Ford Motor Co. plans to invest $1.46 billion in its Canadian operations and build five electric vehicles in Oakville, Ontario, beginning in 2025, Unifor President Jerry Dias said Tuesday.

The announcement comes as part of a tentative three-year labor contract the Canadian union and Ford reached early Tuesday after weeks of negotiations. Dias said the investment gives the Oakville factory, which will undergo a $1.35 billion retooling and will also assemble batteries, a new lease on life.

“It’s fair to say today, that as an organization, we hit a home run,” Dias said during a news conference in downtown Toronto. “Not only does it solidify the jobs for our members in Oakville, but it starts the discussions about the supply chain and the jobs that are created that will follow this type of an announcement. It also starts a discussion as a nation.”

The tentative contract must be ratified by workers before it takes effect. Unifor represents about 6,300 Ford workers in Canada, who will vote on the deal on Sunday.

In a statement, Ryan Kantautas, Ford of Canada’s vice president of human resources, confirmed that the company has reached a tentative contract with Unifor, though it declined to provide details.

“The agreement is subject to ratification by Ford-Unifor members,” he said. “To respect the ratification process, Ford of Canada will not discuss the specifics of the tentative agreement.”

‘Historic agreement’

The deal appears to meet Unifor’s objectives of securing new production for the Oakville plant and jump-starting the production of EVs in Canada. The future of the Oakville plant has been the subject of speculation after reports that Ford Edge output would end there in 2023 and leave the factory without a product to build.

“The fact is until now, Canada has not seen one dime of the more than $300 billion dollars in global investments announced for EV production. This historic agreement changes that today,” Dias said. “This is an agreement for our futures.”

Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, Mich., said the agreement appeared to be great news for Unifor members in Oakville, though it remains to be seen what concessions the union might have had to make on wages, including the 10-year grow-in period, and related issues.

“This would seem really positive to me, just based off what we know about it right now,” she said. “But it all comes down to what they got on the personal economics.”

Government support

Dias credited Canadian Prime Minister Justin Trudeau, Ontario Premier Doug Ford and the federal and provincial governments for getting involved in the talks. The tentative deal came after a Sunday Toronto Star report that the federal government was willing to offer about $380 million in incentives to help Ford retool the Oakville plant for EV production.

Dias did not confirm how much in incentive money the governments had agreed to, though he suggested that the reported figure could be inaccurate. A request for comment from the federal government was not immediately returned.

A spokesperson for Vic Fedeli, the Ontario minister of economic development, job creation and trade, did not specifically say what the government has offered or is planning to offer the automaker.

“As the Premier said yesterday, our government will be at the table to negotiate the terms of this agreement with Ford and the federal government, and will be making a meaningful contribution,” the spokesperson said in a statement.

Dias told Automotive News Canada that it was his understanding that while the federal government has a deal with Ford on incentives, the Ontario government is still negotiating.

Dziczek said the federal government’s involvement likely played into Unifor’s hands favorably.

“The federal government does not incentivize deals like this in the United States,” she said.

A spokesman for Navdeep Bains, Canada’s industry minister, said in a statement that Canada is “well positioned to become a leader in electric vehicle and battery production.”

“Developing domestic manufacturing in electric vehicles and batteries would secure more good paying jobs for Canadian workers,” the statement said.

Retooling plans

The planned production of five electric vehicles dovetails with Ford’s EV strategy, which includes spending about $11.5 billion on EVs and hybrids through 2022, resulting in about 16 EVs.

At least one of the five EVs built in Oakville will be a crossover, Unifor President Jerry Dias said in an interview with Automotive News Canada. He also mentioned plans for two-door and four-door vehicles, though specifics were not offered.

He said it is expected that the Oakville plant would produce 200,000 vehicles annually by 2028, when the fifth model would start production. The first would  start in 2025. Oakville produced 247,615 vehicles in 2019, according to the Automotive News Data Center.

Dias said retooling of the plant would take place in 2024, the year after the tentative contract is set to expire. Asked if Ford would continue to build the Edge and Lincoln Nautilus crossovers in Oakville until then, Dias declined to comment, saying they would first go over details with members at ratification meetings.

“There’s no question that when you go through that type of retooling… the plant will be down for a period of time as we retool the operations. That’s expected and understood,” Dias said.

