November 4, 2016 / 3:27 PM / 10 months ago

Ford Canada labor deal investment mainly for engines-sources

TORONTO/MONTREAL, Nov 4 (Reuters) - Ford Motor Co will invest some C$600 million ($447 million) in its two Windsor, Ontario, engine plants to update existing V8 production and add assembly of a new fuel-efficient motor for large pickup trucks, two sources familiar with the matter said.

The investment is part of a tentative labor agreement with Ford's 7,000 Canadian auto workers, who vote on Saturday and Sunday on the four-year contract. The union, Unifor, has said Ford will spend approximately C$700 million under the deal.

Hefty spending on engine production was seen as vital because the large V8 and V10 motors now built at Ford's Windsor Engine plant were expected to end production in four years.

"There was nothing planned for Windsor after 2020," said Joe McCabe, AutoForecast Solutions Chief Executive. "They need it (the new engine) to survive."

Ford of Canada spokeswoman Kerri Stoakley and Unifor spokeswoman Denise Hammond said they would not comment before members have reviewed and voted on the deal.

A portion of the C$600 million will be used to update existing 5.0-liter V8 engine production at the Essex Engine plant, according to the two sources, who declined to be identified because the plan is not yet public. The updated engine is expected to be a 4.8-liter V8 for the F-150 pickup truck.

The remainder of the C$600 million will go toward production of a new fuel-efficient large engine, not yet named by Ford, for such "super-duty trucks" as the F-250, one of the sources said.

Unifor said that Essex would get a major new engine program, when it announced the deal, and Windsor would continue producing 6.8-liter engines through the new contract period.

In addition to engine investment, Ford will spend C$100 million for a "refresh," or updated version, of the Ford Edge SUV and Lincoln MKX and MKT models assembled in Oakville, the two sources said.

Under the agreement, Ford agreed that Oakville will be the only North American supplier of those vehicles, said a third source, who asked not to be named. Unifor said Tuesday that Ford also designated Oakville as a primary supplier of those models for international export.

That puts Oakville in a good position to win next-generation production of those models, representing an investment of about C$1 billion, the source said.

Ford is the last of three automakers to negotiate with Unifor after deals with General Motors and Fiat Chrysler . ($1 = 1.34 Canadian dollars) (Reporting by Susan Taylor and Allison Lampert; Editing by Jonathan Oatis)

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