Ford Canada, CAW Begin Contract Talks

Automaker says it needs a new contract in order to stay competitive with other manufacturers in both Canada and the United States.

TORONTO (CP) -- Ford Canada and the Canadian Auto Workers union began labour talks Tuesday afternoon, with the future of an assembly plant in southern Ontario one of the major issues on the bargaining table.

Ford asked the CAW to renegotiate its current labour contract, which doesn't expire until 2011, after the union gave substantial concessions to both General Motors and Chrysler earlier this year.

The concessions were part of a massive restructuring process that saw both automakers file for bankruptcy protection south of the border and receive billions of dollars from governments in both Canada and the U.S.

Ford was the only one of the Detroit Three automakers to survive the financial crisis on its own -- and has seen its market share grow because of this -- but Ford Canada president and CEO David Mondragon has said the company needs a new labour contract similar to that at GM and Chrysler in order to stay competitive in both Canada and the U.S.

The CAW has expressed a willingness to negotiate, but under the condition that Ford maintain its current production footprint in Canada.

"If Ford Motor Company is serious about reaching a new agreement with our union, it must commit to maintaining, and hopefully expanding, its Canadian production footprint," CAW president Ken Lewenza said in a statement Tuesday.

"Already Ford's proportional Canadian presence is much smaller than that of General Motors, Chrysler and even Honda and Toyota. There is absolutely no incentive for our members to approve a contract that makes a number of sacrifices without improving job security and returning our laid-off members to the job."

This may prove easier said than done, however.

Ford Canada spokeswoman Lauren More confirmed Tuesday that the company has no plans to manufacture vehicles at its St. Thomas, Ont., plant beyond 2011.

Currently, the 1,600-employee plant manufactures the Ford Crown Victoria, the Lincoln Town Car and the Mercury Grand Marquis -- all full-sized cars, demand for which is limited to niche markets. In fact, the Crown Victoria is only sold as a part of fleets, such as police cars and taxis.

Auto industry analyst Bill Pochiluk said none of the cars manufactured at St. Thomas are "particularly competitive," and Ford would have to spend a lot of money upgrading the models in order to keep the plant open.

"Quite frankly, we're not sure that particular product set is relevant right now with the kinds of volume that it's likely to have, mostly for industrial markets... because that can be achieved using other vehicles, including SUVs and, for example, the new Taurus," said Pochiluk, president of industry adviser AutomotiveCompass.

Pochiluk said the union would have to give Ford "very, very substantial" concessions for the company to be able to justify keeping the St. Thomas plant open.

However, Ford may be willing to invest elsewhere to keep a similar manufacturing footprint in southern Ontario, including building more engines at its plant in Windsor or adding new models to its plant in Oakville, which currently produces the more popular Ford Edge, Ford Flex and Lincoln MKX, Pochiluk said.

Ford Canada's sales are up 17 per cent year over year and the company managed to push GM out of the top sales spot two months in a row this summer.

And two Ford vehicles -- the compact Focus and the Escape SUV -- made the Asian-dominated Top-10 list of vehicles purchased under the American "Cash for Clunkers" program, which offered consumers up to US$4,500 to trade in old cars for new fuel-efficient models.

However, Ford still needs help from the CAW, Pochiluk said.

"Ford right now is riding high, but they need help just like everybody needs help," he said. "They're counting on it. They're planning for it."

After months of bargaining during which the CAW reached agreements with GM, then Chrysler, and was then forced by the federal and Ontario governments to give GM even more concessions, the union agreed to slash labour costs at both companies by cutting benefits, changing pension funding obligations and creating a trust for retiree health benefits.

In addition, Ford Canada's Detroit-based parent (NYSE:F) won US$500 million in savings under a new contract with the United Auto Workers in March. Reports say Ford has asked the UAW to match concessions made to Chrysler and GM as well.

Ford Canada employs about 7,000 people at assembly plants in Oakville, Ont., and St. Thomas and a parts plant in Windsor.

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