There is growing concern about a potential labor disruption in Canada as members of Unifor, a major union, voted overwhelmingly in favor of a strike mandate at three major automakers. This vote occurred during negotiations between the union and the companies, which have since been paused. The current collective agreements covering 18,000 workers are set to expire on September 18.
Economist Moshe Lander warns that a strike at any of the automakers could contribute to the ongoing inflation in Canada, which has primarily been caused by supply chain disruptions rather than higher labor costs. He explains that labor costs eventually impact output costs, which could lead to the Bank of Canada increasing interest rates.
Lander also suggests that a supply chain disruption caused by an auto strike could worsen the potential economic issue of a recession. If there is a shortage of workers in the production process, fewer cars will make it to dealership lots, resulting in lower gross domestic product (GDP) numbers. This could impact car sales and potentially push the country into a recession.
Last month, inflation in Canada rose to 3.3%, exceeding the Bank of Canada’s target range of 1-3%. Rising food prices and mortgage costs contributed to this increase. While there is hope that the Bank of Canada will not announce another rate hike in September, some economists remain skeptical.
Unifor recently announced that it had chosen Ford as its target company for negotiations with the automakers, with the intention of reaching a deal that could serve as a blueprint for further talks with General Motors and Stellantis. However, union president Lana Payne warns that if an agreement that members can be proud of cannot be reached, there will be no deal.
These negotiations coincide with similar talks between the United Auto Workers in the U.S. and the same companies. Last week, the U.S. union’s members also voted in favor of a strike, adding to concerns about potential disruptions on both sides of the border.
While a strike could create supply issues for both countries, Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, believes that even if a strike occurs in the U.S., it may not have a significant impact. He suggests that there might be a redirection of resources during the disruption.
Despite concerns about the potential impact of a strike, Volpe does not anticipate a work stoppage in Canada due to the established relationships between the companies and Unifor. These relationships, built through collaboration on trade disputes and other matters, contribute to a “thoughtful relationship” that fosters labor peace among automakers.
(Source: Global News)
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