TORONTO – The Canadian Auto Workers and Ford are close to reaching a tentative deal, the head of the union said hours ahead of a strike deadline.
Ken Lewenza said an agreement with Ford is nearly finalized, and once it’s done the union will take it to Chrysler and GM to see if they will match it.
Contracts at the three big automakers expire at one minute before midnight tonight and the union has previously said it’s prepared to strike then if necessary.
The union will hold a press conference at 4 p.m. ET today to provide an update on the talks.
The CAW has been focusing its energies on Ford over the past few days, and Lewenza has suggested Ford wasn’t dead set against a union proposal to lower wages for new hires but allow them to reach full pay over time.
Chrysler responded to the move by saying they were “very concerned” that Ford isn’t in the best position to lead negotiations because it has reduced its footprint in Canada in recent years.
Ford has the least to lose from an unfavourable contract, so reaching a deal with them first could be bad news for the other automakers, said auto analyst Tony Faria.
Ford might agree to a deal retaining relatively high labour costs because with about four per cent of their global assembly in Canada — versus about nine per cent for GM and about 20 per cent for Chrysler — it’s easier on them just to avoid a strike, he said.
“We need to have a deal that gets CAW labour costs more in line with the labour costs at (United Auto Workers) plants in the U.S.,” said Faria, a University of Windsor professor.
“That’s the only way we’re going to see future investment and job creation among the Detroit companies in Canada.”
The automakers are looking to pare costs labour costs in Canada, which they say are higher than in the United States.
Ford has said hourly wages for CAW assemblers are around $34 an hour, while assemblers in the U.S. are paid about $28 per hour. The company said all-in labour costs, which include pensions and health care, are approximately $79 per hour in Canada, versus $64 per hour in the U.S.
The strong Canadian dollar is also eroding competitiveness.
Ontario has seen the U.S. car makers cut thousands of jobs in the last decade as their parent companies restructured in the United States.
Premier Dalton McGuinty said Monday he’s confident that everyone involved knows what’s at stake.
“With respect to any agreement that we might have entered into with our auto sector partners we have every confidence that they will honour those agreements,” McGuinty said.
During the financial crisis, the federal and Ontario governments helped bailout Chrysler and GM with a rescue package that totalled about $13 billion, with the majority — $10.5 billion — going to GM.
Lewenza has said the union would ignore its 11:59 p.m. ET deadline if a breakthrough was close.
“If we see light at the end of the tunnel then we’re going to keep working until it shines on an agreement,” he said.
But he said if that tunnel ends with a brick wall then the CAW will put its nearly 21,000 members on strike at one or all of the automakers’ plants.
“That is the last tool in the bargaining toolbox,” he said.
The automakers entered the bargaining round seeking a permanent wage reduction for fresh employees, similar to a deal the companies reached in the U.S.
But the CAW has been adamant it will never agree to a pay structure that creates “two tiers” of employees.
The last CAW strike was in 1996, against General Motors.