A strike by the CAW could have disrupted production of the Ford Edge and other crossovers.
A last-minute deal between Ford Motor Co. and the Canadian Auto Workers Union has averted a threatened strike by thousands of workers that could have disrupted production of vehicles such as the Ford Edge and Lincoln MKT.
But walkouts still look for the other members of the Detroit Big Three. Chrysler and General Motors Corp. now must negotiate their own settlements with the CAW – which the union expects will follow the pattern set at Ford. Both GM and Chrysler are asking for more time to study the terms of the Ford deal, postponing a possible confrontation.
The CAW Monday wrapped up a four-year contract with Ford that froze the wages of current employees and reduced the starting pay for new employees, who will now have to wait 10 years to reach full parity with senior workers. But the union did achieve one key victory: it was able to prevent the creation of a full, two-tier wage structure like the one now in place on Ford assembly lines in the United States.
The tentative Ford/CAW contract also calls for a $3,000 signing bonus and $2,000 in lump sum payments, according to reports circulating in Canada.
Ford also promised new investments and 600 new jobs at an assembly plant in Oakville, Ont. The contract basically preserves the status quo but might not include enough concessions for GM and Chrysler, which have larger operations in Canada and were looking for a way to reduce their labor costs, which have increased significantly along with the value of the Canadian dollar.
The new round of moves meant to boost the U.S. economy approved last week by the Federal Reserve Board is very likely to exacerbate the problem by helping further boost the value of the Canadian dollar, industry observers warned.
CAW president Ken Lewenza said the union agreed to the request by Chrysler and General Motors for a last-minute extension but warned if they seek to go beyond the terms of the union’s tentative deal with Ford they will face strikes.
Chrysler has already said publicly it was “very concerned” about the CAW’s decision to target Ford, adding that the negotiations are pivotal in shaping the automotive landscape in the country.
“While we respect Ford as a competitor, we don’t think they are in the best position to take on this role given the significant reduction in their Canadian footprint in recent years,” Chrysler said in a statement, adding that it planned to continue to negotiate with the CAW towards a settlement that reflected its own unique needs.
The Center for Automotive Research estimates the all-in labor cost of producing the Detroit Three’s vehicles in Canada is roughly $60 an hour compared to $58 an hour at Ford, $56 for GM and $52 for Chrysler in the U.S.
As a result, the automakers have been pushing the CAW for a two-tier system of wages akin to the one agreed to in the U.S. They also want to move new hires into a cheaper defined contribution pension program, as well as eliminating cost of living increases and its so-called “30-and-out” retirement plan.
The CAW represents about 4,500 workers at Ford, 8,000 workers at GM and another 8,000 at Chrysler. Its contracts with all three automakers expired at 11:59 p.m. Monday.