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NAVIGATION
PNHP RESOURCES

Canadian Auto Works Support Medicare

Sep. 21, 01:00 EDT
Carol Goar
THERE'S ALWAYS a surprise when Buzz Hargrove negotiates a contract with one of the country's auto giants.

Three years ago, it was a generous child care subsidy. Ford of Canada agreed to provide parents of preschoolers with up to $2,000 a year to help defray their child care expenses. Nothing like that had ever been achieved at the bargaining table.

This time, it was a corporate endorsement of medicare. Hargrove persuaded Michael Grimaldi, president of General Motors of Canada, to praise publicly funded health care and call for its expansion to include prescription drugs and home care. No high-profile business leader has done this.

It was a gratifying week for the president of the Canadian Auto Workers. Not only did he reach a trendsetting deal with General Motors five hours before the strike deadline, he played a role in the health-care debate.

He can't declare victory yet. Workers at GM's five plants have to ratify Tuesday's tentative agreement and Hargrove has to win comparable settlements for his members at Ford and DaimlerChrysler.

But he has achieved his goal on medicare. The top executives of the Big Three automakers have all signed a letter endorsing Canada's publicly funded health-care system and asking that it be enlarged. "The system needs a secure multi-year funding base from the government and must be expanded to cover an updated range of services including prescription drugs and home care," the statement says.

It would be naïve to believe that senior auto executives — particularly Grimaldi who is American — would stand up for socialized medicine out of a sense of public spiritedness.

They did it because it cost them nothing, it improved the bargaining climate and it clearly mattered to the CAW.

But that is not the whole story. Hargrove had tried to put medicare on the table in past bargaining rounds, but had always been rebuffed. The heads of the car companies would admit privately that Canada's public health-care system was a godsend, sparing them the expense of providing comprehensive medical insurance to their employees. But they would never say it in public.

This time, they agreed. Several factors changed their attitude:
*
The CAW was able to quantify, using credible corporate data, the competitive advantage that medicare provides to the Canadian auto industry.

The union compared the hourly labour costs of vehicle assembly in Canada and the United States. The Canadian rate, including wages, benefits and payroll taxes, was $29.90 per hour. The American rate was $45.60. (All figures are in American dollars.)

Health care accounted for more than a quarter of the difference. It saved Canadian employers $4 per hour per worker.

"It's a strategic advantage for Canada," said Grimaldi, at a joint press conference with Hargrove.
*
Management was concerned about the escalating cost of workplace health benefits.

Drug costs were rising rapidly. Acutely ill patients were being sent home to recover, needing private nursing and home care. More and more medical services were being "delisted" by provincial governments, forcing employers to step in.

The union did not have to make the case that the erosion of medicare had real consequences for business. The car companies were feeling the effects.
*
The health-care outlook worried corporate accountants.

With an aging population, ever-more sophisticated medical technology and a global bidding war for doctors and nurses, it was clear that health costs could only climb.

The less governments covered, the more individuals and their employers would have to pick up. What had once looked like a costly social program to auto executives began to have bottom-line appeal.

It would be a mistake to read too much into a simple endorsation of medicare.

The auto executives did not agree to do anything specific to support or strengthen medicare. They did not challenge other business leaders to speak out. They did not grapple with the difficult question of how to pay for a pharmacare plan or a national home-care program. They certainly did not say that they'd be open to a tax increase to sustain Canada's publicly funded health-care system.

But they did take a stand. They did acknowledge that medicare is good for business.

Hargrove contends that their intervention came at a perfect time to influence the Romanow Commission, which is now drafting its final report on the future of medicare.

In fact, the automakers' statement probably came too late — and said too little — to affect Roy Romanow's prescriptions in any material way.

But it was well-timed to suit Hargrove's agenda. The CAW president is pondering a run for the leadership of the New Democratic Party. He has said he will make up his mind when he completes this round of auto bargaining.

The 58-year-old labour leader has been highly effective at getting good deals for his members, while nudging the country's social agenda forward.

But he's had the resources of the country's largest private-sector union behind him. He's dealt with rich, pragmatic employers. He's known the drama of late-night dealmaking and the euphoria of winning.

Hargrove might find politics a comedown.

GREG KEENAN
AUTO INDUSTRY REPORTER

Canada's system of government-financed health care represents about
half the cost advantage General Motors of Canada Ltd.'s assembly
plants have over U.S. plants, GM Canada president Michael Grimaldi
says.

The health care system is a "strategic advantage," for Canada, Mr.
Grimaldi said yesterday as he and Canadian Auto Workers union
president Buzz Hargrove unveiled a joint letter that the union and all
Big Three auto makers are sending to Ottawa.

