GM General Motors Company

By Mike Colias 

A Canadian union failed to reach an agreement on a new contract with General Motors Co. and its members will strike, labor leaders said late Sunday, threatening to crimp supply of the auto maker's top-selling SUV.

Unifor Local 88, which represents about 2,450 workers at GM's CAMI Assembly plant in Ingersoll, Ontario, said on its website that its members "will be on strike" as of Sunday night, after its contract expired. In a statement, GM said it is "disappointed we were not able to complete a new agreement" and encouraged the union to resume negotiations.

The CAMI plant produces the compact Chevrolet Equinox, which competes in the most popular vehicle segment in the U.S. market. Equinox sales have been surging as GM winds down production of an old model and rolls out an all-new version.

The local chapter has said it wants improved wages and benefits as well as commitments for further investments in the plant that would bolster job security. GM this year laid off several hundred workers, though the factory remains one of the auto maker's busiest in North America.

Crossover SUVs have become a battleground for auto makers as low gas prices and shifting consumer tastes fuel growth. The vehicles generally are more profitable than sedans, which have fallen out of favor in recent years.

While GM invested more than $600 million in the Ingersoll plant to gear up for the redesigned Equinox that went on sale this spring, it also moved some production to Mexico, which should give the auto maker some flexibility should the strike drag out.

GM's U.S. dealers had a 53-day supply of Equinox on their lots or en route to stores at the end of August, according to WardsAuto.com. That is relatively thin inventory as the nation's largest auto maker looks to accelerate the launch of the redesigned model. The company averaged an 87-day supply across all of its vehicle lines.

U.S. sales of the Equinox rose 17% to about 185,000 vehicles this year through August, making it GM's second-highest-selling product behind the Chevy Silverado pickup. It also sold about 17,000 Equinox SUVs in Canada.

GM executives have said the rollout of the new Equinox and three other revamped crossover SUV models this year should provide a profit tailwind.

GM invested more than $600 million in the Ingersoll plant to gear up for the new Equinox, which went on sale this spring. The plant for years has strained to meet demand, which was a factor in GM's decision to also build the vehicle in Mexico.

GM made about 161,000 SUVs at the CAMI plant this year through July, according to WardsAuto.com.

GM a year ago agreed to a four-year contract with Unifor for its other Canadian operations, including an engine plant and another vehicle-assembly facility. The CAMI factory operates under a separate contract.

The Canadian auto sector has been shrinking in recent years as auto makers pour investment into Mexico and the U.S., partly to avoid Canada's relatively high manufacturing costs.

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

(END) Dow Jones Newswires

September 18, 2017 00:17 ET (04:17 GMT)

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