As it enters talks with the Canadian Auto Worker’s union to negotiate a new contract in September, Ford Motor Company has said that it will try and reduce the $15 cost disparity between Canadian workers at its five plants and their U.S. counterparts.
According to an unnamed spokesman for the company, Ford workers earn $79 per hour, versus $64 per hour in the U.S., making Canadian labour rates the highest in the world.
As a result, the automaker is under pressure to cut costs, especially after last year, when it, along with Detroit rivals Chrysler and General Motors negotiated with the United Auto Workers’ Union for contract provisions that included profit sharing instead of wage increases.
However, the CAW, disputes Ford’s Canadian wage claims, saying that much of the perceived gap is due to legacy costs of former employees. Without them, it says Canadian wages run to $61.23 per hour, versus $60 per hour for UAW counterparts south of the border.
The CAW’s president, Ken Lewenza has resisted calls to adopt a two-tier wage system like that in the U.S. where new workers earn about half the hourly wage of their senior counterparts.
However, with virtual parity between the U.S and Canadian currencies and relatively high labour costs; without any wage concessions, Canada faces yielding more vehicle assembly not only to the U.S. but also Mexico, which will likely represent 20 per cent of North American vehicle production by 2018, up from 10.5 percent in 2005.
Ford shut down its St. Thomas, Ont. assembly plant last year and with GM looking to consolidate production at Oshawa, Ont. into a single plant, some believe the union needs to seriously entertain the notion of compromise. Last month, the Conference Board of Canada, issued a statement on the issue; declaring that: “pressure is mounting for CAW to accept some concessions in order to prevent further closures.”