"The public health care system significantly reduces total labour
costs for automobile manufacturing firms, compared to the cost of
equivalent private insurance services purchased by U.S.-based auto
makers; these health insurance savings can amount to several dollars
per hour of labour worked," the union, GM, DaimlerChrysler Canada Inc.
and Ford Motor Co. of Canada Ltd. said in the joint statement.

"The erosion of publicly funded health care -- through measures such
as the delisting of currently covered services, the imposition of user
fees, the failure of the public system to keep up with the changing
nature of health care and new costs such as prescription drugs and
home care -- will impose significant costs on automotive employers and
undermine the attractiveness of Canada as a site for new automotive
investment," the letter said.

The public health care system also makes Canadian workers healthier
and more productive, the letter added.

Mr. Grimaldi said preserving and enhancing the health care system will
make it more attractive for GM Canada to continue making investments
here.

He cited the addition of a third shift at one of the company's car
plants in Oshawa, Ont., and a $500-million investment at Cami
Automotive Inc., a joint venture assembly plant operated with Suzuki
Motor Co. Ltd.

The joint statement comes as the CAW is locked in contract talks with
the Big Three. At the moment, it is negotiating with GM Canada with a
deadline of next Tuesday night for a new contract.

Those talks are going well, both Mr. Hargrove and Mr. Grimaldi said,
while tossing compliments at each other.

Mr. Hargrove said he's hoping for a first wage offer from the company by as early as today.

"A lot of money and a lot of jobs will get you an agreement, Mike," he
told Mr. Grimaldi.

But the focus yesterday was on health care, including during the
talks.

Mr. Hargrove said a presentation from GM Canada's health care provider
showed that "some of the increases we're facing in drugs are
astronomical."

GM Canada's parent, General Motors Corp., is facing similar
challenges, Michael Bruynesteyn, an analyst for Prudential Securities
Inc., noted in a recent report.

"We understand from GM that it is the world's largest purchaser of
Viagra, a benefit not usually covered by many U.S. employers' health
care plans," Mr. Bruynesteyn noted.

Between employees, retirees and their dependents, GM pays for health
care benefits for about 1.25 million Americans, roughly the population
of Manitoba, Stephen Girsky, an auto industry analyst for Morgan
Stanley, noted in a report on GM last year.

The costs of that service amounted to $3.9-billion (U.S.) in 2000, Mr.
Girsky noted.

That in turn, represented a little more than $900 on every vehicle GM
assembled in the United States in 2000.

United stand on health care
CAW, GM leaders urge Ontario, Ottawa to increase public funding
By Steve Arnold
The Hamilton Spectator

Corporate and union leaders of Canada's auto industry have issued a united
call for increased government health care funding.
In an unprecedented move yesterday, the presidents of the Canadian Auto
Workers union and the Big 3 auto makers signed a joint letter urging the
federal and provincial governments to recognize the important role publicly
financed health care plays in the country's economy.
"The success of (the auto) industry has been crucial to Canada's economic
progress over the past decade," the letter states. "Canada's health care
system has been an important ingredient in the auto industry's performance."

GM Canada president Michael Grimaldi and CAW leader Buzz Hargrove told a
news conference that about half of the labour cost advantage Canadian auto
plants enjoy over American competitors can be attributed to the national
health care system, and losing that advantage would cost jobs.
"Canada's health care system is an important part of Canadian culture, a
significant factor in Canada's economy and we must ensure it plays that role
in the future," Grimaldi said. "Health care is important to the country and
to the auto industry and we're looking to the policy makers ... to look at
the system and make sure it addresses the needs of Canadians."
In the letters, which were also signed by Ford Canada president Alain Batty
and DaimlerChrysler Canada head Ed Brust, the industry leaders worry that
measures such as reducing the number of services covered by the public plan,
increasing user fees, the failure to include important new treatments on the
list of covered procedures and the ever-rising cost of prescription drugs
will lead to higher employment costs as workers push for higher wages or
better benefit plans to protect their standard of living.
Those increases, in turn, would mean higher vehicle prices or less
investment in Canada as companies turn to low-wage countries like Mexico.
"For both employers and workers in the auto industry, it is vitally
important that the publicly funded health care system be preserved and
renewed," the letter states. "The system needs a secure multi-year funding
base from government, and must be expanded to cover an updated range of
services (including prescription drugs and home-care services) that reflects
both the evolving nature of medical science and the emerging needs of our
population."
Fear for the future of the public system has been growing for several years
as governments have struggled to offer tax cuts while also trimming debts
and eliminating deficits. A commission under former Saskatchewan Premier Roy
Romanow has been touring the country looking at that question and is to
issue a final report later in the year.
A persistent fear has been that the commission will recommend increased
private involvement in health care -- creating a two-class system in which
the wealthy get preferred treatment while others suffer.
The comments in the joint letter echo those made to the commission by the
CAW and United Steelworkers of America.
In its brief, for example, the CAW recommended expanding coverage under the
Canada Health Act to include pharmacare, homecare, long-term care, the
development of national standards and programs and increased spending on
health promotion.
When USWA national director Lawrence McBrearty made his presentation in May,
he dismissed arguments of a "crisis" in the public system, calling them a
creation of "politicians, whose priority is cutting taxes rather than
preserving essential public services, commissions with tainted credentials
and think-tanks supported by the private health care industry ... The crisis
is that the self-interested and profit seeking in this country are engaged
in a deliberate campaign to undermine confidence in our public health care
system, as a prelude to its destruction."
In the U. S. steel industry, he added, health insurance costs are 18 per
cent of total employment costs compared to between 4 and 6 per cent in
Canada.
"We do not have a crisis of ability to pay," he added. "We have a crisis ...
in which a self-interested and profit seeking elite is working to prevent
Canadians from getting what they clearly want."
The call for continued support of the public system has also been sounded by
Charles Baillie, chairman and CEO of Toronto Dominion Bank, who told an
audience in 1999, "in an era of globalization, we need every competitive and
comparative advantage we have and the fundamentals of our health care system
are one of those advantages ... It is high time that we in the private
sector went on the record to make the case that Canada's health care system
is an economic asset ... that our country dare not lose."
Yesterday's statements came as GM and the CAW enter the final stage of
negotiations for a new three-year agreement. The contract expires Tuesday
and both Grimaldi and Hargrove said they are confident of reaching a deal
before the deadline.
"The pace of negotiations is on track," Hargrove said. "There is a lot left
to resolve, but the mood is good, there's no animosity, and we have plenty
of time and lots of experience on both sides."
CAW and healthcare. Story by Steve Arnold

