Brent Snavely

Detroit Free Press

TORONTO — General Motors averted a possible strike at its Canadian plants, reaching a tentative agreement with its union there just before midnight in Toronto, union president Jerry Dias said.

Dias, president of Canadian union Unifor, said GM has promised to invest millions at its plants in Oshawa and St. Catharines Ontario that secures the future of both plants.

The deal, which must still be approved by the union's members, potentially represents a major breakthrough for both Canada and Unifor, which faced steep odds heading into negotiations because most new automotive investments that have occurred in North America have moved south to Mexico.

In Oshawa, where GM employs about 2,600 workers, Dias said the automaker made a commitment to retool the plant so it can build a new car or truck and said the automaker has earmarked a specific vehicle for the plant.

"The commitment at Oshawa is for hundreds of millions of dollars," Dias said. "Therefore, our fear of a closure in 2019 is now over. The facility clearly has a bright future. This will be the first and only plant in North America that will be able to build cars and light trucks."

GM also has promised to move an engine program from Mexico to Canada and produce that engine at its St. Catharines plant, where it currently makes other six-cylinder and eight-cylinder engines as well as transmissions.

Mexico has far cheaper labor rates than Canada and also has become attractive for automakers because of its free-trade agreements with 45 countries. Mexico now produces approximately 20% of the light vehicles made in North America by all automakers and has captured nine of the last 11 new North American assembly plants built since 2011, according to the Center for Automotive Research.

"Our agreement with St. Catharines not only stabilizes the plant ... but will include volume coming from Mexico to Canada," Dias said, adding that the commitment is "a straight switch of what has been happening historically."

GM confirmed that it has agreed to the new investments that will place its Canadian "operations at the forefront of advanced manufacturing flexibility, innovation and environmental sustainability."

However, the automaker also said it "will be working with government on potential support."

In the past, Canada and Ontario have been asked to provide steep incentives to retain investments and the government is currently considering a change to the way it provides incentives to automakers.

Unifor entered contract talks this year with the odds stacked against it and Ontario, the province where all of the Detroit Three's plants are located in Canada. Collectively, the Detroit Three promised to invest $16.2 billion in U.S. plants over the next four years as part of a new contract with the United Auto Workers union.

GM promised a total of $1.9 billion in new investments to the UAW and that was on top of about $6.4 billion in additional investments planned in the U.S, leaving it with few products left to build in Canada. GM also said in late 2014 it would invest $5 billion to double the capacity of four plants in Mexico and create 5,600 jobs.

Dias declined to name the specific vehicle or engine that GM promised, saying he preferred to tell Unifor members before the general public.

Unifor, which represents about 23,500 workers at the Detroit Three, picked GM as its target on Sept. 6. By doing so, Unifor showed that it was determined to solve its toughest problem first.

The only negative in the new agreement, from Dias's perspective, is newly hired workers will have a defined contribution plan rather than a defined pension plan.

Dias said Unifor also was able to negotiate wage increases for its workers and change the terms of the current 10-year progression to the top wage for newly hired workers.

Currently, new workers hired by the Detroit Three in Canada start at C$20.40 per hour and reach the top wage of C$34 per hour after 10 years. Many Unifor autoworkers who haven't received a raise in 10 years are expecting wage increase in this round of negotiations.

"We changed the progression to give our new members much more money up front," Dias said. "We secured wage increases, we secured lump sums."

Unifor leaders called the new deal with GM a "framework" of an agreement because several disagreements over the language of the contract must still be ironed out. Still, Dias said he expects that will happen in the coming days.

Unifor members will vote on the new agreement on Sunday. Dias said the union's agreement with GM will provide leverage as the union turns its attention to Ford and Fiat Chrysler Automobiles. Dias he will decide within the next 24 hours which company the union will focus on next.

Follow Detroit Free Press writer Brent Snavely on Twitter @BrentSnavely.