Bloomberg News

CAW Reaches Deal With Ford Before Turning to GM, Chrysler

September 17, 2012

CAW Reaches Tentative Agreement With Ford Motor

The Canadian Auto Workers union has reached a tentative labor agreement with Ford Motor Co. Photographer: Andrew Harrer/Bloomberg

Ford Motor Co. (F:US) and the Canadian Auto Workers reached a four-year labor agreement, avoiding a strike that would have shut down production of models such as the Ford Edge and Lincoln MKT.

The contract mostly eliminates cost-of-living raises for workers or for retirees, the union said in a conference call today. Ford agreed to create about 600 jobs, including a partial third shift at Oakville, the union said. Workers will get C$2,000 ($2,050) lump-sum payments in lieu of raises and a C$3,000 ratification bonus. The pension plan won’t be changed to a 401(k)-like defined-contribution plan, the CAW said.

The union said it will ask General Motors Co. and Chrysler Group LLC to accept the same terms. If agreements can’t be reached by midnight, union members may strike, said CAW President Ken Lewenza, who added that the sides are “miles” apart. If negotiators are making progress, the union will extend the deadline, he said.

“We said on day one we’d be flexible in their areas of fixed costs, and the company had to be flexible in the area of rewarding our members,” Lewenza said. “We achieved both.”

Ford won’t comment on the agreement until it is ratified, the Dearborn, Michigan-based automaker said in an e-mail. GM declined to comment on the Ford agreement, Adria MacKenzie said in an e-mailed statement. LouAnn Gosselin, a Chrysler spokeswoman, declined to comment in a telephone interview.

Union Ratification

The accord is subject to a ratification vote by CAW members, which will be held this weekend, the union said. Ford has about 4,500 CAW-represented workers in Ontario, including the Oakville factory in Oakville as well as plants that produce V-8 and V-10 engines. The union wasn’t able to secure new products for its plants.

The CAW said Sept. 16 it would focus its bargaining at Ford, intending to use an agreement with the automaker to establish basic terms of new contracts with General Motors Co. (GM:US) and Chrysler Group LLC. Chrysler criticized the CAW’s move in a Sept. 16 statement, saying that Ford isn’t “in the best position to take on this role.”

Manufacturing in Canada has become more expensive as the nation’s currency has risen about 60 percent against the U.S. dollar during the past 10 years. The CAW accepted a pay freeze and gave up bonuses and time off along with other concessions as part of the restructuring that brought GM and Chrysler out of bankruptcy in 2009. The union has said it would resist concessions in this year’s talks, citing the U.S. automakers’ return to profitability.

Plant Closings

GM and Ford have moved to reduce operations in Canada during the past year. Ford last year closed its St. Thomas, Ontario, factory that made the Ford Crown Victoria and Lincoln Town Car sedans.

GM said that it plans to shut its consolidated assembly line in Oshawa, Ontario, in June 2013, which will eliminate 2,000 jobs, according to a CAW statement on June 1. The company plans to shift production of its Chevrolet Equinox sport-utility vehicle from the plant to Tennessee, where most workers will be paid less than $17 an hour. Oshawa is also where GM makes the new Cadillac XTS full-size luxury sedan.

Ford fell 1.3 percent to $10.39 at the close in New York. The shares have slipped 3.4 percent so far this year.

To contact the reporter on this story: Ari Altstedter in Toronto at aaltstedter@bloomberg.net; Frederic Tomesco in Montreal at tomesco@bloomberg.net

To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net; Jacqueline Thorpe at jthorpe23@bloomberg.net


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Companies Mentioned

  • F
    (Ford Motor Co)
    • $17.58 USD
    • -0.26
    • -1.48%
  • GM
    (General Motors Co)
    • $35.03 USD
    • -0.70
    • -2.01%
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