Outsourcing

What is it?

The transfer of good paying, unionized work to outside contractors. It usually results in a loss of pay and benefits for workers. Outsourcing often transfers work to non-union plants.

Why Outsource?

Companies want to maximize profits and returns to shareholders and top executives by auctioning off jobs to outside contractors or companies.

The car companies, especially GM, say they need to outsource to stay competitive. The fact is that Canadian auto plants are already highly competitive. Consider these facts:

Automakers get a $10 (US) hourly cost advantage per worker in Canada compared to American autoworkers. That's about $20,000 per worker each year in Canada.

For every three American workers GM, Ford or Chrysler hires, they can hire four Canadian workers for the same price.

Automotive plants in Canada consistently rank at, or near, the top of the rankings of North American's most productive auto facilities. Both the 1995 Harbour Report and a federal government Automotive Industry report confirm the high productivity of the plants located in Canada. The Harbour Report also indicates Canadian auto productivity is increasing.

The Canadian plants and jobs that GM wants to auction off through outsourcing make high quality products. The Windsor Trim plant has won numerous quality awards including international, Canadian and GM Corp. awards.

GM Canada turned record profits over the last two years totalling more than $2.4 billion. In 1994 it was $1.03 billion profit after taxes, in 1995 it was $1.39 billion. GM's Canadian operations produced 58 per cent of the company's $2.4 billion in North American profits in 1995.

GM currently does 44 per cent of its work, while Ford does 38 per cent and Chrysler 34 per cent, says a study by Daniel Luria, a respected auto analyst from the Ann Arbor, Michigan Industrial Technology Institute.

In 1995, GM made 20 per cent of its worldwide profits from its Canadian workforce, which makes up just five per cent of all its workers.

Who is affected by outsourcing?

Workers in all industries and in government are threatened by outsourcing, which is an attack on job security, and increases pressure for lower wages and benefits.

For example, GM Canada recently announced plans to outsource more than 5,000 jobs, including 2,200 at its north Oshawa Fabrication plant, 1,300 at its Windsor Trim plant, 750 from its St. Catharines axle plant and 508 from the Oshawa car plant.

The Impact:

Outsourcing hurts workers, their families and communities. The outsourcing of jobs from GM means the loss of thousands of $22 an hour jobs, which are turned into much lower paying work by smaller companies struggling to outbid each other to land a GM supplier contract.

Outsourcing, at a time when the economy supports fewer and fewer good paying jobs, means thousands of workers and their families have less money to spend because of the cuts. Communities are economically rocked by the erosion of consumer spending power.

The loss of good paying auto jobs has a negative spin-off in the community. Economists estimate for every auto job another two spin-off jobs are created inthe community.

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