Canadian employees of Ford have voted to accept the collective bargaining agreement negotiated between Canadian Auto Workers union and Ford Motor Company (NYSE:F). The union said that 82 percent of its members at Ford Motor Company (NYSE:F) have accepted the deal. Ford said the contract will improve the effectiveness of its Canadian operations and add about 600 new employees in Canada within four years.
The US automakers have been worried over the cost of manufacturing in Canada. They claimed that Canada is the most expensive country to produce cars and trucks, and they might move to the United States if the union didn’t cut the costs. Earlier, Canada was advantageous to them because of weak Canadian dollar and government healthcare. Recently, the US automakers – General Motors Company (NYSE:GM), Chrysler and Ford Motor Company (NYSE:F) – negotiated a deal with the United Automobile Workers union to reduce the labor costs. That, coupled with a weak US dollar has made USA a cost effective alternative to manufacturing in Canada.
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Following the steps of Ford, General Motors Company (NYSE:GM) workers are likely to vote on Wednesday and Thursday on the agreement. Chrysler is still in talks with the union. As per the Ford agreement, the base salary will be frozen for the next four years for all employees, and new hires will receive no more than 60 percent of the hourly pay received by current workers. The union said that current workers get an hourly pay of $33.89 Canadian dollars ($34.74) and new ones will receive $20.33 Canadian dollars ($20.84). The employees joining Ford Canada after today will receive a lower wage than current workers and will get a combination of benefits and pension plan. Their pay structure will grow over ten year period to reach the level of veteran employees.
Ford said the new agreement will result into significant cost savings. “By becoming more competitive in our labour costs, we are better positioned to support the growth of the Canadian economy and to provide new job opportunities,” said Stacey Allerton, vice president of Human Resources at Ford Motor Company (NYSE:F) of Canada and the company’s lead negotiator. “For every auto job in Canada, multiple supporting jobs are created, and both the company and our employees view that opportunity and responsibility very seriously.”
CAW union has over 20,000 workers, and their strike would cause a daily loss of $206.5 million to the auto companies and component suppliers.