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October 1, 2009 to November 30, 2009

2011 Mustang may
get up to 30 mpg
2011 Mustang

New high-powered engine will give model nearly GT muscle

Scott Burgess / The Detroit News -Nov 30, 2009

The base model of the 2011 Ford Mustang will come with nearly GT power and could get up to 30 miles per gallon in highway driving, Ford Motor Co. announced today.

Ford will debut a new V-6 engine for the sports car this week at the Los Angeles Auto Show and says it will give the basic Mustang power to rival the performance-oriented Mustang GT, which has a V-8 under its hood.

The 3.7-liter powerplant, which replaces the 4-liter V-6 now in Mustangs, will produce 305 horsepower and 280 pound-feet of torque while also offering better gas mileage.

Ford projects the engine will get 19 mpg in the city and 30 mpg on the highway. The 2010 Mustang's 4-liter engine creates 210 horsepower and 240 pound-feet of torque, while achieving 18 mpg in the city and 26 mpg on the highway.

The new Mustangs will be available at dealerships in the spring.

Stephanie Brinley, an automotive analyst at Southfield-based consulting firm AutoPacific Inc., said the additional power catches the Mustang up to the V-6 Chevrolet Camaro and should help it stay at the top in pony car sales next year.

"The V-6 Mustang is Ford's best-selling Mustang and this is a lighter car, so it should feel faster," she said. "For people looking for these kinds of cars, Mustang is still the place to go."

According to Autodata Corp., which compiles car sales statistics, Ford sold 56,469 Mustangs through October, down 32.4 percent from the same period last year.

The Mustang remains about 8,000 units ahead of the Camaro, which was reintroduced this year by General Motors Co.

The new powertrain suggests that the GT will have to show some big improvements soon, Brinley added.

The 2010 GT with a 4.6-liter V-8 produces 315 horsepower and 325 pound-feet of torque. It gets 16 mpg in the city and 24 mpg on the highway.

By raising the base model's vitals and performance level, Ford likely will have to do the same to the 2011 GT, though the carmaker has not announced a new powertrain for that car.

The V-6 Mustang will come with a six-speed automatic or manual transmission, dropping its well-used five-speed.

Ford has promised to include six-speed transmissions on 90 percent of its vehicles by 2013 in another effort to make its vehicles more fuel efficient.

The new Mustang V-6 engine, built in Cleveland, boasts a number of high-tech features such as variable camshaft timing and variable valve overlap to improve the car's emissions, fuel economy and power. Ford has dubbed the system Ti-VCT.

"Drivers are going to notice improved low-speed torque and increased fuel economy and peak horsepower," Jim Mazuchowski, Ford's manager of V-6 powertrain operations, said in a news release. "Plus, there are benefits they won't notice, too, such as reduced emissions overall, especially at part-throttle."

Ti-VCT can lower the engine's emissions by controlling the NOx -- nitrogen oxide -- and hydrocarbons.

Ford will also announce at the Los Angeles show that it will introduce a performance package for the V-6 Mustang.

It will include a different rear axle for faster off-the-line acceleration, struts, stabilizer bars and brakes from the GT, unique badges and other features.

The performance V-6 Mustang will be available at dealers in the summer.


2010 Ford Fusion: A stride
ahead of its predecessor
Ford Fusion

Bob English Globe & Mail Nov 29, 2009

Ford's 2010 four-cylinder Fusion is fast enough and frugal enough, good-looking enough outside and tastefully revised enough inside that its overall flavour - despite an element of "leftovers" in this mid-sized dish -is much enhanced, better balanced and far more appealing.

The mid-size Fusion first appeared for 2006, a sort of "fusion cuisine" mix of some much-revised Mazda6 technology wrapped in styling and equipped in a fashion it was felt would suit a North American palate content with blander fare.

Now, with even mainstream fast-food brands offering bolder-flavoured versions of their traditional offerings for the more daring burger buyers, Ford has given its latest Fusion a zippier taste too. Albeit one that one that won't put the family value "burghers" who buy one - the four-cylinder version anyway - off at first bite.

The Sport that tops the range offers real motoring zest with its 3.5-litre, 263-hp V-6, all-wheel-drive, sport-tuned suspension and 18-inch wheels and tires. Think of the four-pot-powered Fusion SEL we're taking a look at as the white-bread model, but made with enriched ingredients.

Four-cylinder Fusions come in a quite well-equipped S form at $21,499, a better-equipped SE grade at $22,799 and in feature-enhanced SEL versions for $25,799. The test SEL was also equipped with a Moon & Tune option package: moon roof and Sony Audiophile 12-speaker audio, plus a rear spoiler and block heater. With destination charges, the final tally, less taxes, was $28,879.

