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Transportation equipment industry

Ford Motor Company Reaches Tentative Contract with Canadian Workers, Avoids Strike

Strategic Insights

— 1 min read

A three-hour negotiation period resulted in a tentative, three-year contract between the Ford Motor Company and the Canadian Auto Workers union, averting a threatened strike at midnight. The agreement mirrors the terms of a similar four-year contract negotiated by DaimlerChrysler A.G. with the United Automobile Workers union last Thursday. Both deals provide annual wage increases of 3 percent plus cost of living adjustments and substantial pension benefit increases to encourage older workers to retire.

Key Takeaways:

  • The Ford Motor Company and the Canadian Auto Workers union have reached a tentative, three-year contract with annual wage increases of 3 percent plus cost of living adjustments, equal to nearly the inflation rate of 2 percent.
  • The contract calls for total annual wage increases of roughly 4.5 percent, due to the low Canadian inflation rate.
  • The agreement includes large increases in pension benefits, with Canadian retirees set to receive an immediate 13.5 percent increase in monthly pension payments.
  • The union's president, Basil Hargrove, called the agreement "excellent," and the members will vote on it on Sunday, with previous ratification votes having been easily approved.
  • The final issue in the negotiations, the replacement of Lear Corporation with Magna International Inc. for minivan seat production in 2002, has not been resolved and will be the subject of further talks.
  • The Canadian Auto Workers union plans to ask DaimlerChrysler and General Motors Corporation to accept similar deals.
  • Canadian auto workers have a history of going on strike against at least one auto maker each time a labor contract expires, with the exception of a strike-free year in 1993.
  • The Canadian workers have almost always struck the first company with which their leaders have sought a deal, except for an exception in 1996 when they staged a three-week walkout against General Motors Corporation.

Statistics:

  • Total annual wage increase: roughly 4.5 percent
  • Monthly pension payment increase for Canadian retirees: 13.5 percent
  • Number of Ford workers in Canada represented by the Canadian Auto Workers union: 13,300
  • Timeframe of the tentative contract: three years
  • Number of years since the last strike-free contract expiration: 1993
  • Age of the Canadian Auto Workers union: since its split from the United Automobile Workers union in 1984, currently over 29 years old

Sources:

  • "Ford Reaches Accord With Canadian Union" (The New York Times)
  • "Canadian Auto Workers Announce 4.5 Percent Wage Hike at Ford" (Bloomberg)

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