2010 Chevrolet CamaroGM
About 70 former employees of Automodular Corp. will be hired by Inteva Products, the Michigan-based company that recently won a contract to supply parts and services for the Camaro muscle car built by GM in Oshawa, Ont., according to the Canadian Auto Workers union.
Automodular said last week that it will lay off 100 people due to GM Canada's decision to switch the contract to its rival as part of the automaker's campaign to reduce costs and operate profitably after nearly going bankrupt last year.
Under an agreement involving their union and Inteva, some of the former Automodular employees will simply move to another factory in September, once Inteva sets up shop in Canada and takes on the contract.
The CAW members will be paid at the same rate that they would have gotten at Automodular but the union has agreed to find ways to reduce the new employer's overall costs, CAW spokesman Jerry Dias said in an interview Monday.
The union has agreed to find ways for Inteva to cut labour costs by 10 per cent in the first year of the contract, but that will be reduced to 5 per cent in the second year, he said.
"We can find the 10 per cent savings without touching wages without any problem," Mr. Dias said.
Those savings can be found through workplace efficiencies, said Mr. Dias, who is assistant to CAW national president Ken Lewenza.
"People are celebrating," he added "Usually when the contract was awarded to somebody else, people are expecting the worst. So they were very surprised."
In addition to saving jobs for some of Automodular's current and laid-off employees, who will be selected for the Inteva job based on seniority, some could receive sizable severance packages as they switch from one company to another.
"People with over 20 years will get, for example, over $20,000," Mr. Dias said.
He added there are currently more than 200 CAW members who have been laid off by Automodular, not counting those affected by GM's decision to switch work to Inteva, which hasn't had a presence in Canada.
Mr. Dias said he doesn't know where Inteva's factory will be located or even if the company has leased space yet.
Inteva's spokeswoman was in a meeting and unavailable for comment. GM Canada's spokesman couldn't be reached for comment.
Automodular, based in Ajax, Ont., said last week it intends to sue GM Canada for $20- million for cancelling the agreement in the middle of the contract.
A spokesman for GM Canada said last week that the contract included a provision that Automodular needed to remain competitive and that General Motors had pressed Automodular to lower its costs for "the better part of the last two years."
Automodular shares traded Monday at 33 cents, up a penny, on the Toronto Stock Exchange.