CAW in difficult negotiations with two companies, Ford talks could start soon
Published Tuesday June 30th, 2009
TORONTO - With some workers set to go on strike, others trying to reach an agreement after their contract has expired and still others set to enter a gruelling set of negotiations, the Canadian Auto Workers won't be taking a summer holiday any time soon.
About 250 members of the union could be on strike as early as Wednesday morning if they're unable to reach a deal with their employer, a division of heavy-equipment dealer Toromont Industries Ltd. (TSX:TIH).
Meanwhile, a CAW contract with Navistar has expired without a new agreement and the two sides have ceased negotiations for the time being.
But the number of employees affected by those two disputes pales in comparison with those at Ford Canada. Although the two sides have not yet started negotiating, the rhetoric is heating up and union president Ken Lewenza said he'll meet with the union leadership at Ford to receive his "marching orders" on Monday.
Ford Canada president and CEO David Mondragon has said he is "anxious" to negotiate a new labour agreement with Ford workers after significant cost-cutting deals were reached with General Motors and Chrysler.
The troubled automakers - both of which have since filed for bankruptcy protection in the U.S. - were able to get substantial concessions from the CAW after governments asked them to pare costs as a condition of billions in bailout loans.
Ford didn't ask for bailout money and is now at a disadvantage because it wasn't able to demand the same concessions from its workers.
Lewenza said he's willing to re-negotiate the CAW's current contract with Ford, which expires in 2011. But, he said, he expected to receive a guarantee that Ford will maintain its current Canadian manufacturing footprint in return.
"One of the things demanded in return from GM and Chrysler was a manufacturing footprint to secure as many jobs in Canada as we can," Lewenza said Tuesday, adding that Chrysler agreed to keep 19 to 20 per cent of its manufacturing in Canada, while GM agreed to keep about 14 per cent here.
"So we said to Ford Motor Company, if you want to be treated the same as General Motors and Chrysler, then you have to provide the same type of manufacturing footprint to secure jobs in Canada, and that's kind of the starting point for us."
Bill Pochiluk, president of industry adviser AutomotiveCompass, said Ford may be able to make that promise for the remainder of the CAW's current contract, but it's unlikely to maintain its current level of production much past 2011.
According to analysis done by AutomotiveCompass, Ford currently does approximately 14 per cent of its North American production in Canada. However, it is "virtually certain" that Ford's St. Thomas, Ont., plant - which produces full-sized sedans like the Ford Crown Victoria, the Mercury Grand Marquis and the Lincoln Town Car - will be shut down within a few years.
There are no plans to produce cars at the 1,600-employee St. Thomas plant past 2011, and Pochiluk said that would send Ford's Canadian production down to nine per cent of its North American total by 2012.
"For the period 2012 onwards, we see it as highly unlikely that Ford could continue its double-digit market share," Pochiluk said.
Ford also plans to expand its operations in Mexico and produce more small cars in the U.S., further hurting Canada's proportion.
However, several companies have expressed interested in moving into the St. Thomas plant if Ford leaves, so employment in the region won't necessarily be affected, Pochiluk added.
"A number of players have toured St. Thomas as a potential acquisition, and these have mostly been companies with green products, for example companies with green cars, electric cars, that kind of thing, but nothing has clicked so far," he said.
Auto parts company Magna International Inc. (TSX:MG.A) is working jointly with Ford on producing an electric car that will be introduced in 2011.
Meanwhile, CAW workers at a Toromont CAT plant north of Toronto are prepared to strike if a deal isn't reached by Tuesday at midnight.
At issue is a threat by the company that it will move its operations to a new site and, in the process, will disregard seniority and will not recognize the union at the new location, said CAW Local 112 president Roland Kiehne.
Although talks are ongoing, Kiehne expressed doubt that a settlement will be reached before the deadline.
In other negotiations, the CAW said it has been unable to reach a new deal at the Navistar truck plant in southwestern Ontario because of what the union describes as "company demands for massive concessions and job cuts."
Bob Chernecki, an assistant to Lewenza, said Navistar has asked workers to cut their current production capacity from "a couple hundred trucks a day" to less than 35, which will mean massive layoffs.
Currently, the plant has 800 to 900 employees on temporary layoff with another 350 active, and Chernecki said the new proposal would reduce the number of employees to less than 100.
The Chatham, Ont., plant used to employ as many as 2,000 people, and employed 1,000 as recently as 2007, Chernecki said.
"How the hell do you continue to operate with overhead and shipping costs, all of that, with 100 people in the plant?" he asked.
"And we've continued to raise this with the corporation, and their response has been that they don't have a plan to close, but it's always in the back of people's minds."
Although Chernecki said Navistar employees have no plans to strike, the two sides are taking "a bit of a break" from talks and the plant is beginning a two-week-long planned shutdown beginning Wednesday.
"The reality that we need to be smaller and radically different," said Chatham plant manager Craig Holmes in a recorded message.
"I think that's the biggest hurdle keeping us from reaching an agreement. It's a hurdle we must get over to move forward."
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