While the basic structure may still be based on the original architecture, it has been so extensively revised it just about qualifies as "new." And while the suspension design and braking system remain essentially the same too, they have also been updated.

It's hard to describe, but the structure of the Fusion feels not solid so much as taut. And the spring and damper rates chosen, combined with the new electric power steering's positive feel and the linear response you get, make it much more enjoyable in pure driving terms than Ford's first Fusion. Ride comfort is fine, too.

There's also more power, with the previous 2.3-litre unit increased to 2.5 litres, horsepower increased by 15 to 175 hp at 6,000 rpm and torque increased by 16 lb-ft to a peak of 172 lb-ft at 4,500 rpm. This is vectored to the front wheels by a choice of six-speed manual or automatic transmissions.

The SEL comes with the latter and it helps generate solid off-the-line surge and plenty of acceleration through the gears. And it kicks down to an appropriate gear to tap into optimum engine output to provide strong acceleration for passing or merging.

Its tall top gear helps put up a highway fuel economy number of 6.4 L/100 km and a city rating of 9.4. After about 500 km, much of it Highway 401 driving, the onboard readout on the test Fusion was showing an average of 8.0 L/100 km. At a highway cruise, it was showing an average of just 6.0 L/100 km.

Ford claims the base S with automatic is the most fuel-efficient mid-sizer in Canada with ratings of 8.9 city/5.8 highway (there's also a Hybrid that does even better).

Mechanically, this latest four-cylinder Fusion is a stride ahead of its predecessor, with more than enough performance to make it easy to opt for rather than the pricier and less fuel-efficient V-6.

These updated bits and pieces are wrapped in bodywork that from the windshield back has a familiar look, a revised rear deck and taillights aside, but is fronted by arched fenders, a high-rise power dome hood and a massive three-barred grille. The latter wouldn't look out of place on Ford's F-150 pickup in terms of size and sheer chrome splendour. It all seems to work though, giving the Fusion a distinctive and decidedly less frumpy look.

This is also true on the inside, where there's plenty of head/shoulder/knee room front and rear, an all-new instrument panel with an electro-luminescent green-tinted gauge display and a leather-wrapped wheel with audio and cruise controls. Door caps are in a semi-soft material and silver trims the panels for the window controls, the centre stack (flanked by even nicer metal mesh trim) and the console - with some chrome touches here and there to add a little sparkle.

Seats aren't anything special, but have long enough cushions and between them are chrome-trimmed and blue-lit cup holders. In fact, there are a lot of nice detail touches, including lighted vanity mirrors and grab handles. Headlights are average and noise levels at speed low.

The trunk holds a useful 467 litres, made even more so by the 60/40-split rear seat and fold-flat passenger seat.

Minor quibbles are the high angle of the signal/wiper stalk, the headlight switch and info display button being located a long reach away down by your left knee and the presence of a high hump behind the rear seat that's more noticeable than a real nuisance.

The SE comes with power windows and driver's seat, air conditioning and audio, and the SEL adds alloy wheels, eight-way power driver's seat, auto-dimming mirror with microphone and compass, dual-zone automatic climate control, Ford Sync voice-activated entertainment and communications, automatic headlamps, keyless entry and bright trim outside. A pretty rich mixture for the asking price.

With this latest Fusion, Ford has boosted its passenger car game, as it has with its new entry-level Fiesta, the compact Focus and the now-full size Taurus. All are worth a look.

And hey, if you buy a Fusion right now they'll throw in a set of winter tires and rims, a nice (and novel) little added inducement with winter in the offing.


Type: Mid-size FWD sedan

Base Price: $25,799; as tested, $28,879

Engine: 2.5-litre, DOHC, inline-four

Horsepower/torque: 175 hp/ 172 lb-ft

Transmission: Six-speed automatic

Drive: Front-wheel-drive

Fuel economy (litres/100 km): 9.4 city/6.4 highway; regular gas


Ex-Nortel staff slam
executive bonuses

Payment in leaked file to keep bosses on board

Toronto Star Nov 28, 2009

Nortel Networks Corp. pensioners reacted with disgust on Friday to reports of new lavish bonuses for the company's top executives.

It was yet another blow to Nortel's distressed pensioners, retirees and long-term disabled former employees, who have dealt with financial uncertainty since the former Canadian tech darling declared bankruptcy in January.

"It seems so aberrant, in terms of the executive of the company awarding themselves really, really rich pay raises for doing the job of taking the company apart," said Tony Marsh, who retired from Nortel in 2000 after 30 years.

