The Canadian Auto Workers union struck a tentative four-year deal with Ford on Monday and extended talks with GM and Chrysler, putting off a threatened strike as a midnight deadline loomed.
“It’s a damn good deal in these economic times,” CAW president Ken Lewenza said of the Ford deal. “It is a damn good deal.”
The agreement will give 800 laid off Ford employees the opportunity to get back to work, partially through the creation of 600 new jobs at its Canadian operations. Most of the new positions will be at its Oakville, Ont., assembly plant in two stages of hiring, he said.
There are no base wage increases during the life of the agreement, which lasts until September 2016, but each employee will receive $2,000 a year in the second, third and fourth years of the contract to cover cost of living increases, and a $3,000 ratification bonus.
The union is asking Chrysler and GM to accept the deal as a pattern settlement.
Talks with the two automakers continued Monday toward the midnight strike deadline. The union announced just before 9 p.m. ET that all sides agreed to continue talking — putting off the threatened midnight strike.
The union said it would keep talking with Chrysler and GM as long as progress is being made, but warned that any time it feels talks have stalled it will issue 24-hour strike notice.
After the tentative deal was inked with Ford, Lewenza said the gap between the union and the two remaining companies was “wide.”
“If they come and say, ‘We can work within the confines of that pattern agreement,’ we can do the job real quickly,” he said.
General Motors said after the announcement of the Ford agreement that it was still committed to reaching a deal that will “improve GM Canada’s competitive position for the future,” but that it wouldn’t comment on the deal with Ford.
“Our efforts remain focused on working with the CAW to achieve an agreement that addresses the competitive needs of GM Canada.”
Chrysler said it was not “presently offering any comment.”
Lewenza said pattern bargaining — in which a deal is reached with one company that forms the basis for agreements at the others — is necessary because it removes wages from the number of competitive pressures the companies face.
He said even Honda and Toyota employees, who are not unionized, are closely watching what happens with the CAW for direction on their expectations.
All of the Detroit big three companies were equally aggressive on asking for concessions originally, but Ford was the first to come around, Lewenza said, adding the union plans to stand its ground on the deal reached with Ford.
“We cannot with good conscience compromise the pattern that (Ford) established because frankly it gives them a competitive disadvantage and we will not do that,” he said.
A Ford Canada spokeswoman said Monday that the agreement covering about 4,500 employees will help the company remain competitive, but declined to provide additional details as the deal still has to be ratified by CAW members.
“We believe that the tentative agreement offers unique-to-Canada solutions that will improve the competitiveness of the Canadian operations while providing employees the opportunity to earn a good living,” said Lauren More.
A union proposal to lower wages for new hires — who will make 60 per cent of full pay — but allow them to reach full pay after working for 10 years, is part of the deal. The union agreed to extend the wage progression scale from six years, Lewenza said Monday.
“The fact of the matter is we’ve always had a wage progression and now we have to extend it to win investment,” he said.
There’s no change to pensions for active members, but a new hires will be under a defined hybrid plan, which sees a contribution from the employees and a guaranteed contribution from the employer, Lewenza said.
Chrysler earlier responded to the CAW’s move to focus on Ford by saying they were “very concerned” that Ford wasn’t in the best position to lead negotiations because it has reduced its footprint in Canada in recent years.
Ford has the least to lose from an unfavourable contract, so reaching a deal with them first could be bad news for the other automakers, said auto analyst Tony Faria.
Ford might have agreed to the deal because with about four per cent of their global assembly in Canada — versus about nine per cent for GM and about 20 per cent for Chrysler — it’s easier on them just to avoid a strike, he said.
“It does not bode well for the future of the auto industry in Canada whatsoever,” said Faria, a University of Windsor professor.
“We need to have a deal that gets CAW labour costs more in line with the labour costs at (United Auto Workers) plants in the U.S. That’s the only way we’re going to see future investment and job creation among the Detroit companies in Canada.”
Ford has said hourly wages for CAW assemblers are around $34 an hour, while assemblers in the U.S. are paid about $28 per hour. The company said all-in labour costs, which include pensions and health care, are approximately $79 per hour in Canada, versus $64 per hour in the U.S.
The agreement with Ford could cause GM and Chrysler to re-evaluate their presence in Canada, said auto industry analyst Dennis DesRosiers.
“If it suits both GM and Chrysler they will accept (the Ford deal) and move on. If it doesn’t they also will accept it, but that calls in to question where they want to be in Canada in the medium-to-long term,” he said.
“Not that they would move a plant today, but these plants all have relatively short lifespans and I don’t think any of them would pull back on closing a plant in Canada.”
The big three are making it clear that they will shift production to where labour costs are lower, Faria said.
“The companies are already showing their hands,” he said.
“Ford closed their St. Thomas, Ont., plant last year. At the same time they were investing in plants in the U.S., adding third shifts and adding jobs.”
General Motors is shutting down its consolidated plant in Oshawa, Ont., next year, a move that will eliminate 2,000 direct jobs. Meanwhile, it is restarting production at the former Saturn assembly plant in Spring Hill, Tenn.
The strong Canadian dollar is also eroding competitiveness.
Ontario has seen the U.S.-based car makers cut thousands of jobs in the last decade as their parent companies restructured in the United States.
Premier Dalton McGuinty said Monday he’s confident that everyone involved knows what’s at stake.
“With respect to any agreement that we might have entered into with our auto sector partners we have every confidence that they will honour those agreements,” McGuinty said.
During the financial crisis, the federal and Ontario governments helped bail out Chrysler and GM with a rescue package that totalled about $13 billion, with the majority — $10.5 billion — going to GM.
The automakers entered the bargaining round seeking a permanent wage reduction for fresh employees, similar to a deal the companies reached in the U.S. But the CAW has been adamant it will never agree to a pay structure that creates “two tiers” of employees.
The last CAW strike was in 1996, against General Motors.