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Canadian auto union faces Catch-22 in General Motors fight

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TORONTO (Reuters) – Jerry Dias, the leader of Canada’s auto union, is unsparing in his rhetorical attacks on General Motors Co’s decision to close its Oshawa, Ontario, assembly plant and lay off thousands of union workers by year-end.

Unifor national president Jerry Dias addresses General Motors assembly workers and supporters protesting GM’s announcement to close its Oshawa assembly plant during a rally across the Detroit River from GM’s headquarters, in Windsor, Ontario, Canada January 11, 2019. REUTERS/Rebecca Cook

But when it comes to action, Unifor’s president has been far more circumspect.

Dias promised “drastic measures” to compel GM to extend production of sedans and pickups, including the Silverado, to Sept. 21, 2020, when the current labor contract expires.

For more than a century, GM’s complex in Oshawa, a city east of Toronto, has been an economic engine for Ontario and Canada, anchored by thousands of highly paid manufacturing jobs.

After GM’s November announcement of a broad restructuring, including Oshawa, the union backed brief production disruptions, a call to boycott GM’s Mexican-made vehicles and a “solidarity” concert for workers by British musician Sting.

But Dias has not yet deployed the biggest weapon in his arsenal – a general strike to fully halt production of Silverado and Sierra pickups, vital to the Detroit automaker’s profitability.

Dias concedes there is mixed support for a walkout among union workers. Some Oshawa workers fear that shutting down GM Canada would hurt them much more than the company.

Unifor represents 2,600 assembly-line workers at GM Oshawa and 1,800 workers at plants supplying the Oshawa operations, whose contracts typically have lower pay, benefits and security. Some 1,500 work at feeder plants that are entirely reliant on Oshawa.

That is a sharp drop from the mid-1990s, when Unifor’s predecessor union counted 14,750 hourly members in Oshawa.

“We’re working in the GM plant, but we’re not GM,” said Sheri Steel, a forklift driver at CEVA Logistics. “Whenever GM shuts down, we do too. We get sent home and we lose pay.”

Strikes can be a “dangerous tactic” when plants face closure, and could drive GM to an earlier exit, she said.

Workers are pressing for talks on closure terms, which can improve on guaranteed worker provisions in a contract, said CEVA local Chairperson Keith Poulin. Unifor has declined those requests, saying it intends to keep the plant open, he said.

“We live paycheck to paycheck,” said Poulin’s wife, Jean Poulin. More than seven years ago, the couple were hired by companies supplying the GM plant for C$14 an hour.

Over time, their wages rose to C$20.50, but the 51-year-olds say that with limited severance, no pension and no savings, they cannot afford to retire.

“With a mortgage and bills, we are scared,” said Jean, who delivers parts for Syncreon Automotive.

‘THEY DON’T SCARE ME’

Some union members are nervous about their future, Dias told Reuters in an interview, but he is not. “They’ve got a lot of power,” he said of GM. “But they don’t scare me at all.”

Unifor has laid the groundwork for tougher action. It charged GM with breaking terms of the 2016 collective agreement, committing it to keep Oshawa open until the deal ends in 2020. It filed a grievance that is proceeding to arbitration.

GM Canada says the agreement notes that market conditions may arise beyond the company’s control. “The union has also been aware since 2016 that Oshawa truck production was temporary and ending in 2019,” said spokesman David Paterson.

So far, GM Chief Executive Mary Barra has refused to retreat from her restructuring plans despite criticism from U.S. President Donald Trump, Canadian politicians and unions in both countries. She has also declined to meet with Dias.

“We have a lot more cards to play,” Dias said. “But I’m not going to find a solution playing solitaire.”

Dias has looked for support from his U.S. counterparts in the United Auto Workers union. The two unions, which broke apart more than three decades ago, discussed cooperating on their campaigns to save plants, but provided no details.

In the past 23 years, there have only been two autoworker strikes in Canada, said Unifor’s director of research.

“We used to have strikes at every round of bargaining among auto assemblers right from the beginning in 1937,” said Bill Murnighan. “But Canada now has a very low number of strikes compared to past eras and compared to other countries.”

A GM THAT CAN SAY NO

GM’s decision to end production at Oshawa and four U.S. plants is emblematic of a global shift, as automakers restructure and invest in next-generation vehicles, including electric and self-driving cars. With North American sales projected to flatten or decline, automakers are also wary of maintaining unnecessary capacity in the region.

Politicians on both sides of the border have reminded GM that the U.S. and Canadian governments rescued it with public money a decade ago.

After contributing more than C$10.5 billion to the 2009 GM bailout, the Canadian and Ontario governments sold their final equity stakes in 2015. A set of financing commitments, including domestic production, expired one year later, GM’s Paterson said.

Trump has threatened to cut all GM subsidies, a tough stance that Unifor has asked Canadian officials to adopt. But politicians from Ottawa and Toronto have taken a more moderate approach, saying there is nothing more they can do without GM’s cooperation. Dias calls their response inadequate.

“That couldn’t be further from the truth. … We have been having conversations repeatedly,” said a federal government official. “I don’t think the solution is just throwing money at the company.”

The provincial government agrees.

“We’ve asked many, many times – and offered all kinds of different things – What can we do, as the government of Ontario, for you to change your mind?” said Economic Development Minister Todd Smith. “And the answer has always been: ‘Nothing.’”

($1 = 1.3176 Canadian dollars)

Reporting by Susan Taylor in Toronto; Additional reporting by David Ljunggren in Ottawa; Editing by Joseph White and Peter Cooney

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S&P 500 posts highest close since November 8 on trade optimism

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NEW YORK (Reuters) – The S&P 500 posted its highest closing level since Nov. 8 on Friday as investors clung to signs of progress in the ongoing trade talks between the United States and China.

