TORONTO - The Canadian Auto Workers union has reached a cost-cutting deal with Ford Canada that will give the company lower operating costs and guarantee two new vehicle programs for the automaker's major Canadian assembly plant just west of Toronto.
However, the deal will also see Ford go ahead with plans announced earlier to close its 1,400-employee plant in St. Thomas, Ont., which makes full-sized cars no longer in demand.
"Despite years of efforts by our union... despite lobby, despite protest, despite hard work and first-class quality and productivity, despite all that, Ford is insisting the St. Thomas plant will close in September 2011," CAW president Ken Lewenza told a news conference announcing the deal Friday.
However, he added that the union negotiated "the best possible closure package they could" for St. Thomas employees, which will cost Ford approximately $400 million. In addition, early retirements will be offered to senior employees at other plants between now and 2011 in an attempt to open up positions for younger St. Thomas workers.
Ford said it wouldn't comment on the agreement until after employees vote on it this weekend, saying only that it "would help Ford improve its competitiveness in Canada."
Under the deal, Ford has guaranteed the CAW that it will maintain 10 per cent of its total North American production in Canada. This is down slightly from its current manufacturing footprint of 13 per cent.
Federal Industry Minister Tony Clement said he hopes to sit down with the automaker to get more details about its investment plans.
"I'd love to have that dialogue with Ford to see what their intentions for new (capital expenditures) are going to be for Canada, what sort of production they're looking at, what sort of mandates we can perhaps get in the future. Those are important discussions," Clement said in an interview.
Lewenza said it was "painful" for the union to be unable to save St. Thomas, but they had little choice in the matter.
Ford indicated to the CAW that it has excess capacity in both the United States and Mexico, and said it would begin transferring production out of Canada immediately if they couldn't reach a new labour agreement, he said.
Although Ford's current agreement with the CAW doesn't expire until 2011, the company insisted that it needed the same concessions given to Chrysler and General Motors earlier this year in order to stay competitive.
"Never mind putting new work in Canada, they actually talked about disinvesting in Canada unless we extend the pattern to them, and starting now, not in 2011," Lewenza said.
"So the idea that we could just sit back and wait until 2011 was a non-starter. That would play Russian roulette with the lives and jobs of our members and retirees."
Under the agreement, Ford's engine plant in Essex, near Windsor, will also get additional work over the life of the new contract, which expires Sept. 17, 2012.
It's not clear yet what vehicles will be added to the Oakville assembly line, but Lewenza said the product commitment will be made and spending will start before the new agreement expires. He also said Ford has promised to add a third shift at Oakville "when market volumes justify it."
Workers still need to ratify the agreement, which cuts labour, pension, health benefit and other costs for the car producer.
The union has agreed to give the automaker the same concessions it gave General Motors and Chrysler in negotiations earlier this year, including cuts to vacation time, a freeze on wages and cost-of-living adjustments and an agreement that workers will pay $30 a month towards their health-care benefits. Under the agreement, new hires will also contribute $1 an hour towards their pensions.
The only major difference is that Ford, unlike GM and Chrysler, won't create a health-care trust to manage the health benefits its retirees. Instead, the company will continue to pay health benefits as it has in the past.
GM and Chrysler concessions came first for their American and Canadian unions as a condition for the U.S., Canadian and Ontario governments providing tens of billions of dollars in government bailout money to keep the insolvent companies alive.
Ford did not get government help because its finances were in better shape than its rivals. But the Detroit-based parent company and its Canadian unit demanded the same concessions to keep an even playing field with the others in an increasingly competitive North American car market.
In addition, because Ford didn't file for bankruptcy protection in the U.S., it has a massive amount of debt on its books while GM and Chrysler had their debt wiped out.
In the last two years, GM, Chrysler and Ford have cuts tens of thousands of jobs and closed assembly plants across North America to cope with a slump in business and loss of market share to Toyota, Honda and other overseas rivals.
In Canada, GM has already closed down its pickup truck plant in Oshawa and will shut down a transmission plant in Windsor early next year. Chrysler and Ford have also reduced their workforces and streamlined operations.
The CAW represents about 7,000 Ford workers across the country.
