View Full Version : Magna and the CAW: Stronachism

10-17-2007, 12:48 PM

Peter Foster
National Post

Wednesday, October 17, 2007

The North American auto industry got itself into desperate shape by yielding to union power and giving away too much in wages and benefits. By contrast, for more than 30 years, the success of Canadian-based Magna, one of the world's largest and most successful auto-parts makers, has been based at least partly on resisting unionization efforts by the Canadian Auto Workers.

Given this context, the announcement on Monday that Magna would open its Canadian factories to the CAW seems at best paradoxical, at worst downright crazy. At first sight, it appears a clear and unexpected victory for the CAW, whose membership, and relevance, has been flagging for years. But appearances are deceptive.

In fact, this agreement signals much less a pro-union epiphany on the part of Magna's charismatic founder, Frank Stronach, than a piece of strategic industrial realpolitik. If Mr. Stronach wants to get more assembly business from the Big Three, he is going to have to placate the unions who regard such work as "theirs." That means at least opening the door to Buzz Hargrove's CAW.

Magna is still reportedly eager to become a strategic partner with Cerberus Capital Management, the private-equity firm that earlier this year took over Chrysler. Meanwhile, the union to which Mr. Stronach is opening his doors is allegedly a much changed creature from the beast that came baying at his gates 30 years ago (although we might reasonably ask old dog/new trick questions, given that Mr. Hargrove has been leading the assault all these years).

The long-term consequences of the unions' adversarial power game have become painfully apparent. An indication of how much unions can really promise "job security" lies in the fact that the number of hourly workers represented by the UAW at GM today is less than one-third what it was in 1994.

The recent settlements between the UAW and GM and Chrysler have involved major concessions by the union, along with an acceptance of the burden of managing the employees' health care arrangements. The UAW/Chrysler deal gives the company the right to hire new workers at lower levels of pay and benefits.

The Magna/CAW deal has been in the works for a couple of years, not coincidentally since Mr. Stronach started looking at acquiring Chrysler. It has been presented in terms of the need for more competitiveness and flexibility in the face of Asian competition, rather than those of placating potentially obstructive unionists in order to get assembly work. If Magna merely wanted to stay competitive and flexible, then it would continue to resist the CAW.

In his message to Magna shareholders in its 2006 annual report, Mr. Stronach stressed that a way had to be found to meet the lower wage and other costs faced by new Asian manufacturers. He declared that a new agreement would "clearly define the rights of workers and the responsibilities

of management and would also involve a clear-cut profit-sharing plan involving employees." The result is the "Framework Fairness Agreement," FFA, signed on Monday. The FFA, according to Magna, "represents a new labour model that aims to preserve the key components of Magna's Fair Enterprise system, while ensuring proper checks and balances."

But the checks and balances seem to be mostly on the union. In particular, the agreement removes the right to strike, which is always much to be desired by employers but looks almost like a dereliction of duty if conceded by a union.

The FFA preserves profit sharing, requires secret ballots and introduces new dispute-resolution mechanisms. Wage increases, however, are to be based on a formula that reflects market realities rather than union clout. It also calls for more nebulous goals such as the "depoliticization" of labour-management relations. Since Magna never allowed a politicized union environment to take hold in the first place, this should more accurately be termed a continued rejection of politicization.

On the CAW's bright side, it stands to gain union dues from the overwhelming majority of Magna's 18,000 or so hourly paid Canadian employees. But this leads to an uncomfortable question:What's in it for the workers? Magna's employees seem to be relatively happy with the situation as it stands. If a worker earning $14 an hour signs on to the FFA, what will he receive in return for his approximately $400 of annual CAW union dues, apart from a potential source of aggravation? Buzz Hargrove has effectively admitted that the workers won't be getting any more money as a result of signing on with the CAW.

This agreement has to be voted on by individual workplaces. Mr. Stronach is claiming that he will recommend that his workers sign it, but they may well ask why he has changed his mind about the benefits of having a union at Magna. And what if some, or even a majority, of Magna's workers decide to turn down the CAW? Mr. Stronach will be able to tell the UAW that he offered the union alternative to his employees; they just didn't want it. Whether the UAW would go along with this argument remains to be seen. But any significant refusal by Magna workers to sign on with the CAW would merely confirm the union's practical irrelevance.

© National Post 2007

10-17-2007, 06:04 PM
like it says it will be voted at every single plan individually and i hope this shit doesnt get thru at my place.
so far there hasnt been any official announcements from the HR office, we'll see what happenes in the next couple of months.
but like even the article says there doesnt seem to be any benefits for the guys working there, except they have to pay stupid union fees lol.

and turns out im not even allowed to vote, since im considered part of the management, that sux.

10-17-2007, 11:51 PM
unfortunate for you. even though i'm a union member at my part time job, i'm very anti union. union shops reward tenure and not merit. there is always a sense of entitlement, as opposed to responsibility. if there are no benefits for you guys to join the union, i very much hope your coworkers do the right thing and vote against.