TORONTO/VANCOUVER (Reuters) - A day before a strike deadline at the Detroit Three automakers, the Canadian Auto Workers chose Ford Motor Co as the lead company for contract talks, saying the union believes it has the best chance of reaching a deal with Ford and averting a damaging work stoppage.
The CAW will, however, continue to have talks with the other two Detroit car companies, Fiat SpA’s Chrysler Group LLC and General Motors, as well.
“We’re going to concentrate our efforts on Ford. We hope to get a reasonable deal. We hope to get a modest deal,” said CAW President Ken Lewenza.
If an agreement is reached in time with Ford, Chrysler and GM would have to give a “firm commitment” before the deadline that they could “live with the framework” of such a deal if they want to avoid strikes at their operations, Lewenza added.
“But if they say to us that the collective agreement ain’t gonna fly here, then why would we hold off?” he said at a press conference at a hotel in downtown Toronto where the contract talks have taken place for the past month.
The deadline for an unprecedented simultaneous strike at all three automakers by the CAW’s approximately 20,000 members is 11:59 p.m. EDT on Monday (3.59 a.m. EDT, Tuesday).
A strike at all three companies would result in lost production of about C$200 million ($206.50 million) a day at the companies and their suppliers, according to the CAW.
It would also cut off production of parts exported to U.S. auto plants, as well as assembled vehicles destined for the U.S. market. More than 80 percent of the Detroit Three’s output of around 1.5 million vehicles a year is exported, mainly to the United States.
In response to its selection by the CAW, Ford said it was confident it could find “innovative solutions” to build its operations in Canada. Meanwhile, GM said it looked forward to continuing talks with the CAW.
But Chrysler said it was concerned by Ford’s choice as the negotiations were “pivotal in shaping the future of the automotive landscape” in Canada.
“While we respect Ford as a competitor, we do not think they are in the best position to take on this role given the significant reduction in their Canadian footprint in recent years,” Chrysler said in a statement.
Ford produces only about 9 percent of its North American output in Canada, well below that of Chrysler, at 26 percent, and GM, at 21 percent.
As one of the “few bright lights on the Canadian manufacturing landscape,” any interruption in auto production would come at a particularly bad time, said Mark Hopkins, a senior economist at Moody’s Analytics.
Even a one-week walkout could hurt Canada’s increasingly listless growth, shaving a quarter-percentage point from September GDP while disrupting North American supply chains and retail spending into the fourth quarter, Hopkins wrote in a report.
Transportation equipment accounted for more than three-quarters of the growth in Canadian manufacturing in the 12 months through June, the economist wrote.
The Detroit Three’s resurgence has helped drive a sharp acceleration in Ontario manufacturing, more than offsetting the slowing pace of shipments from Quebec and British Columbia, the report said.
All three automakers - with Chrysler the most publicly outspoken - have argued adamantly that Canadian labor costs are the highest in the world and must drop to match those of their United Auto Workers (UAW) compatriots in the United States or future production and investment there will be put in question.
The union, however, seeing the profits once again being generated by the automakers, wants some payback for concessions its members made during the 2008-09 financial crisis.
Lewenza said the union had chosen Ford for last-ditch intensive bargaining as company negotiators had shown “initiative” over the past few days. Asked if Ford was less adamant about a permanent “two-tier” wage system than the other two automakers, Lewenza said: “Yes.”
The three Detroit automakers and the UAW in the United States have used a two-tier wage scale for the past several years to bring labor costs closer to those of foreign automakers.
The CAW is adamant that new workers, who start at 70 percent of veteran workers’ wages, must over time reach the same pay scales as existing workers. In the United States, they do not.
In recent days it has proposed a lower starting wage as well as an extended “earn-in,” the time it takes new hires to reach the highest end of the pay scale, from the current six years.
($1 = $0.97 Canadian)
Additional reporting by Susan Taylor; Editing by Gary Crosse