He's in the CAW driver's seat — but where's he going?
When Ken Lewenza became president of the Canadian Auto Workers last September, he had no idea it would soon be begging for government loans — $14 billion in the U.S. and $3.4 billion in Canada — to stay afloat. Lewenza spoke with This in January about the challenges the CAW faces in these most uncertain times.
This: How did the North American automobile industry end up in the current crisis?
Lewenza: Looking at the market share decline [in recent] years, it was predictable that the market would continue to drop. Foreign vehicles were coming in at unprecedented rates. In the last decade, we've lost 15 to 20 percent market share. Thirty percent of the vehicles are [manufactured] offshore. That doesn't include the transplants [cars made by foreign companies that are assembled in North America]. So I think public policy initiatives, of which deregulation was a big part, systematically destroyed the auto industry. The United States and Canada are open markets. Our biggest threats are Japan and Korea today and China and India tomorrow. They have closed markets. Less than one percent of the vehicles we build in North America go into Korea. Less than five percent go into Japan...because we don't have access to those markets.
This: Why did the Big Three not foresee the current predicament?
Lewenza: GM and Ford in particular were making significant investments offshore. Ford is huge in Europe. GM is huge in China. They lost focus on their home base. They thought they could make up lost market share by concentrating their investments outside North America. But it didn't work out.
This: When the federal and Ontario governments say all stakeholders should contribute to solving the crisis, do you think that message is aimed at the CAW?
Lewenza: Absolutely. They used the term "stakeholders," but in every single interview they referred to the CAW and our collective bargaining.
This: Are you willing to make concessions?
Lewenza: We have already agreed to a three-year wage freeze and given up some of our vacation time. That's a total over three years of anywhere between $750 million and $900 million out of our members' pockets. Today we could work for literally nothing and it wouldn't make a difference [toward solving the crisis]. The total labour rate for a fully assembled vehicle is just seven percent of the cost.
This: But do you agree the politicians need you to make concessions in part because of optics?
Lewenza: Yes. And "optics" is the right word to use.
This: So are concessions going to be made?
Lewenza: It's hard to predict. In the U.S. they dictated as part of getting the loans that the UAW would roll back their total compensation rates comparable to the transplants in the U.S.
This: Aren't some of the transplants paying $14 or $15 an hour in the southern U.S.?
Lewenza: They are. And they don't have to pay for about a million retirees that the Detroit Three have to fund.
This: But when the public sees what a CAW worker gets paid —
Lewenza: Which, with all the benefits and deductions, the total cost of employing a manufacturing worker in Canada comes to be about 68 bucks an hour —
This: — they think that's a lot and there's room for concessions.
Lewenza: If [concessions] come, I think they will be in the form of improvements in productivity. New technology. More robotics. It will mean fewer jobs for the CAW, but we won't oppose the changes.
This: What's your forecast for the future?
Lewenza: About five years ago the total U.S. vehicle market was about 17 million vehicles in the U.S., which is where most of the cars we make end up. In calendar year 2008 it will be less than 12 million units. I don't see the numbers increasing in the next few years. Bestcase scenario is over the next five years maybe as high as 14.5 million. So there are going to be casualties and the changes are permanent. The plants that we lose today are not coming back.
This: If you went to a high school career day what would you say to someone who asked if they should become an assembly-line autoworker?
Lewenza: I'd tell them to avoid the auto industry. [Years ago] I told them it was hard work, boring work, but you could earn a good living and support your family. I wouldn't say that now.