A new labour agreement with Unifor that has already been approved by two of the Detroit Three auto makers in Canada is proving too rich for Ford Motor Co.
The contract, which provides $12,000 in bonuses, wage increases for longer-term employees and even- higher wage increases for recently hired workers, is a high-cost deal, a source close to the negotiations said Wednesday.
"This pattern [agreement] as it stands now puts Ford at a disadvantage to its competitors," the source said. "It's a high-cost agreement."
While the pattern deal established in negotiations between Unifor and General Motors Co. and Fiat Chrysler Automobiles NV may be too costly for Ford, it may not be rich enough for Unifor's biggest Ford local, setting up a potential impasse as a strike deadline of Oct. 31 approaches.
But to negotiate wage increases beyond what GM and Chrysler have already agreed to and which the 5,000-member-strong Unifor local in Oakville, Ont., appears to be demanding would make Ford even less competitive than its Detroit Three rivals in Canada and put Ford's Canadian manufacturing operations at risk, the source said.
In automotive pattern bargaining, the template established at one company is then applied to the other two companies.
Ford is maintaining at the bargaining table that the deal makes it uncompetitive, Unifor president Jerry Dias said, but he said its profitability in recent years means it "is not in a position to complain."
The critical issue for the auto maker is how the pattern deal affects newly hired workers, the source said.
"What's unique about it is that it disproportionately impacts Ford," said the source, who insisted on anonymity because the discussions between the union and the company are being held in private. The agreement would cost Ford more than GM or Chrysler because it has hired 2,000 new employees in recent years and those newly hired workers make up about 30 per cent of the auto maker's unionized work force in Canada.
Fiat Chrysler Canada has hired about 1,600 workers since 2012, while General Motors of Canada Ltd. has reduced the size of its unionized work force in Oshawa, Ont.
Ford Motor Co. of Canada Ltd. hired the workers in Oakville under the terms of the 2012 contract, which specified that wages for newly hired workers would rise to the same level as those of traditional workers over 10 years, but stay at $20.49 an hour for the first three years of employment.
The new agreement calls for increases for newly hired workers in each year of their 10-year progression to full wages of $34.15 an hour.
The wage increases amount to about 10-per-cent wage annually or about $18,000 over four years for newly hired workers, the source said.
In addition, the $12,000 in bonuses during the four years includes a $6,000 ratification bonus that is the highest ratification bonus yet in a deal between one of the Detroit Three auto makers and Unifor or its predecessor, the Canadian Auto Workers union, the source added.
Unifor identified new investment at a Ford engine plant in Windsor, Ont., as its key priority when it entered negotiations with the company, which is the smallest of the three companies when it comes to vehicle production in Canada.
But members of the union's local 707 in Oakville have been urging Unifor to demand higher wage increases for newly hired employees.
Local 707 president Dave Thomas has said in two bargaining updates to members that he would not submit the deal already approved by Unifor workers at GM and Fiat Chrysler to members of the Oakville local.
"Negotiations have been very difficult and so far we have very little movement," Mr. Thomas said earlier this week in his third update to members of the Oakville local.