CAW president Ken Lewenza and Bank of Canada Governor Mark Carney at the annual CAW union convention in Toronto Aug 22, 2012.
Credits: Veronica Henri/Toronto Sun/QMI Agency
LONDON, Ont. – Automotive workers in Canada are bringing their pay in line with their U.S. counterparts, and a leading automotive research firm says that may save jobs here.
The tentative deal reached Monday between the Canadian Auto Workers and Ford of Canada is a step closer to lowering the cost of manufacturing a vehicle in Canada, said Kristin Dziczek, director of the labour and industry group at the Center for Automotive Research in Ann Arbor, Mich.
"It has the potential to shrink that gap, but it depends a lot on new hires," she said. "It certainly did not make things worse. It may make things better."
CAW workers earn about $6 an hour more than their U.S. counterparts with UAW, including wages and benefits, she said. And this contract does not narrow the margin immediately.
But with CAW starting rates dropping to $20 an hour and the UAW starting rates climbing to about $19 an hour, that will bring the sides closer.
In addition, UAW workers won profit-sharing language and the CAW did not. Profit sharing is a costly give by Ford because of its booming sales.
"So much depends on new hires, but there has to be attrition. The real question is how many will leave the company," Dziczek said.
CAW members also will receive about $7,000 less in bonus money over the life of the collective agreement compared with UAW members, she said.
But Tony Faria, business professor at the University of Windsor and an automotive analyst, said the deal doesn't go far enough in trimming expenses, and Ford wanted deeper cuts.
"It does not close the gap. At best, it is neutral,” he said.
Ford wanted, but didn't get, a lower top-wage rate for CAW members, workers to pay a portion of their pensions and an end to the provision that workers qualify for a full pension after working 30 years, Faria said.
New CAW workers will, however, get a hybrid pension plan using defined benefit and less costly defined contribution plans.
"It does not improve labour costs in relation to the U.S., but it does not worsen it. The automaker came to the table with the goal of closing that labour gap. That did not happen," Faria said.
Scott Smith, former chair of Local 1520 CAW at the now-closed Ford assembly plant in St. Thomas, Ont., believes the deal is a framework for future automotive jobs.
"It positions us for future investment. It moves us forward. They were upfront about not raising fixed costs and this does that."
The lean contract comes as Ford has made more than $30 billion in profits since 2009.
"Let's be honest. They are making money, they are doing well in Canada and we cannot take that momentum away from them. They have to be profitable to create jobs," Smith said.