"Those of us who built the company up, into arguably the world's No. 1 telecom company, could never have dreamed of such riches," Marsh added.

An internal Nortel file "outlines a new compensation scheme for 72 Nortel executives that will see them get a total of $7.5 million U.S. on top of their current salaries in 2009," according to CBC News.

The company has argued that bonuses are necessary to keep executives aboard what is essentially a sinking ship following Nortel's filing for bankruptcy protection and the subsequent selling off of the company's assets.

Nortel would not comment on details of the plan. It issued a statement saying: "As Nortel works through the highly complex tasks of this restructuring, it is critical to have the right specialist resources in place ... Any steps taken around these individuals has been within the context of a previously approved compensation plan, taken in consultation with the creditor committees, external legal counsel and the Canadian Monitor."

Earlier, former CEO Mike Zafirovski claimed $12.3 million (U.S.) for back pay and bonuses. In March, some 100 executives were awarded $45 million in retention bonuses.

The company's divisions are being auctioned off in a process dragged out by bankruptcy court approvals. Retirees are worried that when Nortel's various global divisions are entirely sold off, they will be stuck with even less than they are now, which is not much, Marsh said.


Outspoken Ryan wins top union job
Sid Ryan addresses delegates of the OFL, an umbrella group for the province’s most powerful unions, Nov. 26, 2009.

Building green economy, restoring manufacturing are his key priorities

Nov  27, 2009 - Toronto Star

Controversial union leader Sid Ryan has been a polarizing figure in provincial politics – but as the new president of the powerful Ontario Federation of Labour, he says he comes to Queen's Park in peace.

Ryan helped Bob Rae secure the union vote that helped propel him to the premiership in 1990 – but the unions took that support away after Rae forced the public sector to take unpaid days off to save nearly $2 billion.

As head of the OFL, a body representing nearly 1 million public and private unionized workers, the 57-year-old Ryan says he wants to work with the Liberal government on building a "green" economy and repairing the province's gutted manufacturing sector. Ryan thinks Premier Dalton McGuinty is right and that the new green energy act can create about 50,000 jobs.

"But we want to make certain those jobs stay here in Ontario – that is the big ticket for us," Ryan told the Star after he was acclaimed during the OFL's 10th biennial convention in downtown Toronto on Wednesday.

"We have essentially lost the manufacturing base," he said, adding the government could use some closed auto-manufacturing plants to start producing new energy and wind-power products.

Today, Ryan will meet Finance Minister Dwight Duncan to discuss this year's $24.7 billion deficit.

"We are not going to threaten anyone here," Ryan said. "I want to listen to the premier and his cabinet and see what proposals they are putting on the table."

The premier said he looks forward to working with Ryan, who failed five times in a bid for public office as an NDP candidate.

Ryan has been the Canadian Union of Public Employees Ontario president since 1992. He is taking over from Wayne Samuelson, OFL president since 1997.

Ryan is not interested in opening up contracts, as the Canadian autoworkers did, in order to save money. GM asked the union for concessions and then "magically six months later" announced it is rebounding and making money after it and "plundered ... collective agreements," he said.

"I am not so sure that is a model we need to follow," Ryan said. But he says the CAW did what they had to do to save jobs. "They managed to survive to fight another day."

Ryan said he learned his strong sense of social justice from growing up in working-class Dublin.

"Yes, I am going to make mistakes. I just hope you'll be open and forgiving to some of those mistakes as we learn from each other," he said in his speech to the OFL delegates.

For now, the leaders of the OFL, umbrella group for the province's most powerful unions, are standing behind their new leader.

"Sid comes from a longstanding history in the labour movement," said Linda Haslam-Stroud, president of the Ontario Nurses' Association. "He is a great articulator, a fast learner and a strategic thinker."


Nortel approves more exec raises

CBC NEWS - Nov 27, 2009

Management at Nortel Networks Corp., already under fire for handing out executive bonuses, approved a plan this fall to give another round of raises to its top managers, according to an internal corporate document obtained by CBC News.

The raises, in the form of increases in salary, investments or bonuses, are part of the company's plan to retain employees as it restructures after filing for bankruptcy protection in January.

But they come at a time when many laid-off and retired Nortel employees are having to fight the company in court for their severance packages, pensions and disability payments.

The former employees contacted by CBC were outraged at what they say is another example of corporate greed.

"I am shocked," said Melanie Johannink, who worked for Nortel for 18 years before being laid off in the spring. "It kind of makes you wonder where the money is going."

