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.
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.
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.”
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.