Skip to main content

The Globe and Mail

Ford warns union against fighting for reversal of auto crisis concessions

In a photo provided by Ford Motor Co., assemblymen Paul Oliveira, left, and Rob McAlister help build the 2009 Ford Flex at an assembly plant in Oakville, Ont., in June, 2008.

Sam VarnHagen/The Canadian Press

The desire among Canadian Auto Workers to reverse some of the concessions they made to auto makers during the last set of contract negotiations is running into a roadblock at Ford Motor Co. of Canada Ltd.

"There is no catch-up to be had," a senior Ford Canada official said Tuesday during a background briefing on this year's contract negotiations. "That's what we have to help our employees understand. This really isn't a situation of catch-up because by any reasonable comparison, they're doing quite well."

The comments underscore how difficult the bargaining will be later this summer as the Canadian units of the Detroit Three auto makers seek to cut hourly labour costs while the union tries to recover past concessions and win new investments at Canadian plants.

Story continues below advertisement

This is a key set of negotiations for Ford, in part because it's planning an investment of about $1.2-billion at its Oakville, Ont., assembly plant and has asked the federal and Ontario governments for more than $400-million in financial help.

Labour costs are important when it comes to convincing Ford Motor Co.'s head office in Dearborn, Mich., that Oakville is the right place to make that investment, the official said.

That doesn't mean Ford is threatening to pull the investment if costs aren't reduced, the official said.

"But we also want to give [our workers] a realistic sense of, 'Hey, it's pretty hard to make the rest of the equation when you're this far out of line on the labour cost element.' "

CAW members agreed to reduce time off, freeze cost-of-living adjustments and require newly hired employees to contribute to pensions, in contracts signed with Chrysler Canada Inc. and General Motors of Canada Ltd. during the 2008-2009 recession and auto crisis. The concessions were later extended to Ford.

All three companies have stated publicly that they need to reduce their hourly labour costs in Canada, particularly when compared with their U.S. operations.

"The CAW remains the highest labour cost jurisdiction on the planet," the Ford official said.

Story continues below advertisement

The company pegs its total labour costs here at $79 an hour, including base wages, company contributions to pensions and other benefits such as health care. It says that compares with $64 (U.S.) for the same costs at its U.S. factories.

CAW economist Jim Stanford countered that the Canadian figure includes such legacy costs as pensions, health care costs and life insurance for retired employees.

Total labour costs for the average active worker are $62.33 (Canadian) an hour, he said, adding that that number is the one that matters because investment decisions are based on costs auto makers face for active workers.

Ford said that when pension and benefit costs of both active and retired employees are stripped out, base wage rates are $34 an hour at the Oakville operation and at engine plants in Windsor, Ont., and a parts warehouse in Brampton, Ont., compared with $28 (U.S.) at its U.S. plants.

"The question is: How do we start to narrow that gap in a reasonable way that works for both parties?" the Ford official said. "We recognize at the end of the day Ken [Lewenza, CAW president] has to take a deal to the work force and they have to say yes."

Mr. Lewenza said Ford and the CAW have a "reasonable relationship, but today, all of the companies are overzealous."

Story continues below advertisement

He said he will remind Ford that its Canadian workers approved concessions in 2009, while Ford members of the United Auto Workers in the United States rejected them.

In addition, he said, he will raise at the bargaining table the issues of Ford's profit and big increases in compensation for its chief executive officer Alan Mulally.

Report an error Licensing Options
About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More


The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