Canadian Auto Workers (CAW) negotiators have reached a four-year tentative agreement with Ford Canada during which time about 600 new jobs will be created at the automaker’s Canadian operations.
The union also said in a statement it would extend talks with General Motors and Chrysler past Monday night’s (17 September) midnight deadline.
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The new agreement with Ford also includes CPI-linked lump sums of C$2000 in each of 2013, 2014 and 2015, as well as a $3000 bonus on ratification. There are no base wage increases.
Cost of Living Adjustment (COLA) wage adjustments are suspended until the final quarter of the agreement with the COLA programme coming back into effect in June 2016.
There are no changes in pensions for current workers and those who retire during this agreement.
The tentative agreement rejects the concept of a permanent two-tier wage system.
New hires will start at 60% of the current base rate with a 10 year grow in period until reaching the top rate. There is also a restructured pension plan for new hires which is a hybrid defined benefit/defined contribution plan.
CAW President Ken Lewenza said, when the 600 new jobs are taken together with restructuring incentives for senior workers, it “will allow every laid-off Ford worker today to have either an employment offer or a decent early retirement.”
He said the number one priority is jobs and to “stay in the ballpark” for new investment and to create opportunities for the next generation of autoworker.
He stressed the union would be continuing talks with General Motors and Chrysler based on the tentative agreement reached with Ford. The union has extended the deadline indefinitely with General Motors and Chrysler, just as long as progress is being made at the bargaining table. If talks stall, the union could give the company a 24-hour notice of work stoppage.
Ratification meetings for Ford employees will be held next weekend.
In a statement, Ford Motor Company of Canada said the four-year national labour contract covered about 4,500 of its unionised employees in Canada.
“To respect the ratification process, Ford of Canada will not discuss the specifics of the tentative agreement until it is approved. 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,” the automaker said.
Human resources chief Stacey Allerton said: “I’d like to take this opportunity to thank CAW president Ken Lewenza and the entire CAW national bargaining committee for all of their hard work and professionalism during negotiations. I would also like to thank the Ford of Canada bargaining team for its skill and dedication during this complex and challenging set of talks. Without the unrelenting commitment of all parties, this innovative agreement could not have been reached.”
CAW chief economist Jim Stanford told Reuters both GM and Chrysler were willing to negotiate around the pattern set by Ford’s agreement.
“Both companies must keep working towards the pattern settlement, and both companies have indicated in writing to our leadership that they are prepared to do that,” said Stanford.
The union, which has about 20,000 members, had previously warned that without a tentative agreement before contracts expired last night, it could stop work at one or more of the companies, in what would have been the first Canadian auto strike since 1996.
“We have agreed with the CAW to extend the agreement. We are currently reviewing the tentative agreement that has been reached with Ford,” Chrysler spokeswoman Jodi Tinson told Reuters.
GM said it had agreed to continue talks.
“GM Canada looks forward to continuing with the constructive dialogue,” said spokeswoman Adria MacKenzie.
The Ford deal, which will create about 600 jobs at the company’s Oakville, Ontario, plant, came after the automaker recognised the CAW would not accept a permanent two-tier wage scale for new hires and veteran workers, Lewenza said.
“It’s a damned good deal in these economic times,” he told the news agency.
All three automakers – with Chrysler the most publicly outspoken – have argued adamantly that Canadian labour costs are the highest in the world and must drop to match those of the UAW in the United States, or future production and investment in Canada will be jeopardised.
Lewenza had fought for the cost of living adjustment in negotiations that began in mid-August. Instead, a series of lump sum bonuses was agreed, Reuters noted.
Labour costs have been the key sticking point in negotiations, according to the report.
Lewenza said Ford agreed to take off the table a proposed two-tier wage scale – such as that used by the Detroit Three and United Auto Workers for the past several years to bring labour costs closer to those of foreign automakers.
CAW workers at the Detroit Three earn an average of US$34 in a base hourly wage, compared with an average $28 for UAW employees, the CAW said.
Including benefits such as pensions, healthcare and overtime pay, the CAW’s total average labour cost is about $60 an hour, according to the Center for Automotive Research in Ann Arbor, Michigan. That compares with $58 for US workers at Ford, $56 for GM and about $52 at Chrysler.
The CAW, seeing that the automakers are again generating profits, wants some payback for the concessions its members made during the 2008-09 financial crisis, Reuters said.
The CAW is adamant that its new workers must over time reach the same pay scales as existing workers. In the United States, they do not.
“As long as all of the companies understand the concept of pattern bargaining, they have the potential to get a deal done,” Lewenza said.
