TORONTO, March 13 (Reuters) - Ford Canada (F.N) will not accept the same labor agreement that General Motors of Canada (GM.N) recently struck with the Canadian Auto Workers union because the deal will not deliver enough cost savings, Ford said on Friday.
The company joined Chrysler [CBS.UL] in saying it wants more concessions from the CAW, which has agreed to open up contract agreements with the Detroit-based automakers to try to help the companies though the brutal downturn in the auto sector.
“We believe the recently negotiated agreement between General Motors Canada and the Canadian Auto Workers will not keep Ford’s Canadian operations competitive in today’s global economy,” Joe Hinrichs, Ford group vice president, global manufacturing and labor affairs, said in a statement.
Ford, which is not facing the same liquidity problems as Chrysler and GM, reached a new labor agreement in the United States earlier this week with the United Auto Workers union. That deal cuts total hourly labor costs to around $55 now and to $50 by 2011.
Two years ago, before the UAW accepted a landmark deal for a two-tiered wage system, Ford’s U.S. labor costs were estimated to be around $70.
Average wages and benefits at Ford’s Canadian arm are estimated at around C$70 an hour ($55.12).
On Wednesday, Chrysler President and Vice Chairman Tom LaSorda, called the GM-CAW deal “unacceptable” and threatened to pull Chrysler’s operations out of Canada if the union did not accept steeper cuts at Chrysler.
Eighty-seven percent of GM’s 10,000 hourly Canadian workers voted in favor of the agreement, which will see wages frozen, more health care costs shifted to employees, paid time off cut, and cost of living adjustments suspended or eliminated.
It also will divert employee bonuses to cover retiree health care costs, and reduce expenses for union-sponsored programs.
GM said cost savings from the deal would significantly close the competitive gap with nonunion foreign automakers in the United States.
Hinrichs said Ford is confident it can reach an agreement with the union. The CAW was not immediately available for comment.
$1=$1.27 Canadian Reporting by John McCrank; Editing by Peter Galloway