Negotiations between the Canadian Auto Workers’ union and Ford resulted in a tentative deal concerning the new four-year contract between the workers and the automaker, averting the proposed strike that would start on Monday midnight if a deal couldn’t be reached.
Though the deal still needs to be ratified by the union members, it includes creating 600 new jobs, modifying the two-tier wage system, paying CAW members US$9,234 in bonuses over the life of the contract and eliminating guaranteed cost-of-living wage increases. Moreover, new hires will start at about US$21 an hour, but will receive full wages of about $35 an hour after 10, instead of six, years.
The CAW has also decided to give General Motors and Chrysler “an indefinite extension” of the current contract, providing them with extra time to assess the Ford deal.
“We weren’t looking for a strike, we’re looking for a settlement”, said CAW president Ken Lewenza, who added that, should they fail to reach an agreement, he will give GM and Chrysler a 24-hour notice before any strike begins.
Vice president of Ford Canada human resources Stacey Allerton commented: “We believe that the tentative agreement offers unique-to-Canada solutions that will improve the competitiveness of the Canadian operations while providing employees the opportunity to earn a good living.”
By striking (pun intended) a deal with the CAW, Ford has ensured that production of its Canadian-built models, i.e. Ford Edge and Flex and the Lincoln MKX and MKT, will continue unhampered.
As research firm Polk points out, U.S. car manufacturers came out of the 2009 crisis with a different strategy, matching production to demand and avoiding the creation of big inventories. This makes perfect sense from a cost-cutting point of view, that is, as long as your plants are operational and your inventory is sufficiently large to meet demand.
General Motors’ Canadian-built models’ inventory, for example, is 25 and 41 days for the Chevrolet Impala and Equinox respectively, 82 for the Buick Regal, 71 for the GMC Terrain and 85 for the Cadillac XTS.
If CAW were to strike, GM would have to deal with the fact that Chevrolet dealers’ forecourts would be stripped of their best-selling passenger cars and SUVs, while the launch of the XTS full-size luxury saloon would be problematic, to say the least.
The same applies to Chrysler: the Grand Caravan and Town & Country are among their high-volume models and currently, have an inventory of 27 and 49 days respectively. Stopping their production would cause many lost sales, while Dodge dealers wouldn’t be too pleased to see the Challenger and Charger production halted.
By Andrew Tsaousis
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