Arbitrator rules Nemak plant closure in Ontario doesn’t violate union contract

Auto supplier Nemak’s wind-down plan for its Windsor, Ontario, engine-block plant does not violate the collective bargaining agreement it has with Unifor members, according to an arbitrator.

Nemak and Unifor both confirmed the ruling last week but neither provided a full transcript.

Nemak employees build engine blocks for a Cadillac vehicle assembled in China, the I-6 engine blocks for the Chevrolet Silverado assembled in Flint, Mich., and the Corvette engine block and bedplate.

Nemak announced the pending closure in July. It said the decision came on the back of “the expected withdrawal from an export program by a client in China,” which would lead the plant to use less than 10 percent of its installed capacity by 2020. Nemak previously said the Windsor plant is now too small and too inefficient to remain open as the company expands elsewhere in the world. The company says it recently purchased larger businesses outside of Canada that came with existing plants and capacity.

The union claims Nemak always knew the contract in China would expire and that the supplier promised a replacement product in Windsor. Unifor also says it and Nemak “agreed that the Windsor plant would be the sole source for General Motors I-6 engine blocks and engine blocks and bedplates for the Corvette.”

As a result of under-utilization in Windsor, that work is being moved to Mexico.

“In fact, both parties made a good faith effort to create conditions that would allow the plant to operate even beyond 2022,” Nemak said. 

Unifor still disagrees. In its grievance, Unifor insisted Nemak must keep the plant open until the current labor contract expires in 2022. Nemak wants to shutter the plant in mid-2020.

The binding arbitration came after Unifor staged a 13-day blockade at the Windsor plant, defied an Ontario Labor Relations Board order to remove the blockade and ignored Superior Court Justice Terry Patterson’s ruling to end the standoff.

In a statement Friday, Nemak, which is owned by Mexico-based Alfa, said arbitrator Norm Jesin concluded the union “has not established that the Employer violated the collective agreement, and that the grievance of Unifor regarding the closure of the Nemak Windsor Aluminum Plant must be dismissed.”

According to Nemak’s statement, Jesin noted that he did not find any bad faith from either party. 

The company said Jesin wrote: “Unfortunately, through no fault of any of the parties the contract did not deliver the amount of work expected.” 

Unifor Local 200 Vice President Tim Little, who represents the roughly 270 workers at the plant, said the union is “extremely disappointed” in the ruling.

“What’s a contract worth anymore in this province?” he asked. “I don’t know what to say. We’re standing here startled. We thought we had a good case. We didn’t think they could up and leave.”

Little believes Nemak could end production as early as February, leaving his members unpaid for the duration of the contract and with only the government-regulated severance as they walk out the door. Supplier contracts, such the one between Nemak and Unifor, often don’t include special severance packages surrounding plant closures.

“Our agreement [with Nemak] is strong. We’re stunned,” Little said. “I don’t think it’s a very good precedent-setting ruling.”

Nemak said it will honor the arbitration decision. 

“At this time, Nemak will continue operations as usual and working with Unifor leadership to support employees. A plant closure date will be announced soon,” the company statement said.

Nemak officials weren’t immediately available for comment.