Jobs, economics

According to Dias, Ford will assemble batteries for the five EV models in the Oakville factory, which he said will create about 300 jobs, though he still expects that fewer people will be needed to work at the plant than are needed today.

Citing projections from Ford, Dias said Unifor “should end up landing” with around 3,000 members in Oakville building the five EV models and batteries, down from about 3,400 members today.

“If I take a look at those members today who are retirement eligible, we should be in pretty good shape,” he said.

Details regarding pensions, wages and other economic measures were not announced. But Dias said he was “very pleased” with what the union bargained, including “positive changes” to the 10-year wage grow-in period.

“Once the plant is retooled, I believe… that our members should be able to retire with their pension from Ford Motor Co.,” Dias said.

Economics could prove to be critical to ratification. A majority of Oakville workers in 2016 rejected that year’s contract over concerns about the wage grow-in period, though strong majorities at the Windsor engine plants offset those votes.

Dziczek noted that the 10-year wage grid is Unifor’s answer to the UAW’s two-tier wage system in the United States. She said the UAW made “substantial gains” on that issue during bargaining in 2019.

Supplier impact

The tentative deal with Ford was welcome news for Flavio Volpe, the head of Canada’s Automotive Parts Manufacturers’ Association. He said such a large investment will provide long-term stability for Canadian suppliers.

“There’s usually good news when we do these collective bargaining agreements, but this one stands alone as potentially the best news of the last 10 years,” he said.

Volpe said the investments could spur more business related to batteries. Sourcing batteries and battery components from within Canada or the other USMCA nations is likely critical to those vehicles being able to cross the border into the United States without having to pay tariffs under the deal’s regional content rules.

“There’s an interesting and mature supply chain in the battery space in southwestern Ontario and in Quebec that could see new business here,” he said.

Ford’s “anchor investment” could spur other automakers to eventually make similar investments in Canada, said Brendan Sweeney, managing director of the Trillium Network for Advanced Manufacturing in London, Ontario.

“When you get someone who makes a massive investment like this, then they create a supply chain and it’s easier to duplicate that supply chain for Company B’s batteries or Company C’s batteries,” he said.

V-8 production

The tentative deal also includes new engine production for Ford’s Windsor, Ontario, engine plants. According to Dias, Windsor will build a 6.8-liter V-8 engine for the Ford F-150 pickup and Ford Mustang.

Dias said the new engine production could create “some hiring” at the plants, which already builds 5.0-liter and 7.3-liter V-8s for those models. He said Ford has designated it as one of its “key” powertrain operations, which opens it up for future investment.

“We know that our members in Windsor will be employed for the long term,” he said.

Dias said Unifor will negotiate with Fiat Chrysler Automobiles next. Should the Ford deal be ratified by members, union leaders will look to model a new contract with FCA from it.

The Ford deal would expire in 2023, before the retooling of the Oakville plant. Dias said he was not concerned that Ford could walk away from the commitment in the time leading up to talks that year.

“We’ve locked in the future in this agreement,” he said. “We’re in good shape. It’s not like when I go into bargaining in 2023 that I’ll have to reinvent the wheel.”

Dziczek said whether Ford would be able to back out of an investment before then will depend in large part on what is written in its agreement with Unifor.

“I’m sure Unifor wouldn’t have gone into this thinking all the chairs could move again three years from now,” she said. “And I’ll point out that every time the [Detroit Three] have made promises to the UAW or Unifor in this recovery period since 2009, they’ve exceeded their investment targets every time.”

Negotiating in 2023 would mean Unifor would bargain with Ford again at the same time as the UAW in the United States, which Dias believes will put the union in a better position to secure investments.

“This will give us an opportunity to work hand-in hand with the UAW to make sure that we maintain our footprint and, frankly, find a solution for expanding it,” he said.

Different than Oshawa?

This is the second time Dias has led off bargaining with the Detroit 3 with what he called a “historic” contract. He also used that adjective to describe the agreement Unifor came to in 2016 with General Motors.

That year, the automaker announced an investment in its Oshawa, Ontario, plant to allow for final assembly on pickups shipped from the U.S.. Oshawa would ultimately end vehicle production in 2019 and was converted this year into a smaller aftermarket parts operation.

Dias said this agreement is different due to both its size and the length of Ford’s commitment.

“We negotiated a product that was a shuttle” in 2016, he said. “This is not a shuttle. This is not just one vehicle. It’s five models. We’ve got a plan. The first one will roll off in 2025.”

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