UPDATE 4-GM Canada blockade continues ahead of meeting

(Adds government willingness to add to C$250 mln fund, next to last paragraph)

TORONTO, June 5 (Reuters) - Canadian autoworkers blocked the road leading to General Motors of Canada's GM.N headquarters in Oshawa, Ontario, for a second day on Thursday, protesting against plans to shut a truck plant as company officials and labor leaders prepared to meet on Friday.

Hundreds of workers and their supporters have been on site both days, with some spending the night in tents. The protest has been peaceful so far.

GM has said it understands the workers are upset and will not interfere with the protest. About 1,000 people work at GM Canada’s head office, and it has asked them to work from home.

With U.S. sales of pickup trucks and sport utility vehicles slumping, GM said on Tuesday it would shutter its Oshawa truck plant, which employs 2,600 workers, in September 2009. The Canadian Auto Workers union says that violates the contract the two sides signed just last month.

CAW President Buzz Hargrove said the union is exploring all its options, and did not rule out a strike.

“We believe General Motors is obligated by law and otherwise to live up to this agreement,” he said on Thursday.

Hargrove, along with the CAW’s GM bargaining committee from Oshawa, will meet GM Chief Executive Rick Wagoner and leaders from GM Canada in Detroit on Friday to discuss the matter.

The CAW has three complaints. It said GM committed to keep the Oshawa truck plant open until the new labor agreement expires in 2011; that the company agreed to continue building hybrid versions of two pickup trucks in Oshawa; and that it agreed to a new investment in 2011 that would launch the next generation of half-ton trucks.

“They’ve violated all three of them,” Hargrove said. “They’re closing the plant now, they say in September of next year. They’re moving the hybrid production -- which we’re currently building the pilot trucks right now -- they’re moving that to Mexico, and they’re not going to invest, as they committed to do, in the next generation of half-ton trucks.”

But the labor agreement the CAW signed with GM has a loophole, said Anthony Faria, an analyst at the auto research center at the University of Windsor, Ontario.

“All of that in the contract was agreed to with the stipulation ‘pending acceptable market conditions’,” he said.


The market for pickup trucks and SUVs has deteriorated rapidly, and GM said that the closure of the Oshawa plant, along with two plants in the United States and one in Mexico, will cut pickup and SUV capacity by 700,000 units.

“I certainly wish Buzz Hargrove well in his efforts at General Motors tomorrow, but I just can’t imagine anything being accomplished, given that the issue is GM does not need the output from that plant,” Faria said.

He said U.S. state governments and Mexico’s government were also meeting GM to offer incentives to keep plants there. He said the union at the plant scheduled to be closed in Mexico, where GM pays its workers $6 an hour, was offering wage cuts. GM workers in Oshawa make an average C$34/hour plus benefits.

Finance Minister Jim Flaherty said on Thursday everyone in the auto sector was surprised with how precipitous the fall in North American demand for large SUVs and pickups had been.

“These statistics fall off a cliff,” he said. Car sales in Canada were at record highs but a lot of the big vehicles are sold in the United States “and that market has collapsed.”

Flaherty has been talking with GM and plans further talks soon. He repeated an offer on Thursday to use money from a special research-and-development fund to help GM start production of a green car at its Oshawa auto assembly plant.

Hargrove said GM had already committed to the new car, which he said he announced during labor negotiations in May.

“Flaherty is now going to pay them for something they already agreed to do. Pretty dumb,” he said.

Hargrove dismissed the government’s announcement that it may allow GM to access its C$250 million ($245 million) Automotive Innovation Fund, available over five years, to help start production of the new car.

“It’s C$50 million a year and I said to (Canadian Industry Minister) Jim Prentice on the phone the other night you might be able to open up a flower shop for C$50 million a year, but it takes over C$1 billion to put a new product in an auto plant,” he said.

Flaherty later said the government might add to the C$250 million if needed. “If there’s some great technologies, great green technologies, fuel-efficient, we’ll have to look at doing more,” he told CBC television.

He also said that if any funds needed to be recouped from GM from the truck plant it is closing, he would plow that back into R&D for the auto sector. ($1=$1.02 Canadian) (Additional reporting by Randall Palmer and Louise Egan; Editing by Frank McGurty)