The Big Three automakers now have the CAW pinned down
By the time you read this, I suspect that negotiations between the Canadian Auto Workers (CAW) and the Big Three auto manufacturers will have been long wrapped up. My prediction is that from the CAW, there will be plenty of bleating and whining after the fact about all the concessions they were forced into. They will probably call on the government to do something—something that will benefit the handful of their members at the expense of everyone else. The vast majority of us will ignore what they’re saying, as we should. And when I look back at this negotiation, I’ll always think of the classic Rolling Stones song, Under My Thumb.
If you can remember when it came out (it was 1968), you’re dating yourself. But whenever you were born, my guess is that you’re probably familiar with it. However, you might not recall the first couple of lines: “Under my thumb, the girl who once had me down/Under my thumb, the girl who once pushed me around.” What we’re looking at, if I can turn the song into metaphor, is that the CAW is the girl and the Big Three are Mick Jagger. The CAW used to have the power in the relationship but, as the song says, the change has come. The Big Three are in the driver’s seat today and should be there for a very long while.
Here’s why the CAW previously had the control position. They and their American counterparts, the UAW, were very good at a technique called pattern bargaining. The unions would identify the most profitable of the Big Three and make their demands to that company first. There are a couple of reasons why this made sense. First, the most profitable company can afford to pay the most in wages. That’s logical. And because things are going well for that company, it’s also the last one that wants to see a labour stoppage in the form of a strike. So it’ll agree to the most generous deal. Then this first settlement becomes Ground Zero for negotiations with the other two car companies.
However, the auto makers finally figured something out. Because of the monopoly power granted to unions, they can’t make anyone in Canada compete in order to bring wages into line with appropriate market rates. But what they can do is pit the CAW against the UAW against Mexican assembly workers for jobs. There’s no law that says they have to assemble cars in Canada—or in any particular American state, for that matter. So what the automakers did, implicitly, was hold the sword of closing operations over the CAW’s head—which is why the change has come—and the CAW is now under the Big Three’s thumb! b2b
Toronto-based Michael Hlinka provides business commentary to CBC Radio One and a column syndicated across the CBC network.