Case Study

Canadian Auto Union Says Has Deal With Ford

September 17, 2012

By CAROLINE VAN HASSELT And MIKE RAMSEY

The Canadian Auto Workers union on Monday reached a tentative agreement on a four-year labor contract with Ford Motor Co., F -1.33% averting a strike at the auto maker's Canadian plants.

The agreement increases the chance that labor contracts at General Motors Co. GM -1.41% and Chrysler Group LLC, which is owned by Fiat SpA, F.MI -2.07% could be extended while talks continue.

Ford's deal eliminates cost-of-living increases and freezes the pay of veteran workers while reducing the starting pay for new hires and stretching out the period when their wages can reach that of veteran workers, the union said. Existing workers will not take a pay cut and pensions are unchanged; auto makers had proposed changes to both.

New Ford hires will start at 60% of existing base wages and progress to 100% of base in 10 years, according to CAW President Ken Lewenza. That's down from the previous contract that had new hires start at 70% of base and moved up over six years, the CAW said.

"It's a damn good deal in these economic times," Mr. Lewenza said at a news conference.

As part of the agreement, Ford promised to create more than 600 new jobs over the life of the contract, mostly at its Oakville, Ontario, assembly plant, the CAW said. The plant builds the Ford Edge, Ford Flex, Lincoln MXK, and Lincoln MKT. The agreement likely ensures production at Oakville through most of the decade.

Ford is the smallest of the Detroit Three auto makers in Canada with 4,500 hourly workers. Its workers will vote on the contract this weekend.

In a statement, Ford said the tentative deal "offers unique-to-Canada solutions that will improve the competitiveness of the Canadian operations while providing employees the opportunity to earn a good living."

The union said it would extend an 11:59 p.m. strike deadline on Monday if GM and Chrysler agreed to follow the framework of...