Motors or other
auto makers that wanted to build a new greenfield plant in Canada' might
have been more than a verbal slip (Globe and Mail, October 15, 2007; note
that Hargrove later retracted his statement according to reporters who
followed it up).
If there is any validity to the above, it would also help explain one of
the mysteries surrounding this deal. Why did Frank Stronach, who spent his
life structuring his company to keep unions completely out, suddenly have a
change of heart? Was he thinking 'assembly' and how to integrate the union
beforehand?
A final question remains. Although Stronach -- as the 'Canadian
nationalist' -- has made it clear that his preferred legacy would be to
build any assembly plant for North American production in Canada,
Stronach-the-businessman might in fact build it elsewhere. He may very well
decide that the anti-union southern United States or third-world Mexico
might be a more conducive environment for controlling workers and keeping
costs down. The present value of the Canadian dollar certainly reinforces
the likelihood of Stronach taking his Canadian dream elsewhere.
This exposes a further dimension of the inequality built into the new
partnership with the CAW, as well as its limits. Canadian workers give up
their right to refuse their labour, but Stronach maintains his right to
allocate the profits he earned here as he sees fit. This applies, of
course, not only to the location of a new assembly plant: it also pertains
to Stronach's continuing right to relocate any of the work under the
Magna-CAW-deal.
Conclusion: Magna's Corporatism or Union Independence?
The timing of the Magna-CAW deal and other comments surrounding it warrant
some questions about the relationship between this deal, Magna's future
intentions in auto assembly, and the implications of this for Canadian jobs
and standards at the Big Three. These are, of course, part of the larger
set of questions that come with the current 'experiment' the CAW has
undertaken in one of Canada's most important industries and with the
largest employer in that industry. What are the implications for the CAW as
a whole, and the broader Canadian labour movement, of endorsing and then
selling an agreement which includes a no-strike pledge, the abandonment of
independent in-plant structures, and the embrace of Magna's corporatist
ideology?
The union movement was built by workers finding ways to organize when
'economic logic' suggested it was impossible. Indeed it was in the midst of
the Great Depression that autoworkers first fought their way to
unionization in the 1930s. Times do, of course, change. But it is in the
creativity and commitment of the workers who first formed the UAW and then
the CAW, and not in any return to the company unionism of the 1920s, that
workers will find the inspiration to build the independent organizations
they so desperately need.
Sam Gindin teaches political economy at York University.
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