Ford will begin exploratory cost cut talks with the Canadian Auto Workers (CAW) union in September.
The CAW is looking for job and product commitments in return, similar to those won from Chrysler and General Motors last year to help the two car makers qualify for loans from the governments of Canada and Ontario. Ford, which did not apply for loans, has said it needs the same concessions to remain competitive.
The CAW agreed to freeze wages, reduce paid holidays, suspend cost of living allowance increases and pay more for healthcare. Ford, which has enjoyed relatively good relations with unions in Canada and the US, has about 6,800 CAW-represented workers in Canada.
Ford has also said it has enough liquidity to survive the steep downturn in the automotive industry but repeatedly insisted it needs the same cost structure as its competitors if it is to keep manufacturing in Canada.
It has plants in St Thomas, Oakville and Windsor, all in Ontario province. When the current collective agreement was reached, a little over a year ago, Ford said it planned to close S. Thomas when the deal expired in 2011.
The CAW said keeping St Thomas open would be one of the union’s main priorities in bargaining a new agreement, which would extend the current deal to 2012.
Ford currently makes the Ford Crown Victoria, the Mercury Grand Marquis and the Lincoln Town Car in St Thomas.
In order to receive emergency funding from the governments of Canada and the province of Ontario, GM and Chrysler had to commit to maintaining between 15 and 20% of their Canada-US vehicle production in Canada.
Ford’s output in Canada is about 13 to 14% of its Canada-US production, but that would fall to below 10% if St Thomas closed.