Former Nortel president Bob Ferchat told the CBC he was also surprised at the extent to which executives at a company in bankruptcy protection were rewarding themselves.

"My reaction, frankly, to the document is 'Here we go again'," said Ferchat. "It's another round of people dividing the proceeds, eating the carcass of the company before it's even dead."

14 executives to earn over $500K

The internal document obtained by CBC outlines a new compensation scheme for 72 Nortel executives that will see them get a total of $7.5 million US on top of their current salaries in 2009.

Of those 72 executives, 14 will be getting compensation of $500,000 or more.

The biggest earner under the new compensation plan is former treasurer John Doolittle, who took over as head of the company's corporate group in August after the departure of chief executive Mike Zafirovski. Doolittle's total compensation has been bumped to $1.68 million this year, an increase of 1.12 million over 2008, when he earned $390,000 US in salary and an estimated $170,000 US in investment and bonus money.

Nortel confirmed a new compensation scheme had been approved but would not confirm the specific information in the document CBC obtained.

Former CEO defended bonuses

Before departing in August, Zafirovski had already riled up retired and laid-off employees when he proposed $45 million in bonuses to key executives. The bonuses were approved by a U.S. bankruptcy court in March, a month after the company announced 3,000 job cuts.

Zafirovski defended the payments, saying they were necessary to retain vital executives who might otherwise flee the flagging company as it tried to maximize the sale of its assets and pay off creditors.

However, he told a House of Commons finance committee looking into Nortel's situation that the company's constrained cash resources and competing creditor claims meant it wasn't possible to pay severance to laid-off employees. He also said the company decided to trim the value paid out for pension benefits to reflect the pension plan's current funding levels.

He said the refusal to pay severance was an "agonizing" decision.

"It has weighed on me greatly," he told the committee.

"The decision not to pay severance was not taken lightly."

Zafirovski further enraged retired Nortel employees when he made a filing in October with a U.S. bankruptcy court naming himself as a creditor and claiming more than $12 million US from the company, about half of which was for pension benefits. That claim is still under review.

Workers seek pension reform

Nortel's pension deficit was estimated to be between $2.5 billion and $2.8 billion when it filed for bankruptcy protection in January.

Don Sproule, chairman of the national committee for members of Nortel's pension plan, has said about 17,500 retired Nortel employees have been affected by the bankruptcy.

Sproule said the issue for retirees is that Nortel's pension plan is about 69 per cent funded, leaving 31 per cent up in the air and in the hands of bankruptcy courts, which consider retirees and workers seeking severance or disability payments a lower priority than other creditors.

The pension deficit was discussed on Parliament Hill, and in October, federal Finance Minister Jim Flaherty introduced new rules for public pensions to ensure companies do a better job funding their plans. But the reforms would do nothing to address shortfalls in private pension plans at companies like Nortel. Ottawa has been reluctant to use taxpayer funds to guarantee private pensions.

Earlier in October, the Quebec government vowed to safeguard the pensions of 3,750 Nortel employees in the province for a maximum of five years. National assembly member François Ouimet called the measure a "special situation."

The NDP has proposed changes to the Bankruptcy and Insolvency Act that would designate workers seeking to claim the unfunded portion of their pensions preferred creditors in bankruptcy proceedings. NDP Leader Jack Layton has said the party is working on similar legislation for disability payments.

Disability payments on hold

For 62-year-old Alice Campbell, the loss of funds from her disability pension would be devastating. Campbell says she has been on disability for 15 years since a series of unsuccessful surgeries and pays more than $1,000 a month for medications.

"To lose their support on my pension... the cost of my drugs is unreal," she said. "I don't know what I would do, I really hate thinking about it."

Like Johannink and Ferchat, Campbell was dismayed that executives are being rewarded while rank-and-file workers go without the money they are owed.


Nortel workers' appeal dismissed

Judge rules current, former employees not
entitled to retirement and severance payments

Toronto Star Nov 27, 2009

An Ontario court has dismissed an appeal from a union representing current Nortel Networks workers, as well as laid off and retired employees who are seeking payments from the insolvent company.

Appeals court Judge Stephen Goudge wrote in his decision on Thursday that a collective labour agreement between Nortel and its union only applied to current employees at the company, and not retired workers.

The Canadian Auto Workers union and former Nortel employees had insisted that the agreement covered both the 45 current workers at the company, and those who were retired or were laid off last year before the company filed for bankruptcy protection from creditors.

They argued that retired workers who left the company ahead of its January creditor protection filing should continue to receive termination and severance payments in addition to monthly retirement payments. The union argued that Nortel was breaking labour laws by refusing to do so.

