Brent Snavely

Detroit Free Press

Unifor and General Motors remain far apart in contract negotiations but the union that represents Canadian autoworkers appears to be on the cusp of getting a lifeline from Canada.

The Canadian government is quietly planning to change the key terms of its Automotive Innovation Fund, which has previously offered automakers low-interest loans to support investments in Canada, according to a report earlier this week in the Toronto Globe & Mail. The government is likely to change the fund from a loan program to a grant program.

"Yes, the federal government has clearly signaled that they are going to shift direction and that is very positive," Unifor President Jerry Dias told the Free Press on Friday. "Do I believe that that will play a role and provide an assistance to us in our negotiations? The answer is yes."

The fund, introduced in 2008 by the Conservative government of Stephen Harper, offers repayable loans to automakers and parts companies. That structure was viewed as helpful at the time when automakers were struggling to get loans in the midst of the Great Recession. But they are of little use today when automakers can obtain low-interest loans from banks.

Meanwhile, current Prime Minister Justin Trudeau of the Liberal Party has been far more open to broader support for the automotive industry than Harper of the Conservative Party.

The help is arriving as Unifor enters the final days of negotiations with the Detroit Three. Its current contract with GM, Ford and Fiat Chrysler Automobiles is set expire at midnight on Monday.

Philip Proulx, a spokesman for Canada's department of Innovation, Science and Economic Development, would say only what the government has been saying for some time — that Canada is studying the issue.

"We have made clear we are looking at changes … to see how we can help the sector," Prouix said. "We are not ready to make any announcements."

A change from low-interest loans to grants could fundamentally change the financial calculations, or "business case," for any automaker considering an investment in Canada versus the U.S. or Mexico, said Flavio Volpe, president of Canada's Automotive Parts Manufacturers' Association.

"If, in fact, the government has made this change, it’s a significantly different offering for any automaker who is considering reinvestment," Volpe said.

Industry groups, including Volpe's parts association and the Canadian Automotive Partnership Council, argue that the federal government needs to step up in a more significant way for the Canada auto industry to be competitive.

Unifor and government officials have watched as Mexico surpassed Canada in automotive production in 2010 and are hoping to stem the tide of plant closures and job losses in this year's contract talks.

At least three plants operated by the Detroit Three in Ontario could close in the coming years if Unifor cannot secure product commitments from the automakers. Together, those plants employ 7,200 workers or about one-third of union members employed by the Detroit Three in Canada.

A change in incentives will only help Unifor if GM has a car or truck available for the Oshawa, Ontario, plant and most analysts say the Detroit automaker doesn't appear to have anything in the works that could keep the plant running.

"It's looking very slim when it comes to options for Oshawa," said AutoPacific auto analyst Dave Sullivan.

In Oshawa, the union is trying to save 2,600 jobs and keep a plant running that has been in jeopardy for several years. GM builds the Chevrolet Impala, the Buick Regal and the Cadillac XTS at the plant but all three are to be discontinued or moved to other plants. The plant also handles overflow production for the Chevrolet Equinox but that production is scheduled to end in 2017.

So far, GM has refused to discuss product commitments as a part of its negotiations with Unifor.

"We haven’t talked product yet at all," Dias said. "There seems to be an agreement that Oshawa is one of their most competitive plants in the world. I think the fact that we are having those types of discussions is a good start."

A GM spokesman declined to comment.

Dias said Unifor has been making progress with GM in discussions on wages and benefits. But Dias has repeatedly pledged to call a strike without clear product commitments.

In America, strikes are used less frequently than in the past. Unions that use them run the risk of alienating the general public rather than winning support.

"I think that's less of an issue in Canada," said Kristin Dziczek, director of the labor and industry group at the Center of Automotive Research. "I don’t think they would be vilified as much as if the UAW called a strike."

Dias has specifically threatened to call a strike at an engine and transmission plant in St. Catharines, Ontario, because a strike there could impact several GM plants. GM makes V6 and V8 engines as well as six-speed transmissions at that plant that are used in a wide range of vehicles including the Chevrolet Silverado and Tahoe and the GMC Sierra and Yukon, as well as the Chevrolet Camaro, Impala, Traverse and Equinox.

On Sept. 8, leaders of Unifor Local 88 at GM’s Cami assembly plant in Ingersoll, Ontario, sent a letter to GM saying their workers would refuse to accept parts from other plants that they normally get from the St. Catharines plant.

"Any supplemental/alternates parts/components being used we will be treated as 'hot cargo,' " union leaders from the local said in the letter. "The membership of Unifor Local 88 will not handle or work with these parts."

Contact Brent Snavely: 313-222-6512 or bsnavely@freepress.com. Follow him on Twitter @BrentSnavely.