Ford and the Canadian Auto Workers union ratify a new 4-year labor agreement over the weekend that the auto maker says will improve competiveness and create jobs.
The agreement with Ford is the union’s first deal reached with the Detroit Three and serves as a model for pattern bargaining with Chrysler and General Motors, CAW President Ken Lewenza says.
“Our members at Ford recognize that in these uncertain times some of the most important elements of a new collective agreement are future investment and improved job security,” he says in a statement.
Under the terms of the agreement, which was approved by 82% of CAW workers, a wage system similar to that adopted by the United Auto Workers union in the U.S. will be implemented.
The agreement with Ford calls for new hires to start at a lower wage than current employees and have a combination defined benefit and contribution plan. After 10 years, these workers will be elevated to the same pay structure as more senior employees.
Other highlights of the agreement include a $3,000 employee signing bonus, the suspension of cost-of-living allowances until June 6, 2016, an updated prescription drug plan and increased operational flexibility that Ford says will allow it to better meet consumer demand.
In lieu of cost-of-living allowances, each worker will receive a $2,000 lump-sum payment in the first three years of the agreement.
In return for union concessions, Ford says it will hire 300 new workers for a third shift it will create at its Oakville, ON, Canada, assembly plant to build a product based on a new global platform. The auto maker says the potential exists for 300 additional workers to be added at a later date.
Oakville currently builds the Flex, Edge and Lincoln MKT cross/utility vehicles.
Ford says the new CAW contract agreement will result in significant cost savings, largely through the new wage structure.
“By becoming more competitive in our labor costs, we are better-positioned to support the growth of the Canadian economy and to provide new job opportunities,” Stacey Allerton, Ford vice president-human resources, says in a statement.
The CAW last week reached a tentative agreement with GM, but that pact has yet to be ratified.
Under terms of the GM agreement, workers would be subject to the same 2-tier wage structure as their Ford counterparts.
Additionally, GM has committed to create a third shift at its Oshawa, ON, Canada, flexible assembly plant starting next year that would add 900 new jobs.
The auto maker also agreed to extended production on at least one shift at its Oshawa consolidated plant until June 2014. Operations there were planned to be phased out. GM also made commitments to a range of new engine and transmission investments and production at its Plant in St. Catharines, Ontario.
In total, the GM commitments will create, maintain or extend 1,750 jobs across the auto maker’s Canadian operations.
The CAW is continuing talks with Chrysler with the intent of reaching a deal that follows the pattern established by Ford and GM, but says progress has been slow.
Chrysler CEO Sergio Marchionne publically has called for deep concessions from CAW workers, saying Canada is the most-expensive place in the world to produce vehicles.
However, a memo from the CAW negotiating committee obtained by WardsAuto indicates a deal soon could be struck with Chrysler.
“We are in a much stronger position today, with one pattern agreement ratified and another on its way,” the memo says. “We are more confident today that Chrysler can and will meet the pattern.”