(Black and) Blue Oval: Ford of Canada labor costs reportedly world's highest
it wasn't long ago that U.S. automakers were producing a high percentage of their new products in Canada because labor costs were lower up north than are here in the States. The cost paradigm changed considerably after GM and Chrysler went into Chapter 11 reorganization, as the ailing automakers secured better labor deals with both U.S. and Canadian unions, making the UAW and CAW more competitive versus Japanese automakers.
The United Auto Workers renegotiated with Ford, giving Dearborn terms similar to those it gave GM and Chrysler. Ford reportedly told The Globe and Mail that it now pays about $52 per hour for U.S. labor after benefits. Unfortunately for Ford, the CAW hasn't extended the same helping hand labor-wise, and the Blue Oval isn't very happy. Ford says it is paying $16 more per hour for its Canadian workforce than it is for U.S. workers. In fact, Ford says its labor situation in Canada is so bad that the Blue Oval alleges its labor costs there are now higher than in any other region on earth.
The Canadian Auto Workers union appears willing to negotiate, but The Globe and Mail reports that it wants job security in return. Ford's St. Thomas plant, which currently builds the Panther-platformed Lincoln Town Car, Ford Crown Victoria and Mercury Grand Marquis, is scheduled for closure at some point in the next two years, and the CAW would like Ford to instead guarantee a new product for the facility. The CAW says it wants to continue to account for 13% of Ford's North American production, but closing the plant and laying off its 1,600 workers would shrink that number to 9%. So far, neither party seems to be budging, but we have a feeling Ford won't be paying the highest labor rates anywhere for very much longer.
[Source: The Globe and Mail]
Reader Comments (Page 1 of 4)
John 1:17PM (10/03/2009)
Why would Ford commit new product to Canadian factories with such high labor costs? How about getting them under control first, then talk about new product being built in Canada.
Most of Ford's lineup is already being built or scheduled to be built elsewhere. There is no direct replacement for the Panthers, so Ford has no new models in which to build in St. Thomas. The only all-new model that Ford is coming out with in the next few years (that isnt already built here) is the Fiesta, and due to the fact that it's price point will be measured against those of the Fit, Versa, Aveo, etc., it will be built where labor costs are their cheapest: Mexico.
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elprogramer 1:29PM (10/03/2009)
Because labor costs reflect a statistical blip on overall costs for a company's operating costs. The sheer amount of material handled over the course of constructing a vehicle means that employees will handle in about one hour enough material worth their week's pay.
In any case, the CAW wouldn't be negotiating for nothing; there's obviously a product they see as possibly coming to St. Thomas or Canada as whole. Both parties will get what they want; Ford doesn't want labor problems to interfere with their rebounding and the Canadians want jobs.
KC 1:42PM (10/03/2009)
Three reasons: only recently Canadian dollar has 90+ cents exchange rate with the USD; historically, CAD was trading in 70+- cents against the USD(That's almost 30% jump)
CAW workforce are statistically higher educated and healthier than their UAW counterparts.
Ford Edge, Lincoln MKX, MKT production will be costly to move and they will stay for at least another 4 years in the line up.
John 1:49PM (10/03/2009)
The Edge, MXK and MKT are already being built in the old Windstar/Tempo factory which is in Canada but it isnt the same factory as the one where the Panthers are currently being built, and THAT is the factory that they want to stay open. Ford simply has nothing to build there.
odens 2:00PM (10/03/2009)
"Labor reflects a significant blip of overall cost"
Having you been smoking crack lately.
Look at the HUGE costs. 52 p/hr + 16p/hr (for Can)= 68/hr *2080 (work hours in a year)=$141,440 avg per person * 1600= $226,304,000 per YEAR.
Making these cars in America, would save $53,248,000 a year, and since there not way under manufacturing capacties they wouldn't need much capital investment to bring them over here. The fact is, if CAW, doesn't reduce their rates to US levels, I could see almost all of Ford lineup being brought over saving the company close to a quarter of billion dollars a year.
