WEST MICHIGAN — The Canadian Autoworkers Union’s last-minute deal with Ford on Monday averted a strike, but did little to change the game for West Michigan automotive suppliers, says Mike Wall, director of automotive analysis at the Grand Rapids office of IHS Automotive.
The deal improves some of the cost structure for the automakers, but does not provide for “a true two-tiered wage,” he said. According to reports, the four-year Ford-CAW deal includes annual $2,000 cost-of-living payments after the first year for active workers, but not retirees. It also gives workers a $3,000 signing bonus. The contract, if approved, will also lead to a substantial investment in Ford’s Toronto-area Oakville Assembly Plant, where the next-generation Ford Edge and Lincoln MKX will be produced.
Wall expects Chrysler Group LLC and General Motors to make similar deals with union. The union suspended threats of a strike Tuesday to give both automakers a chance to review Ford’s contract.
Wall said West Michigan suppliers do considerable business with the Canadian plants because of the amount of powertrain assemblies that cross back and forth over the border at Detroit. But in recent years, that business has been shifting to the south, where West Michigan suppliers have been opening shops to follow the automakers, he said.
The bottom line, Wall said, was that the automakers should be able to avoid major labor problems, but the new deal will not lead to Canada seeing much of a “windfall of activity” in the form of new platform production capacity.
At the Center for Automotive Research Management Briefing Seminars in Traverse City in August, analysts warned that the automakers were increasingly seeing Canada as a high-cost country. As a result, the auto companies began shifting their production strategies to the Upper Midwest and to the south, whether in the U.S. or Mexico.
“The fixin’ for a fight mentality (will result) in a slow leakage out of Canada,” Wall said. “Nothing’s changed.”
After this four-year contract cycle, Wall sees the automakers having an even stronger position with the CAW as the industry shifts to more global flexible platforms. That shift will give the companies more production flexibility and leverage against the CAW, he said.
Wall said this cycle may be one of the last contract negotiations where the CAW can have much of an impact on the automakers, he said.