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Ford reaches ‘home run’ labor deal with big investment from Canadian government

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Jim Farley, of Ford Motor Co., talks about the future of the automobile and how Ford will innovate and change demand like they did with the Model T.

Detroit Free Press

Ford Motor Co. reached a tentative labor contract deal with its Canadian autoworkers Tuesday based in no small part on critical support from the Canadian government, announced Unifor National President Jerry Dias.

Having pushed past a midnight deadline Monday, union members earlier had voted to strike the Dearborn automaker if necessary. They forged an agreement instead.

In a dramatic pivot from fear of a plant shutdown to a massive investment of nearly $2 billion, Dias called the news a “home run” for Ford, its factory workers and Canada.

“This is a major commitment from Ford Motor Co., huge,” Dias told reporters.

The $1.95 billion investment — with $1.8 billion earmarked for  Oakville Assembly, specifically — will be spent transforming the auto industry in Canada into a major player in electrification. Dias said the “lion’s share” of the package would be funded by Ford. 

The Toronto Star reported Sunday that Canadian government officials were willing to invest half a billion dollars to finance electric vehicle production at Oakville, Ontario. Dias declined to reveal financial details on Tuesday, deferring to the government to make its announcement. However, $500 million overstates the government’s involvement, he told the Free Press.

The investment plan involves building five models of electric vehicles, making Canada a player in the rapidly growing electric vehicle market for the first time, Dias said.

“Retooling will start in 2024,” he said. “We’re going to have the first vehicle roll off in 2025 and there will be five models. Another will roll off in 2028. And we’re definitely going to be assembling batteries in Oakville. This is going to be a long-term investment.”

Shortly after the Unifor remarks, Ryan Kantautas, vice president, Human Resources, Ford Motor Co. of Canada, Limited, released this statement:

“Ford of Canada and Unifor have reached a tentative agreement on a three-year national labour contract covering nearly 5,400 unionized employees in Canada … To respect the ratification process, Ford of Canada will not discuss the specifics of the tentative agreement.”

Unifor members are scheduled to vote on the proposed contract on Sunday, when union leaders will outline personal benefits and other details.

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Behind the scenes

Ford CEO Jim Hackett and Ford Chief Operating Officer Jim Farley, who becomes CEO on Oct. 1, played key roles in creating the ambitious deal, Dias told the Free Press.

“Jim Farley understood the importance of Oakville,” the union leader said after the news conference. “We had very, very, very good conversations with Mr. Farley. This announcement happens only as a result of Jim Farley making that decision. He’s taking over. This is his baby.”

This “quantum shift” means  “venturing into a whole new arena; new for us and new for Ford Motor,” Dias said. This also stabilizes employment and safeguards the national economy in Canada, he said.

A sensitive issue heading into contract talks was the future of the Oakville Assembly plant, where the majority of Ford’s Canadian employees work and the Ford Edge and Lincoln Nautilus are scheduled for production into 2023. Dias said he viewed the plant as the most vulnerable. Plants in Windsor and Essex build powerful engines for the F-Series pickups and the Mustang.

Unifor represents about 6,300 Ford workers at five sites, including 3,400 at Oakville. The union represents 35,000 auto industry workers overall, including 20,000 employed by the Detroit Three, Dias said.

With government money, Canada is also investing in new energy and harnessing the power of its own natural resources, including aluminum, cobalt and lithium, Dias said.

“Today is about a vision, a vision for our country and a vision for our industry,” he said.

And while electric car production requires fewer workers than currentfactories use, retirement projections suggest worker numbers will naturally fall as the Oakville site reduces its need, Dias explained. 

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A major priority is keeping U.S. and Canadian jobs from going to Mexico, said Dias, a former sheet metal worker from Toronto who has led the union for nearly seven years.

The UAW echoed the concern on Tuesday.

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“We support our brothers and sisters at Unifor and will not interfere in their contract discussions,” UAW spokesman Brian Rothenberg said. “However, the real product issue is not between the U.S. and Canada, but instead the offshoring to Mexico, China, and other nations of existing products and new products. Only fair trade and trade enforcement will fix that problem.”

Why Ford 

Ford is the best-selling model in Canada, so the commitment reflects valuing the market, analysts said, while sales outside of North America have been unpredictable.

“And Canada does not want to become Australia, where they saw the pullout of automaker after automaker,” said Kristin Dziczek, vice president of the Industry, Labor & Economics Group at the Center for Automotive Research in Ann Arbor. “They’re an all-import market now.”

Canada produced 1.9 million vehicles in 2019, exporting 1.7 million, she noted. That was the first time in a decade the number fell below 2 million, according to IHS Markit. In 2016, the country produced 2.4 million.

In 2019, Canada  imported 1.9 million.

“Of all the vehicles they sell in Canada, just 12% were built in Canada, Dziczek said. The rest of that market is 47% from the U.S., 15% from Mexico, 12% from Japan, 7% from South Korea, 3% from Germany, 1% from the U.K and 4% from other sources.”

Targeting Ford

Unifor, having established Ford as the strike target in the pattern collective bargaining process, sealed a deal with the carmaker that sells the most vehicles in Canada. The union announced that talks now begin with Fiat Chrysler Automobiles and then end with General Motors.

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‘Sick and tired’

 The Unifor deal reflects top priorities of Canada in terms of jobs and the environment, said market analyst Jon Gabrielsen. “Gambling on future demand for electric vehicles may result in major disappointment. … Just look to the amount of downtime and low output of GM’s electric vehicle plants over the past years for an indication of what Oakville could experience.”

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“Unifor is sick and tired of getting scraps of what the UAW gets,” said Joe McCabe, CEO of AutoForecast Solutions. “And the Canadian landscape doesn’t offer a threat to the UAW by taking business away. The future is electrification, alternative propulsion and autonomy. Canada has a very consistent and high level of education. It has a strong workforce and a skilled workforce that’s centralized. And the government looks to the future.”

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Staff writer Eric D. Lawrence contributed to this report. Contact Phoebe Wall Howard at 313-222-6512or phoward@freepress.com. Follow her on Twitter @phoebesaid. Read more on Ford and sign up for our autos newsletter.

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