May 5, 2008 / 12:18 AM / 10 years ago

Ford Canada, union deal to reap significant savings

TORONTO (Reuters) - While Ford Canada’s F.N new collective bargaining agreement with the Canadian Auto Workers union avoids a two-tier wage system - like that agreed with a U.S. union - savings in other areas of the pact will make up the gap, the company said on Monday.

<p>Canadian Auto Workers (CAW) President Buzz Hargrove listens to a question while speaking with journalists following a meeting with Industry Minister Jim Prentice in Ottawa November 2, 2007. REUTERS/Chris Wattie</p>

“Certainly, there was a lot made of the potential for two-tier in Canada,” said Stacey Allerton Firth, lead negotiator at Ford Canada and vice president of human resources.

“We... really listened to the CAW leadership’s feedback that said that while (a two-tier) system works well in the U.S. culture and environment, it wasn’t something that they felt would fit into the Canadian environment, so we had to look at other strategies and tactics to yield the same or similar savings.”

Firth couldn’t specify how much in savings Ford would realize through the agreement but said some of the planned changes, along with changes to healthcare delivery, would have a significant impact on Ford’s competitive position.

“We are confident that the overall collective agreement, as struck, makes our Canadian operations competitive in North America,” she said.

Firth said changes to the new hire “grow-in period” and rates, where workers are hired below the base rate and then work their way up, would go a long way in making up savings.

Under the arrangement, new hires would start at 70 percent of the base rate, and then be bumped up to 80 percent after one year, 90 percent after the second year and 100 percent on their third year.

Currently, new hires earn around 85 percent of the base rate and it only takes them two years to reach 100 percent.

Ford will also save money by outsourcing work that isn’t considered core to the assembly of vehicles at its Oakville, Ontario plant.

Reporting by John McCrank; Editing by Bernadette Baum

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