The Canadian Auto Workers (CAW) union is hoping to seal an agreement with Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), and Chrysler Group LLC before the expiration of its contracts on 11:59 P.M. today, in order to prevent the possibility of strike.
The Detroit automakers were engaged in preliminary talks with the union, and they are trying to negotiate the Canadian wages and costs that would match the salaries of the American workers as much as possible. CAW Officials expressed their willingness to compromise and to stretch out the period for new hires from 6 to 10 years, before reaching the same pay of a veteran worker.
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Executives from the U.S. automakers said manufacturing cars in Canada became the most expensive place to perform the task. A Ford Motor Company (NYSE:F) Assembler in Canada receives $34 per hour salary, while the hourly wage of their counterparts in the United States was only $28. The automakers spent approximately $79 dollars per hour in labor costs, including benefits and pensions, compared with the $64 total labor costs in the United States.
To be able to reach a negotiation with the top three U.S. automakers before the deadline, CAW chose to focus its talks with Ford Motor Company (NYSE:F) and temporarily stopped its negotiation with General Motors Company (NYSE:GM) and Chrysler. If CAW and Ford are able to reach a tentive agreement, that will be used as an outline for further negotiations with the auto industry.
Ken Lewenza, leader of CAW, said a number of key principles in the agreements are already in place, and he is hopeful that a tentative agreement would be achieved with Ford today.
Each automaker issued a statement regarding CAW’s decision in choosing Ford to lead the contract negation. Ford expressed confidence that it will be able work with the Canadian Union in finding innovative solutions to help build the future success of the American auto industry in Canada.
GM looks forward to continuing its talks with CAW to reach an agreement that would improve its future competitive positions in Canada.
Chrysler expressed its concern in reaching a tentative agreement with Ford. The company said, “These negotiations are pivotal in shaping the future of the automotive landscape in this country. While we respect Ford Motor Company (NYSE:F) as a competitor, we do not think they are in the best position to take on this role, given the significant reduction in their Canadian footprint in recent years. Chrysler’s goal in these negotiations is to develop an agreement that is conducive to long-term job security in Canada, and we will continue to work with the CAW to get there.”
In an interview with Reuters, Peter Kennedy, National Secretary-Treasurer for CAW, said the Union would continue its negotiations with Ford later on today. Both parties suspended their meeting at 4:00 A.M. Monday. They started negotiating on Sunday.
Kennedy expects to experience some hurdles before reaching a final deal, particularly the issue on permanent two-tier wage scales for new hires and veteran workers. Kennedy hopes that the two parties would be able to put together the key pieces in the tentative agreement and meet the deadline.
Kennedy said, “We’re working towards getting a deal (at Ford) that will be the pattern, and if it takes a few more days at the other locations, as long as we’re having constructive dialogue to get the pattern, then we’ll continue to do that, without a strike.”
CAW represents 20,000 workers. If a strike happens, the three automakers including its suppliers will suffer $206.5 million total losses per day.