The Canadian Auto Workers union (CAW) and Ford began contract talks on a subdued note on Wednesday, with union leaders saying Ford is clearly the weakest of the Big Three automakers in this round of negotiations, the Associated Press (AP) reported.
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“Overall, the operations are very, very soft,” said CAW president Buzz Hargrove.
Hargrove reportedly said weak sales of the Freestar minivan led to layoffs at Ford’s largest Canadian plant, in Oakville, Ontario, and other Canadian plants aren’t producing at their full capacity.
AP noted that Ford employs about 12,000 hourly workers in Canada, down from nearly 13,000 in 2002, when Ford negotiated its last contract with the CAW. Ford also has about 12,000 retirees in Canada.
Stacey Allerton Firth, Ford’s chief negotiator in Canada, told the Associated Press that as the Canadian dollar gets stronger there is less advantage to building vehicles there. Canada already has the second-highest labour costs – after the United States – of any country Ford operates in, Firth said. The base salary for a Ford assembly worker in Canada is about $24.43.
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By GlobalData“The Canadian industry is part of a global marketplace competing with countries that weren’t even considered serious players 10 years ago,” Firth reportedly said.
According to AP, Firth wouldn’t say what Ford is seeking in the new contract, although she did say that the increase in labour costs in the last contract “isn’t sustainable over the long haul.” Ford’s labour costs – including health care and other benefits – rose 5% in each of the last three years, Firth said, adding: “We’re looking for a competitive, sustainable settlement.”
Firth reportedly added that Ford’s recent commitment of nearly $1 billion in improvements to the Oakville plant shows that it is committed to boosting its Canadian operations.
Ford doesn’t reveal profits for Canada, but CAW economist Jim Stanford told the Associated Press Ford may not have made a profit in the country last year. On Tuesday, Ford reported a second-quarter profit of $946 million, but said its North American operations lost $907 million.
Hargrove reportedly said the CAW is aware of Ford’s difficulties and will keep them in mind as the union negotiates a contract that will eventually be adopted by all three automakers. Ford was the second of the Big Three U.S. automakers to start negotiating a new three-year contract with the CAW this week. General Motors began talks on Tuesday and DaimlerChrysler is scheduled to start on Thursday. The automakers’ contracts with the CAW expire on September 20, the Associated Press noted.
“I do want to stress that our relationship with Ford Motor Company has historically been the best of the three companies. We’ve always been able to work out an agreement with Ford in the most difficult situations,” Hargrove reportedly said.
“We hope to continue, (but) given the issues that face us, given the position that Ford’s in, it’s going to be a real challenge as to whether or not we can keep that relationship intact.”
The Associated Press said the mood was far different from Tuesday, when GM Canada vice president Al Green said the world’s largest automaker doesn’t want to see any increase in its labour costs. Green said GM will ask the CAW to offset wage increases with cuts in other benefits.
Hargrove reportedly estimated GM Canada made $500 million in profit last year and said GM’s plants in Canada were some of the most productive in the world.
GM would be “in a lot worse condition if it wasn’t for the contributions that the CAW makes,” Hargrove told AP. GM announced Wednesday it lost $286 million in the second quarter, dragged down by a $1.2 billion loss in North America.
According to the Associated Press, the CAW plans preliminary negotiations with the three companies until Labour Day. After that, it will choose a target company to negotiate a master agreement that is expected to be adopted by all three companies.
The talks offer a preview of what’s to come in the United States in 2007, when the United Auto Workers’ contracts with the Big Three expire, AP noted.
