OTTAWA — Just hours before a strike deadline, the Canadian Auto Workers union and the Ford Motor Company of Canada reached a tentative four-year contract agreement on Monday.
While the union made concessions on wages paid to some workers and pension costs, Ford agreed to gradually rehire about 600 workers who are currently laid off.
Calling it a "good deal in these economic times," Ken Lewenza, the union's president, said at a late-afternoon news conference, "It's far from a carry-over agreement."
The agreement with Ford increases the pressure on Chrysler Canada and General Motors of Canada. Mr. Lewenza said they must agree to the same broad contract terms as Ford or face a strike at midnight, a step he hopes to avoid.
"Our jobs is to manufacture cars and build components," Mr. Lewenza said. "Our job isn't to go on strike."
Stacey Allerton, vice president for human resources at Ford of Canada, said the tentative agreement provided "unique-to-Canada solutions that will improve the competitiveness of the Canadian operations while providing employees the opportunity to earn a good living."
The tentative agreement at Ford preserves the Canadian system under which new employees start at a lower wage but gradually move up to full rates. Chrysler, in particular, has repeatedly said that it wants its plants in Canada to follow the American system in which new hires are permanently paid at lower wage rates.
Mr. Lewenza said Chrysler and the union remained far apart on Monday afternoon.
"The gap is so wide that, quite frankly, it's hard to imagine," he said.
Chrysler Canada declined to comment.
In a statement, G.M. Canada said that it was "focused on working with the C.A.W. to reach a competitive agreement that will improve G.M. Canada's competitive position for the future."
Canada's manufacturing sector is disproportionately dependent on Detroit's automakers, as well as Honda and Toyota. The loss of production at the three companies' plants, with the exception of a factory G.M. owns that operates under a separate contract, could have a significant impact on the country's economy.
Mark Hopkins, an economist with Moody's Analytics, wrote in an analysis published on Friday that auto-related companies contributed about three-quarters of the growth in Canada's manufacturing sector over the 12 months leading to June.
"Stalling this momentum, even temporarily, would be costly," Mr. Hopkins wrote.
The rise of the Canadian dollar to parity with the American dollar has reduced the usual cost advantage of Canadian auto plants and put pressure on the union to find cost savings for manufacturers. Even Mr. Lewenza acknowledged that labor costs are now higher in Canada because of the exchange rate.
Sergio Marchionne, the chief executive of the Chrysler Group, threatened to withdraw the company from Canada during an interview with The Globe and Mail earlier this month.
"Nobody in their right mind would continue to create an unlevel playing field in its own organization," he told the Canadian national newspaper. "It's impossible. We have other plants, other options."
The remark set off some controversy in Canada because both the federal government and the province of Ontario contributed to Chrysler's bailout.
By IAN AUSTEN 18 Sep, 2012
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Source: http://www.nytimes.com/2012/09/18/business/global/ford-and-canadian-workers-in-tentative-accord.html?partner=rss&emc=rss
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