Ford to cut labor costs at Canada sites

The Detroit News - Ford Motor Co. says it will have to work with the Canadian Auto Workers to find a way to reduce labor costs in Canada so it can ensure its factories there are considered for future products.

"We're really looking at this round of negotiations as an opportunity to improve the competitiveness of the Canadian operations," said a senior Ford of Canada official, who spoke to The Detroit News on the condition of anonymity. "Canada has higher labor costs than anywhere else we do business. It's not sustainable."

According to Ford, the base wage for its 4,500 assembly workers at three factories in Canada is $34 an hour, compared with $28 an hour in the United States. For years, the gap has been masked by favorable currency exchange rates and legacy health care costs that no longer apply.

CAW President Ken Lewenza has acknowledged that a labor cost gap exists, though he argues that it is much narrower when all costs are factored into the equation.

"We have been meeting with all three companies and trying to define active costs," Lewenza told The News in a recent interview. "Where we're apart is because of the rising Canadian dollar. We don't have any control over that."

A stronger Canadian currency raises the cost of Canadian labor.

And Lewenza says Ford's calculations of labor costs do not take into account the productivity and quality of Canadian factories.

With good reason, Ford says.

"There really is no productivity or quality advantage," the company source said.

"We have a global environment — and it's very clear to us what it takes to compete in this industry at this time," the Ford person said. "It will be really important for us to help the CAW understand what their role is from a labor perspective to secure and sustain operations in Canada for the future."

But Ford is open to creative solutions. Its bargaining team will not be coming to the table with any "firm positions" other than improving competitiveness. That is unlike Chrysler Group LLC, which has said it will be looking for a deal similar to the one it negotiated with the United Auto Workers here last fall — a deal that replaced cost-of-living wage increases with a new profit-sharing formula.

"It's really about how we make progress on that labor cost gap in a way that works for everybody and works for Canada," the source said. "What works for the U.S. and the UAW may not work for the CAW."

Formal negotiations are scheduled to begin Aug. 15 at the Sheraton Hotel in downtown Toronto.