In another blow to the struggling Canadian province of Ontario, Ford announced plans to close its St. Thomas assembly plant, threatening to stop investing in Oakville and Windsor unless the union agreed to pay freezes.
The closure of the St. Thomas facility is expected to create job losses for at least 1,400 people. The shut-down is scheduled for September 2011. The troubled automobile manufacturer is also facing difficulties in the
United States, where the company reported a staggering loss of $14.6 billion this year. Ford was the only auto company to not take stimulus funds from the United States.
A part of Ford's survival strategy has been to cut operating costs, and this has meant reducing costs of employment. This
weekend the Canadian Auto Workers were meeting in Toronto to vote on Ford's
offer. In exchange for keeping operations going in Oakville and Windsor, Ford offered frozen wages and cost-of-living allowances; reduction of holiday time and higher payments for benefits. Under the offer, retired workers would also face extra costs. GM and Chrysler had already obtained similar concessions from its employees earlier this year. Ford's financial problems are blamed on a huge debt burden created when Ford borrowed to stay afloat through the recession. Said Canadian Auto Workers (CAW) President Ken Lewenza,
"The changes are painful."
The CAW said it had tried to
persuade Ford to keep the St. Thomas plant open. Lewenza said Ford threatened to move its Canadian operations to the U.S. and Mexico, where the company has
"... excess capacity ... and would begin transferring production out of Canada immediately if they couldn't reach a new labour agreement,"
Ford said the deal, if agreed to by union members this weekend, would help make the company more competitive. Under the terms of that deal Ford will have to live up to its promise to keep 10% of its operations in Canada.
Ford is also waiting final word on the results of
voting on a similar contract offer by United Auto Workers (UAW) in the U.S.A. UAW members told the media members had rejected the deal offered by Ford, although voting was still underway in Detroit. Workers in the U.S. did not like the concessions Ford was asking of employees. While the vote was close to unanimous against the wage freezes and other austerity measures Ford wanted its employees to swallow, some employees were not happy with the vote. One employee at Ford in Sterling Heights Michigan, Brian Pannebecker,
said "I think the UAW failed its membership in adequately explaining how important it is for Ford to stay competitive with Chrysler and GM and how relatively minor these contract changes were."
The Sterling plant rejected the offer by almost 80%.
Both the CAW and UAW have been engaged in negotiations with Ford on contracts that would take effect in 2011, when the current contracts will end.
The St. Thomas plant employs 1,400 people. The CAW
said it has
"negotiated the best possible closure package for St. Thomas employees."
The deal to protect St. Thomas workers, if agreed to by CAW members, will cost Ford some $400 million. Lewenza said that the union tried to protect younger St. Thomas workers by opening up jobs in other plants by offering senior employees early retirement packages.
The final
vote on the tentative agreement is expected to take place Sunday afternoon in Toronto. Results of the voting are expected to be released to the public by 7 pm November 1. It is not known how the UAW vote results will affect the CAW vote process.