Mehdi Cheddadi 2:48PM (10/03/2009)
no way they are getting paid 141,440$ average. impossible. why the hell would anyone be doing any other job if you can get that much in a factory
Maestro Mario 3:04PM (10/03/2009)
"Making these cars in America, would save $53,248,000 a year..."
Odens, when you say America, you mean central America (Mexico) or south america right?
Marko 5:07PM (10/03/2009)
Mehdi,
Its not a straight per hour calculation. Keep in mind when they say $52/hr after benefits, it includes the overhead burden per head in that additional amount. Probably closer to 30/hr + 10/hr for health + 10/hr for insurance + 2 for misc admin stuff thats built in.
I do agree....those factory workers make far too much to be pushing buttons. Manufacturing takes a bit of intelligence, but when you see someone who has put themselves through college, then obtain an entry level engineering position with Ford. They are barely ahead when they get like 65K salary....when factory workers in the good ol days got 1.5x overtime!
Temple 5:09PM (10/03/2009)
"no way they are getting paid 141,440$ average."
Its not take-home pay. A large portion of that is benefits, pensions, insurance, etc. In the US, where healthcare burden is on the company, the health car cost for retired workers is also included.
texmln 7:36PM (10/03/2009)
Take home pay or not it's still CASH out the door for Ford and a huge expense line item that makes profitability difficult to achieve. "Benefits, pensions and insurance" aren't free.
Polly Prissy Pants 6:21PM (10/03/2009)
When a corp calculates the total cost of an employee it usually includes that employees share of the light bill, water bill, cube space, equipment, supplies etc in addition to actual pay. In other words, everything it costs a company to employ a single person. We already know the average pay is around $25/hour so that would make the total cost 200% of pay, which is probably about right, although Ford doesn't really specify how they're calculating that. Without knowing the details the discussion of costs is meaningless.
Tony 8:33PM (10/03/2009)
The BASE wage for a Ford of Canada line worker is 34+ an hour plus benefits and pension.
Judy Zik 1:18AM (10/05/2009)
The Union doesn't trust Ford. I wonder why?
1) Out of the big 3 Ford builds the smallest percentage of it's vehicles in Canada. Going back to the Autopact a couple of generations ago there has been an agreement in place that the Big 3 would build at least as many vehicles in Canada as they sell. That is no longer the case. Especially with Ford.
2) In order to get concessions GM and Chrysler had to make product guarantees.
3) Like the others Ford has a history of outright lies. They closed the truck plant in Oakville despite being the most efficient truck plant they had at the time. Then they got a bunch of government money to pay for the Flex plant upgrades in Oakville to allow them to build the Edge, Flex and friends (there was supposed to be 5 products). This was of course promised as something that would create jobs. Instead jobs have been lost. An entire third shift was hired. People had quit their other jobs and were ready to start just to be told a couple of days before hand that the third shift was cancelled and they were out of a job.
4) This crap out the cost of building in Canada is suspect to say the least. Our dollar is the highest it has been since the 1970's but that will likely change. There is also the fact that there is now basically only one plant in Canada left and it isn't being utilitized to capacity so that really skews the numbers.
If Ford wants GM and Chrysler's deal they should be willing to make the same guarantees they did.
mbslrm 1:21PM (10/03/2009)
I'm sure Ford could find another car/truck to build there, considering they're sales are on the rise...
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Clavius 1:27PM (10/03/2009)
They could but why would they? The labor cost's are so high that in turn their profit margin is even smaller for each car they produce, that or they'll be making each car at a loss.
mbslrm 2:39PM (10/03/2009)
If they find another car to build, the CAW said they'd come to the bargaining table (or something to that effect).
Matt 9:05PM (10/03/2009)
"considering they're sales are on the rise..."
Ford's sales are down over 22% this year from last...their sales are NOT "on the rise".
mbslrm 9:27PM (10/03/2009)
They are in Canada. They were up about 25% in September.
http://www.thestar.com/article/704176
Yaroukh 10:04PM (10/03/2009)
Matt, being an ignorant and failing as always
mbslrm 10:06PM (10/03/2009)
Well, you just have to look at his avatar...