Investors assessed a slew of headlines on the talks, with top trade negotiators from the two countries meeting to wrap up a week of discussions on some of the thorniest issues in their trade war.

If the two sides fail to reach a deal by midnight on March 1, then their seven-month trade war could escalate.

“People are expecting some sort of positive news on trade and tariffs with China fairly soon,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“But we won’t know until the end of next week,” he said, and, “there has been a lack of specifics.”

Optimism on the trade front and dovish signals from the U.S. Federal Reserve have driven the recent gains and left indexes well above their lows of December, when the market swooned on fears of an economic slowdown. The S&P 500 is now up about 19 percent since its late-December low.

The S&P 500 technology index was up 1.3 percent, leading gains among the 11 major S&P sectors, while the trade-exposed industrials index climbed 0.6 percent.

The Dow Jones Industrial Average rose 181.18 points, or 0.7 percent, to 26,031.81, the S&P 500 gained 17.79 points, or 0.64 percent, to 2,792.67 and the Nasdaq Composite added 67.84 points, or 0.91 percent, to 7,527.55.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., February 22, 2019. REUTERS/Brendan McDermid

All three indexes registered gains for the week, with both the Dow and Nasdaq posting a ninth week of increases.

The number of New York Stock Exchange and Nasdaq stocks hitting 52-week highs hit 367, the most since mid-September and outnumbered those hitting year lows by the widest margin in six months.

Stocks briefly pared gains after U.S. officials briefed on the negotiations said more time is likely needed in the talks given China’s resistance this week to American demands for specific steps by Beijing to end forced transfers of U.S. technology and certain other policies.

Afterward, President Donald Trump said there was a very good chance the United States would strike a deal with China to end the trade war, and that he was inclined to extend his March 1 deadline to reach an agreement.

“Right now the downside risk has been not as steep, but there’s always a concern that something happens last-minute,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

“Having a Chinese economy that stabilizes is constructive for global markets,” she said. “That’s what is key in terms of the market looking at the results.”

Kraft Heinz Co tumbled 27.5 percent, and was the biggest drag on the S&P along with a 1.7 percent fall in Class B shares of the company’s controlling stakeholder, Berkshire Hathaway Inc.

The packaged food company posted a quarterly loss, disclosed a Securities and Exchange Commission probe and wrote down the value of its iconic Kraft and Oscar Mayer brands.

Slideshow (2 Images)

Advancing issues outnumbered declining ones on the NYSE by a 2.99-to-1 ratio; on Nasdaq, a 2.45-to-1 ratio favored advancers.

The S&P 500 posted 64 new 52-week highs and three new lows; the Nasdaq Composite recorded 112 new highs and 21 new lows.

About 6.9 billion shares changed hands on U.S. exchanges. That compares with the 7.3 billion-share daily average for the past 20 trading days.

Additional reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru; Editing by Chizu Nomiyama and Jonathan Oatis

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FCA sets $14 million annual target compensation for CEO Manley: filing

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FILE PHOTO: Fiat Chrysler Automobiles (FCA) CEO Mike Manley arrives at the memorial service held in honor of former CEO Sergio Marchionne in Turin, Italy, September 14, 2018. REUTERS/Massimo Pinca/File Photo

DETROIT (Reuters) – Fiat Chrysler Automobiles NV (FCA) has set an annual compensation target for Chief Executive Officer Mike Manley consisting of pay, cash and equity bonuses of $14 million, the automaker said in a regulatory filing on Friday.

Manley took over as the head of FCA last July after the abrupt departure of his predecessor Sergio Marchionne. The company paid its new CEO 600,442 euros ($680,240) for 2018 and he will receive a bonus for 2018 of $367,000 to be paid this year.

Manley also was granted FCA 180,364 shares for his work in 2018, which will vest in 2019 if the company meets certain targets. The fair value per share on the date those were granted was $16.61, FCA said.

His target annual compensation consists of a base salary of $1.6 million, and a bonus of $2.4 million and an equity award valued at $10 million, both linked to the company hitting certain performance targets.

Former CEO Marchionne received 6.6 million euros in compensation for 2018, which consisted of nearly 2 million euros in base pay and an annual bonus for 2017 of just over 4.6 million euros.

For the 2014 to 2017 time period, Marchionne also received 2.8 million FCA shares. The fair value per share was $14.84, FCA said.

FCA chairman John Elkann received a base salary of 1.7 million euros and no annual bonus.

Reporting by Nick Carey; Editing by Sonya Hepinstall

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Flattening U.S. yield curve in late 2018 ‘flashing red’ on economy: Fed’s Williams

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President and Chief Executive Officer of the U.S. Federal Reserve Bank of San Francisco, John Williams, addresses a news conference in Zurich, Switzerland September 22, 2017. REUTERS/Arnd Wiegmann/File Photo

NEW YORK (Reuters) – A flattening U.S. yield curve in December, which was close to being inverted, was “flashing red” about a deceleration in U.S. economic growth heading into 2019, despite some solid data at the time, New York Federal Reserve President John Williams said on Friday.

The yield curve flattens as the gap between short and long-dated yields narrow, suggesting investors’ worries about a slowing economy.

The yield curve inverts when shorter-dated yields rise above longer-dated ones. An inverted yield curve has preceded all U.S. recessions in the past 50 years.

Williams was giving closing remarks at a conference about quantitative tools, jointly sponsored by the New York Fed and the Atlanta Federal Reserve.

Reporting by Richard Leong; editing by Diane Craft

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