Ford & CAW Near Tentative Agreement - "Significant" Job Cuts Coming

[Perian]

Source: Automotive News

Reuters / September 12, 2005

TORONTO -- The Canadian Auto Workers and Ford Motor Co. of Canada are hours away from clinching a new contract deal, with only several issues at the local level left to be resolved, the union's president said on Monday.

CAW president Buzz Hargrove expects to sign a definitive three-year agreement later on Monday after sorting out some local issues at plants in Windsor, Ontario, and with office worker groups. The contract would then have to be ratified by union members.

"By sometime late today we believe we will be able to say our bargaining has concluded with Ford Motor Co.," Hargrove told a news conference.

"I hope, by late this afternoon, to be able to define the challenges we faced in our 2005 bargaining and the solutions that we have come up with working together with Ford."

Hargrove declined to reveal details of the deal but noted that there will be "significant less employment" at Ford over the next three years.

The CAW expects the Ford deal to set the pattern for reaching agreements at DaimlerChrysler Canada and General Motors of Canada Ltd. The union represents about 41,000 workers at the Big Three, including 12,138 members at Ford.

"We've narrowed down the issues and we're focused on reaching a sustainable agreement," said Ford Canada spokesman John Arnone. "The last few hours have seen significant progress."

The CAW's selection of Ford as its first target for contract talks was a surprise. Most analysts had expected it to choose DaimlerChrysler Canada, which is in better financial shape. The CAW said, however, it would switch targets to DaimlerChrysler if it could not get a Ford deal by early this week.

The CAW said it has had a good bargaining relationship with Ford.

Its current contract with the automakers expires Sept. 20.

[Perian]

This is a very good sign for the entire industry.

It bodes well for General Motors...I hope.

[Perian]

Update:

AP
CAW Expects Tentative Contract Settlement
Monday September 12, 3:15 pm ET
By Beth Duff-Brown, Associated Press Writer
Canadian Auto Workers Expect Tentative Contract Settlement With Ford

TORONTO (AP) -- The Canadian Auto Workers union said Monday it expected to achieve a tentative contract settlement with Ford Canada later in the day, one that likely would include layoffs but slightly improve benefits.

The union may have to trade rich wage increases it has negotiated in the past for fewer job cuts at Ford in a new three-year labor agreement, union president Buzz Hargrove said.

A deal with Ford on economic issues would set a pattern that its Big Three competitors, General Motors and DaimlerChrysler, would be expected to accept in subsequent talks this month.

Hargrove has said his union is bracing for "significant" layoffs in Ontario over the next three years at Ford, which is restructuring its North American operations due to profit challenges and lost market share in recent years.

In hopes of reducing the impact of the restructuring on Ford's 11,600 Ontario workers, the CAW had said it may accept a proposal Ford made Sunday, which offers workers only "moderate" wage and benefit improvements, but prevents wider layoffs as the company reorganizes its work force.

Hargrove wouldn't quantify the number of possible Ford layoffs, though observers suspect there would be hundreds.

The proposed contract was reviewed Monday morning by top CAW negotiators. If accepted, it would have to be ratified by rank-and-file workers on Saturday. The union would then open talks with a second Big Three company -- DaimlerChrysler -- the following Monday.

"This is not the richest settlement" Hargrove said Sunday. "There will be moderate improvements in most areas. I think it is a responsible response by Ford Motor Co. in some of the most difficult times that we've faced as an industry, which means our union has to face it as well."

Hargrove said wage gains would be moderate -- below the 3 percent annual increases negotiated in its 2002 contract.

The economic terms in the contract, which will also include changes to benefits and pensions, will set a "pattern" agreement that the CAW would expect DaimlerChrysler and General Motors to match in subsequent negotiations over the next few weeks.

[thehustler]

This seems to be the trend in Canada, except for the job losses part. Most unions are taking a lower wage increase to get better benefits. This in turn seems to encourage more hiring which in turn brings in more union members (ie: early retirements due to a better pension).

The job loss part shouldn't be unexpected. How they are going to go about it will be the interesting part. Early retirements? Attrition? Or outright layoffs?

The UAW down south must be looking at this and thinking that it doesn't help there cause at all. Ford was going to close an engine plant in Ontario so something must have been worked out dealing with it.

