Tuesday, April 29, 2008

Ford Agrees To Preliminary Terms with Canada's CAW Union

By Chris Haak


In an interesting development, considering the difficulty of negotations in late 2007 between the Detroit 3 and the UAW, plus the increasingly belligerent statements from the CAW's leadership (particularly its president, Buzz Hargrove, pictured) about how it would never accept some of the concessions that the UAW agreed to in its historic negotiations, Ford and the CAW have agreed to a framework for a new long-term labor deal nearly five months before the current pact is set to expire. The current agreement is set to expire at midnight on September 16, 2008.

While the agreement is not the final version, the parties have hammered out the major financial issues, including wages, benefits, and pensions. Once local agreements are bargained (expected to occur in the next week), the agreement will be presented to rank-and-file membership for a ratification vote. The local agreements cover items such as skilled trades and health and safety issues.

Although Ford has not yet released specific terms of the framework, the CAW said Monday that base wages are frozen and temporary lower starting wages (similar to those in the UAW agreements for new hires) are established for the first time. However, in a break with the pattern set by the UAW, the CAW did not concede a two-tier wage structure. Mr. Hargrove vehemently has said over the past several months that the CAW would never, ever accept a two-tier structure. As an outside observer, I thought that he'd have no choice, but apparently, he got his way on that issue. Finally, the endangered St. Thomas plant, which builds the body-on-frame Crown Victoria, Grand Marquis, and Town Car will remain open at least until the end of the agreement, which will expire in 2011.

The deal is important for Ford, which is depending on CAW workers to assemble some of its important, high-profile launches later this year, including the Ford Flex crossover. The UAW's concessionary contracts late last year, coupled with the weak US dollar relative to the Canadian dollar also increased pressure on the CAW, because it was becoming much more expensive to build a vehicle in Canada than in the US. (See related article HERE). Although at the current exchange rate, CAW employees will still receive about $7 per hour more in pay and benefits than their UAW counterparts under their new contracts (about $67 per hour for the CAW versus about $60 per hour for the UAW, according to the CAW), the CAW justifies this disparity by stating that their workers are more productive than UAW workers. However,

Ford will give each worker a $2,200 signing bonus (called a "productivity and quality bonus") upon contract ratification, plus another $3,500 cash payment in January 2009 in return for giving up one week of paid vacation going forward. It also includes improved buy-out offers for employees who would like to take the cash and run.

It will be interesting to see if talks with GM and Chrysler, each of whom are bringing their own wish lists to the table, and neither of whom have immediate high-profile launches scheduled of Canadian-built vehicles in the next few months, progress as quickly or follow the pattern set by Ford and the CAW. Did Ford hurt itself or help itself by settling unexpectedly quickly? On one hand, they averted a labor stoppage that could torpedo the Flex's launch, but on the other hand, they may have been able to wring more concessions from the CAW had they spent more time bargaining or at least driven a harder bargain.

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