GM General Motors Company

By Mike Colias 

The union representing Canada's auto workers reached a tentative agreement on a new four-year contract with General Motors Co., averting a strike that threatened to disrupt production of GM's sport-utility and other high-margin vehicles.

Unifor President Jerry Dias said early Tuesday that GM has committed to spending "hundreds of millions of dollars" to keep open a vehicle assembly plant in Oshawa, Ontario, beyond a potential 2019 closure. Securing future investment in Canada was the union's top priority during the talks.

GM confirmed the tentative contract, saying it "will enable significant new product, technology and process investments," at the plants.

Mr. Dias said the Oshawa plant--which now makes several light-selling sedans that were expected to fallout of GM's production plans by around 2019--would be retooled under the agreement to produce both cars and trucks.

Around 3,900 Unifor workers covered under the contract still must ratify the proposed agreement once the union's bargaining committee irons out some final details with GM, Mr. Dias said. He also said about 700 temporary workers will be made full-time employees under the agreement.

A strike would have sent Unifor members to the picket lines beginning Tuesday at the Oshawa plant as well as a factory in St. Catharines, Ontario, near Niagara Falls, which makes engines and transmissions that go into many of GM's SUVs and pickup trucks. Analysts said a walkout there represented the biggest risk to GM because it eventually could have spilled over to pinch production of those models, which generate a disproportionate share of the auto maker's profits.

Mr. Dias said GM, as part of the proposed deal, also slated additional work for the St. Catharines plant, including some engine production that will be shifted from Mexico.

"The facilities clearly have a bright future," said Mr. Dias, who throughout the monthlong talks had stressed the need for an upfront commitment from GM on Canadian investment. GM officials had said they didn't want to address future production plans for Canada until an agreement was in hand.

Unifor's contracts with GM, Ford Motor Co. and Fiat-Chrysler Automobiles NV covered about 20,500 workers combined and expired at the end of Monday. The union chose GM as the target company for negotiations in hopes of reaching a deal that could be used as a template for the other two.

If the tentative deal with GM is ratified, Unifor negotiators will pivot to Ford and FCA. Union officials want fresh product commitments at an FCA assembly plant in Brampton, which makes the Chrysler 300 and other sedans, and two Ford engine plants in Windsor.

Unifor and Canadian government leaders have said that the future of Canadian auto manufacturing is at stake in the current contract negotiations, after watching the lion's share of the three Detroit companies' investment flow to existing U.S. plants and new Mexican factories in the years since the financial crisis.

Write to Mike Colias at Mike.Colias@wsj.com

(END) Dow Jones Newswires

September 20, 2016 01:59 ET (05:59 GMT)

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