UPDATE 2-Ford, Canadian union agree on contract changes

* CAW, Ford reach tentative deal on concessions

* Agreement covers some 7,000 workers

* Tentative contract faces weekend ratification vote

(Updates with background on production, labor costs)

DETROIT, Oct 30 (Reuters) - Ford Motor Co (F.N) and the
Canadian Auto Workers union said on Friday they reached a deal
that would freeze wages for some 7,000 workers into 2012 in
exchange for protecting jobs at Ford's factories in Canada.

The union had granted similar concessions to General Motors
Co [GM.UL] and Chrysler, a precedent the CAW cited in offering
cost-saving contract changes to Ford.

CAW President Ken Lewenza said Ford's heavier debt load
relative to GM and Chrysler had made it unavoidable to offer
changes to a contract that will run until September 2012.

"Ford is not in good financial shape," he told reporters at
a briefing in Toronto.

Ford has said costs at its Canadian operations represented
its highest worldwide, with a labor cost gap of about $16 per
hour compared with the United States.

The proposed contract changes face a ratification vote at
union locals this weekend, CAW officials said.

GM and Chrysler went through bankruptcies funded by the
Obama administration this year to shed costs and debt. Ford was
the only U.S. automaker to have avoided bankruptcy.

In exchange for the concessions, Ford withdrew a threat to
pull out of Canada and pledged to keep 10 percent of its North
American manufacturing output there, union officials said.

Ford now has about 13 percent of its Canada-U.S. production
in Canada, while Chrysler has about 20 percent and GM about
18.

The CAW had warned Ford's Canadian production footprint
would fall below 10 percent in 2011, when the large sedans
being manufactured at its St. Thomas, Ontario, assembly plant
are slated to be phased out.

The CAW said Ford would close the St. Thomas plant in the
third quarter of 2011 and offer severance and retirement
packages to workers there.

At the same time, Ford offered production pledges to its
Essex and Windsor engine plants and promised to bring a new
global vehicle platform to the Oakville, Ontario assembly plant
that makes the Ford Edge, Flex and Lincoln MKX.

Ford has been seeking a similar set of concessions from its
major union, the United Auto Workers.

Ratification of those concessions has been thrown into
jeopardy by strong opposition from rank-and-file workers in the
United States in a vote set to conclude on Monday.

UAW workers have expressed opposition to a provision of the
proposed deal with Ford that would see the union surrender its
right to strike when its current contract expires in 2011.
(By Kevin Krolicki; editing by Matthew Lewis and Andre
Grenon)