Labour peace at Ford; GM and Chrysler in the balance in Canada

By Greg Keenan, Globe and Mail, September 17, 2012
Ford has secured labour peace for four years in a deal the company said improves the competitive position of its Canadian plants in the global battle to win auto investment and jobs.

The Ford agreement, now being studied by Chrysler and GM, reflects the power of private and public-sector employers to keep a lid on wages in a fragile economic recovery that has many workers – especially in Canada’s manufacturing sector – fearful their jobs will be eliminated.
Auto makers in particular are in a position of strength in Canada because the rise in the value of the Canadian dollar has pushed labour costs above those in their U.S. plants, leading some to threaten to shut their plants here eventually if the union did not agree to their demands.
Detroit Three workers, however, wanted to win back some of the things they gave up during the recession of 2008-2009, which drove two of the companies into bankruptcy protection.
They failed to get back holidays they surrendered in 2009 and the cost of living adjustments that were frozen when they agreed to help the companies.
Mr. Lewenza said it’s not clear to him if specific elements of the Ford deal will be difficult for Chrysler and GM to swallow.
“I didn’t get an aggressive negative response,” he said, but added, “on most counts, they think it’s a pretty expensive deal.”
Nonetheless, Mr. Lewenza expressed satisfaction with the agreement.
“It’s a damn good deal in these economic times; it is a damn good deal,” Mr. Lewenza told reporters at a downtown Toronto hotel after the union fought off Ford’s most stringent demands, but agreed to a pay freeze for existing workers for the length of the contract plus lower wages and a less costly pension plan for newly hired employees.
Workers at Chrysler and GM were scheduled to strike at 11:59 p.m. on Monday if those companies refused to match the Ford deal.
Mr. Lewenza said workers and union leaders recognized that they needed to make sure Canadian operations remain competitive and attractive for new investment.
“We believe that the tentative agreement offers unique-to-Canada solutions that will improve the competitiveness of the Canadian operations,” Stacey Allerton, vice-president of human resources for Ford Motor Co. of Canada Ltd., said in a statement.
The union won signing bonuses of $3,000 for about 4,500 Ford workers, plus annual bonuses of $2,000 in each of the last three years of the four-year contract.
The deal – reached eight hours before a strike deadline – will also create about 600 new jobs, mainly at Ford’s assembly plant in Oakville, Ont.
That will help provide work for some of the 800 workers laid off after the company closed its St. Thomas Assembly Plant near London, Ont., last year.
About 230 jobs will be created by the addition of a partial third shift in Oakville to increase production of four vehicles built at the auto maker’s last remaining assembly plant in Canada.
Another 300 jobs will be created in 2014 when production is scheduled to begin on replacement vehicles for the current crossovers.
Ford is still negotiating with the federal and Ontario governments for financial assistance for an investment of more than $1-billion to redevelop that plant.
The union also managed to maintain two key principles that were under threat – its opposition to profit sharing as a means of compensation, and its insistence that pay for newly hired workers eventually rises to that of longer-term employees.
Newly hired workers will be paid about $20 an hour to start compared with the current $24, and their wages will rise to the full level of $34 an hour over 10 years instead of the current six years.
That’s crucial to the company, because the more employees it hires at the lower tier to replace longer-term workers, the more money it will save.
“Ford Motor Co. has indicated to us that the new rate positions them to make the tough decisions in the future for future investment,” Mr. Lewenza said. “It’s a living wage, not a good wage.”
That system compares with the contract the Detroit Three auto makers negotiated last year with the United Auto Workers, which established a permanent second tier of lower-paid workers.
He said Ford recognized the CAW’s philosophical opposition to a permanent two-tier system.
Chrysler and GM were still insisting on a permanent second tier in Canada as of early Monday evening.
Blocking a two-tier wage system, securing job security for four years, securing employment for workers who lost their jobs in the St. Thomas closure, while agreeing to a wage freeze supplemented by bonuses seems like a sensible, mature and workable contract negotiated between Ford and the CAW.
These signals are not only important for the auto industry; they have implications for the whole economy, especially in light of the scorched-earth war against unions in all workplaces in the U.S.
This contract sends signals that the labour movement is far from dead, the avowed hope of a vast majority of American voters, and, unfortunately, too many Canadians.
While GM and Chrysler are already sending signals that Ford can do such a deal because it has such a small "footprint" in Canada, and they both think the contract "too rich" for their blood, there will now be pressure to follow the "template" established at the bargaining table with Ford. And that pressure can only help secure, at least in the short run, the big three auto makes in Canada, and also see similar contact terms extended into non-union shops like Honda and Toyota in Canada.
No doubt, there will also be renewed efforts to certify workers at both Japanese companies' plants in Canada by the CAW, and this contract with Ford is their best argument in favour of union certification.
This contract also sends signals to Ottawa, where the union-busting fervour has a permanent home, so long as the Harper gang is in power in the federal government. Unions are alive; they are demonstrating responsible negotiating tactics and strategies; and they are also transforming their own ways of operating to be more transparent, more accountable and more in sync with the economic conditions in which they operate.