[gilli77]

the job cuts won't be very large in the grand scheme of things and could probably be done through early retirement. Ford must retain at least 10,000 employees in order to qualify for the federal government funding to upgrade/expand facilities. job cuts could be a max. of 1600

While wages are important I think the union was largely concerned with maintaining a strong ford presence in Canada and Ontario in particular and was willing to forego large wage increases in favor of ford committing resources, facilities and jobs to the Canadian market.

at this point I think the UAW and the CAW are more in competition with each other for plants, products and jobs from the big three than they are trying to help each other.

[thehustler]

Originally Posted by gilli77

at this point I think the UAW and the CAW are more in competition with each other for plants, products and jobs from the big three than they are trying to help each other.

I agree with that.

I wonder if the UAW thinks Canadian built cars are imports (civic, carolla, matrix)?

[paul8488]

This is encouraging. Seems like the CAW was able to accept that there are some serious problems, and were willing to stretch a bit to improve the situation for Ford. That's positive, and not what most of us expected, I'd say! The Big 3 working WITH the union will get them much further than working against them.

[mjd1001]

I would almost have rather seen reduced benefits but with no job cuts.

Of course, I have no idea what were the priorities in the negotiations. Just it seems that some "give backs" were going to be required by the union. I'd just rather see some pay/benefits reduced a bit rather than people totally lose jobs via job cuts in the current economic environment.

[thehustler]

Who's to say they won't try to cut more plants in 3 years though?

Why is it that the auto industry keeps going for short term contracts with the union? In my industry we go for 5-7 year deals that have clauses built in for good times in my industry, which is quite cyclical. If our product reaches a certain price we get a bonus on each check while above that price, when it is below we get nothing, plus we get a 2% increase on our base salary every year either way. Our wages are on par with others in industry for our jobs.

My wife's union gets a base increase every year of, what else, 2%. Plus the company goes out in her industry and compares wages with other employers in North America for her position once a year and if its higher she gets that.

Our unions and copmanies have adapted to the changing global economy why can't the auto industry? Long term deals allow companies to invest and adapt to oppourtunites better. The unions in these cases will take less up front for potential during the contract. It's a risk both sides take but one which so far for the past 20 years seems to work well for both sides.

Just my 2 cents.

[joey]

I agree. With CAMI importing Chinese engines, I'm sure that Canada would be a great place to start to reduce the work force to assembly and outsource as many parts as possible. I don't think the big three have any problems with increasing benefits when they know they can reduce this expensive work force by half in a few years.

[doh]

Originally Posted by thehustler

Who's to say they won't try to cut more plants in 3 years though?

Why is it that the auto industry keeps going for short term contracts with the union? In my industry we go for 5-7 year deals that have clauses built in for good times in my industry, which is quite cyclical. If our product reaches a certain price we get a bonus on each check while above that price, when it is below we get nothing, plus we get a 2% increase on our base salary every year either way. Our wages are on par with others in industry for our jobs.

My wife's union gets a base increase every year of, what else, 2%. Plus the company goes out in her industry and compares wages with other employers in North America for her position once a year and if its higher she gets that.

Our unions and copmanies have adapted to the changing global economy why can't the auto industry? Long term deals allow companies to invest and adapt to oppourtunites better. The unions in these cases will take less up front for potential during the contract. It's a risk both sides take but one which so far for the past 20 years seems to work well for both sides.

Just my 2 cents.

3 years isn't to bad, my wives union is 1 year contracts, usually signed 2 months into the contract.

[gilli77]

Originally Posted by thehustler

Who's to say they won't try to cut more plants in 3 years though?

Why is it that the auto industry keeps going for short term contracts with the union? In my industry we go for 5-7 year deals that have clauses built in for good times in my industry, which is quite cyclical. If our product reaches a certain price we get a bonus on each check while above that price, when it is below we get nothing, plus we get a 2% increase on our base salary every year either way. Our wages are on par with others in industry for our jobs.

Just my 2 cents.

Three years is pretty standard for most union contracts that I've seen in Canada. Long enough to provide stability but not too long that it could hinder either the workers or the company. As for what could happen in three years, the hope is that with stable labour relations the company can focus on other areas and be in a better financial position at the end of the agreement.

long term planning being what it is, there is never a guarantee that any plant is going to be protected but it is a good bet that if ford drops a large amount of cash in to Oakville to turn it in to a flexible plant like chicago (which is what is planned) then there is a good chance the plant will be around for more than three years to try to get some return on investment.