Hinrichs: Ford saw no need for two-tier wage in Canada

Joe Hinrichs
DETROIT -- With an excess of hourly employees already on the payroll in Canada, Ford Motor Co. didnít see any advantage to pushing for a two-tier wage agreement with the Canadian Auto Workers.

On Sunday, the CAW ratified a new three-year contract with Ford that notably excludes a two-tier wage arrangement like that approved by the UAW in 2007. CAW President Buzz Hargrove has said he will fight any plans by the Detroit 3 to establish two permanent wage tiers in their Canadian plants.

Instead, the new Ford-CAW agreement extends the length of time that new hires are paid a lower ďgrow-inĒ wage from 18 months to 3 years. The amount of that starting wage also was lowered from 85 percent of regular wages to 70 percent, said Joe Hinrichs, Ford group vice president of global manufacturing.

ďIf in the term of your three-year agreement you donít plan on doing much hiring, how much energy do you want to spend on trying to work on that issue,Ē Hinrichs told Automotive News.

Ford has about 780 workers idled at its Windsor, Ontario, facilities. About 150 of those workers are likely to move to Fordís Oakville, Ontario, assembly plant when a third shift is added in late July. Ford will hire another 350 workers for Oakville for that third shift.

The new contractís grow-in provisions for those hires will save Ford money right away, Hinrichs said. But beyond that, there is little opportunity for Ford to cut costs through a second tier of wages.

ďDuring the three-year period, we donít see much turnover taking place, especially with the excess employees in Windsor,Ē he said.

Earlier Monday, Hargrove said he was "elated and relieved" after 78 percent of union members voted for the agreement.

"We are going to talk to General Motors and Chrysler and we are going to offer them the same deal," he told Reuters. "There's no reason why they wouldn't accept it."

The deal was sealed an unprecedented five months before the union's current contract with Ford expires, avoiding the deadlines and tense brinkmanship that traditionally accompany auto sector contract negotiations.

Hargrove said that reflected the "overwhelming challenges" in the North American auto sector, which faces tough foreign competition, a U.S. market collapse, high gas prices and other problems. "Our members are aware of that," he said.

Union officials, who recommended the deal on Friday, have said it will save Ford hundreds of millions of dollars.

Workers will face a wage freeze for the duration of the contract, higher health costs, and one week less paid vacation per year, while cost of living increases will be suspended for five quarters.

But they will receive a $2,200 Canadian ($2,160 U.S.) "productivity and quality" bonus and a one-off $3,500 bonus (Canadian) in January to compensate for the lower vacation time.

In addition, Ford Canada's assembly plant in St. Thomas, Ontario, will remain open until 2011, instead of 2010 as originally scheduled.

The union has said it plans talks with General Motors on Monday and then with Chrysler LLC on Tuesday "with the intention of adapting the pattern agreement achieved at Ford to each company."

Reuters contributed to this report

You can reach Amy Wilson at awilson@crain.com

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