Ford Canada CEO 'anxious' to negotiate CAW deal

Ford CEO David Mondragon speaks to the parliamentary committee on Monday, March 9, 2009.

TORONTO - Now that Chrysler and General Motors have redrawn the labour landscape of the Canadian auto industry, Ford Canada is "anxious" to begin negotiations with its workers, the company's CEO says.

Ford is the only one of the Detroit Three that hasn't asked for a bailout or filed for bankruptcy in the United States, but Ford Canada president and CEO David Mondragon said the new cost-cutting labour deals at Chrysler and GM are hurting the company's ability to compete.

"We are very anxious to sit down with the CAW. We need to act now to be competitive in the global auto industry," Mondragon said Friday in an interview with The Canadian Press.

"We do not have a cost of productivity advantage today in Canada versus other North American jurisdictions, so we've got to bring ourselves in line, not only with our competitors here in Canada but with our other manufacturing facilities in the United States as well."

In the past, pattern bargaining assured the unionized Detroit Three that a labour concession given to one of them would soon apply to them all, but that changed when governments asked GM and Chrysler to pare costs as a condition of billions in bailout loans.

In Canada, GM initially reached a deal with the CAW in March that cut its labour costs by about $7 an hour, but governments almost immediately said that didn't go far enough. Threats that GM and Chrysler could vacate Canada without major labour concessions forced the CAW to sign new agreements that slashed both company's labour costs -- Chrysler's by about $19 an hour and GM's by about $22 an hour.

Mondragon wouldn't give details on the specific concessions Ford will request from the CAW, but it's likely it will aim to forge a deal similar to GM's and Chrysler's.

Ford's decision to stay out of the bailout game appears to have been the right one. Rather than applying for government loans, Ford mortgaged most of its assets and sold the rest to build up cash.

Mondragon said the company made some "very difficult decisions internally and externally" three years ago to streamline its operations and those have helped it weather the global slump in auto sales.

"Our stakeholders -- our dealers, our bondholders, our shareholders -- have made great sacrifices over the years, but nobody has made more sacrifices than our own employees," he said.

"We've drawn down 17 plants, we've let go over 60,000 employees at Ford, and we've right-sized our business and now we have opportunities in the market that should allow us to grow."

Mondragon said Ford Motor Co. (NYSE:F) has launched seven new vehicles in North America this year -- more than any other automaker -- and will follow that with another 12 over the next two years. Many of these will be smaller, fuel-efficient vehicles Ford already produces in Europe.

Consumers have rewarded Ford for restructuring its operations without turning to taxpayers for help. In Canada, Ford has increased its market share for seven consecutive months to 13.8 per cent and now ranks No. 2 after GM compared to No. 4 after GM, Chrysler and Toyota in 2008.

Mondragon said Ford is attracting more so-called "conquest customers," or buyers who have never owned a Ford before, than it has in more than a decade and many of its vehicles now compete directly with Toyota and Honda.

Ford is reshaping its image to be more than just the producer of "built Ford tough" F-150 trucks, but also an innovative, green car company, Mondragon said.

"Our opportunity going forward is to reinvent ourselves and reintroduce ourselves to consumers as a great car company," Mondragon said, adding that 80 per cent of Ford's investments are now in cars and crossover vehicles.

Canada will benefit from Ford's new focus on cars when it rolls out the new Lincoln MKT at its Oakville, Ont., plant next month. Ford is also working on developing a line of electric vehicles, including an electric car that will be produced jointly with Canadian auto parts company Magna International Inc. (TSX:MG.A) and introduced in 2011.

Ford Canada employs about 7,000 people at assembly plants in Oakville and St. Thomas, Ont., and a parts plant in Windsor, Ont.

The Oakville plant produces the Ford Edge, Ford Flex and Lincoln MKX and will soon begin producing the Lincoln MKT. In St. Thomas, Ford produces the Ford Crown Victoria, Mercury Grand Marquis and Lincoln Town Car.