Canadian Union Says GM Warns of Production Shift to Mexico Over Strike

By Mike Colias Features Dow Jones Newswires

General Motors Co. has warned Canadian union officials the auto maker will shift more production to Mexico unless striking workers at a GM sport-utility plant don't return to the job, the union's top official said.

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Company negotiators on Wednesday told the union representing about 2,500 workers at GM's CAMI factory in Ingersoll, Ontario, that it will boost production of the Chevrolet Equinox SUV at two GM plants in Mexico to offset the nearly monthlong strike, said Jerry Dias, president of Unifor, which represents Canadian auto workers.

"They said they're going to ramp up production at their Mexican operations to satisfy the American and Canadian markets," said Mr. Dias.

About 2,500 workers walked off the job at CAMI Sept. 18 as their four-year contract expired. The sides returned to the bargaining table days later but since then have been in a stalemate.

A GM spokeswoman declined to comment.

Mr. Dias said the union wants GM to designate CAMI as its primary North American factory for the Equinox, a compact crossover SUV and GM's No. 2 vehicle by U.S. sales volume. The plant has served as the main production source for Equinox since the vehicle's introduction in 2004.

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When GM introduced an all-new version of the Equinox early this year, the auto maker equipped its factories in San Luis Potosi and Ramos Arizpe in Mexico to assemble the SUV to supplement CAMI's output. That has given GM greater leverage in the labor dispute.

The lengthening strike is playing out as negotiators for the U.S., Canada and Mexico continue discussions in Washington over potential changes to the North American Free Trade Agreement. Mr. Dias said GM's relocation of some SUV production to Mexico is "the poster child for what's wrong with Nafta."

"This is GM's way of saying not only to Canada but to the U.S., 'We're going to do what we want,'" Mr. Dias said in an interview. "There is no loyalty with GM when it comes to their employees. It's all about money."

GM laid off several hundred works at CAMI earlier this year when it relocated production of a related model, the GMC Terrain, to Mexico. Union leaders are worried about job security amid the threat that more work could be taken from the plant, which is among GM's busiest in North America.

The CAMI factory was forecast to make about 212,000 SUVs next year, with the two Mexican plants building the rest, according to The Monthly Autocast, a research firm. GM could shift most or all of CAMI's output to the Mexican factories, though that would likely disrupt some production of other vehicles made there, according to research firm J.D. Power.

GM has ample unused factory space in the U.S., but retooling one of those plants to make the Equinox could take a few years. GM invested more than $600 million in CAMI in recent years to build the new model.

Chevy's U.S. dealerships had a relatively thin 41-day supply of Equinox at the end of September, according to WardsAuto.com.

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

(END) Dow Jones Newswires

October 12, 2017 10:50 ET (14:50 GMT)