GM Strikes a Deal in Canada

The strike by 36,000 Canadian autoworkers against General Motors started out two weeks ago as only a minor nuisance for the giant automaker, but it soon escalated into a major problem. Because of parts shortages caused by the walkout, GM had to lay off 40,965 hourly workers at 30 U.S. plants in ten states. Canadian Union Boss Robert White was demanding that his GM workers receive a bigger wage increase than the one their U.S. counterparts got in their new contract. White, though, was under heavy pressure from United Auto Workers President Owen Bieber to settle the strike quickly. Bieber did not want to see Canadian wages get too far out of line with American pay rates and was eager to get U.S. workers back on the job. Last week, after GM made a new pay proposal, the union accepted the offer, which must still be ratified by the rank and file.

With auto sales strong, as they now are, strikes can be costly. GM announced last week that its third-quarter earnings fell 43%, largely because of the one-week walkout by U.S. workers in September. Securities analysts figure that the first seven days of the Canadian strike cost GM $35 million; the losses would have risen to $135 million a week if there had not been a settlement.