CAW, auto makers laud health system
By GREG KEENAN
AUTO INDUSTRY REPORTER

Friday, September 13, 2002 - Globe and Mail

Canada's system of government-financed health care represents about half the
cost advantage General Motors of Canada Ltd.'s assembly plants have over
U.S. plants, GM Canada president Michael Grimaldi says.
The health care system is a "strategic advantage," for Canada, Mr. Grimaldi
said yesterday as he and Canadian Auto Workers union president Buzz Hargrove
unveiled a joint letter that the union and all Big Three auto makers are
sending to Ottawa.
"The public health care system significantly reduces total labour costs for
automobile manufacturing firms, compared to the cost of equivalent private
insurance services purchased by U.S.-based auto makers; these health
insurance savings can amount to several dollars per hour of labour worked,"
the union, GM, DaimlerChrysler Canada Inc. and Ford Motor Co. of Canada Ltd.
said in the joint statement.
"The erosion of publicly funded health care -- through measures such as the
delisting of currently covered services, the imposition of user fees, the
failure of the public system to keep up with the changing nature of health
care and new costs such as prescription drugs and home care -- will impose
significant costs on automotive employers and undermine the attractiveness
of Canada as a site for new automotive investment," the letter said.
The public health care system also makes Canadian workers healthier and more
productive, the letter added.
Mr. Grimaldi said preserving and enhancing the health care system will make
it more attractive for GM Canada to continue making investments here.
He cited the addition of a third shift at one of the company's car plants in
Oshawa, Ont., and a $500-million investment at Cami Automotive Inc., a joint
venture assembly plant operated with Suzuki Motor Co. Ltd.
The joint statement comes as the CAW is locked in contract talks with the
Big Three. At the moment, it is negotiating with GM Canada with a deadline
of next Tuesday night for a new contract.
Those talks are going well, both Mr. Hargrove and Mr. Grimaldi said, while
tossing compliments at each other.
Mr. Hargrove said he's hoping for a first wage offer from the company by as
early as today.
"A lot of money and a lot of jobs will get you an agreement, Mike," he told
Mr. Grimaldi.
But the focus yesterday was on health care, including during the talks.
Mr. Hargrove said a presentation from GM Canada's health care provider
showed that "some of the increases we're facing in drugs are astronomical."
GM Canada's parent, General Motors Corp., is facing similar challenges,
Michael Bruynesteyn, an analyst for Prudential Securities Inc., noted in a
recent report.
"We understand from GM that it is the world's largest purchaser of Viagra, a
benefit not usually covered by many U.S. employers' health care plans," Mr.
Bruynesteyn noted.
Between employees, retirees and their dependents, GM pays for health care
benefits for about 1.25 million Americans, roughly the population of
Manitoba, Stephen Girsky, an auto industry analyst for Morgan Stanley, noted
in a report on GM last year.
The costs of that service amounted to $3.9-billion (U.S.) in 2000, Mr.
Girsky noted.
That in turn, represented a little more than $900 on every vehicle GM
assembled in the United States in 2000.