The dispute centres on Nortel's restructuring under bankruptcy protection laws in Canada and the United States and the company's financial obligations to employees it has laid off as it slowly winds up its operations.

"Can it be said that the payment required for the services provided by the continuing employees of Nortel also extends to encompass the periodic payments to the former employees in question in this case?" Goudge wrote in his decision, speaking on behalf of a three-person panel.

"In our opinion... the answer is clearly no."

Former employees who were let go in a downsizing that began in late 2008, and others that were laid off since the court filing in mid-January, have been fighting to get severance payments that had been part of their separation packages.

After the bankruptcy filing, Nortel workers who lost their jobs, severance payments or pensions are considered lower level creditors and typically receive their payments if any money is left after repayment of debts owed to the banks, trade creditors and bondholders.

The ruling followed an initial ruling in the Ontario Superior Court in June, which also denied the request by the union and workers.

Nortel filed for creditor protection in January, and has been auctioning off its assets since the summer.


GM Canada dealers
sue to stay open
Robert Slessor invested $3.5-million in Robert Slessor Pontiac Buick Inc. in 2002-03 to upgrade the dealership and maintain the standards required by GM. In October of 2010, it will cease to exist. For The Globe and Mail

Greg Keenan
Globe and Mail , Nov. 27, 2009

Twelve General Motors of Canada Ltd. dealers – one of whom represents a family that sold GM vehicles for more than 100 years – have launched a lawsuit against the auto maker in a bid to keep their dealerships open.

The dealers are among about 240 who were sent termination notices by GM in May as its parent company was approaching Chapter 11 bankruptcy protection in the United States. The auto company is making announced massive cuts to its dealer network as part of a strategy to get rid of four of the eight brands it operated in the U.S. and Canadian markets.

The elimination of several hundred dealerships and tens of thousands of jobs in the two countries underlines how the most severe crisis to batter the auto industry since the Great Depression of the 1930s has spread its tentacles into even tiny communities.

In the town of Paisley, Ont., with a population of 750, six churches, a curling club and an arena, Bud Rier Chevrolet Ltd. has been operating since 1975. Gary Rier, son of founder Bud Rier, employs about 15 people and spent about $250,000 starting last year to upgrade the operation to meet GM's requirements.

In Stouffville, Ont., northeast of Toronto, Duncan Giles employs 19 people at Giles Chevrolet Ltd. The family has been selling GM vehicles in Ontario since 1902.

The court filing outlines a brief history of those dealerships and the other 10 outlets, many of which were in their second or third generation and most of which spent big money – in some cases, a few million dollars – to upgrade their dealerships before they received their termination notices.

They are seeking $1.5-million each from GM, an injunction that prevents the company from terminating their dealer sales and service agreements and an unspecified amount of compensation for losses of profit, good will, business opportunities and market share.

Robert Slessor, whose father started a GM store in 1955 in Grimbsy, Ont., near Hamilton, invested $3.5-million in Robert Slessor Pontiac Buick Inc., in 2002-2003 to upgrade the dealership and maintain the standards required by GM.

“It was my intention to carry it forward into the third generation by all means,” the 53-year-old Mr. Slessor said Thursday. “It has been the family livelihood for 54 years.” He has a daughter working in the business and two teenaged sons.

He said he was offered $532,000 by GM in May to cover severance costs for his 43 employees plus the cost of inventory.

“To the knowledge of GM, in every case, after payment of employee severance and other necessary close-down costs, the sum offered by GM provided no compensation at all to the plaintiffs,” the 12 dealers said in a statement of claim filed in the Ontario Superior Court of Justice. The accusations have not been proved in court. GM would not comment.

GM eliminated its Pontiac division and put its Saturn, Saab and Hummer brands up for sale. But since the termination notices went out to Canadian dealers in May, deals to sell Saturn and Saab have collapsed.

Saturn will be shut down and the future of Saab is in doubt, which means about 16 Canadian dealers who hoped to continue under Saab's new owners are examining other options.

Industry analysts spent years criticizing GM for having far too many brands and an excessive number of dealers in the United States and Canada.

For years in many communities, Pontiac-Buick-GMC outlets were kilometres away from – or next door to – Chevrolet-Oldsmobile-Cadillac dealerships selling virtually the same cars with a different badge.

The average number of sales per GM dealer slid to 497 last year from 547 a year earlier, well off the pace set by Toyota Canada Inc., whose dealers sold an average of 875 vehicles.


Superlux Ford Taurus coming
Tommy Z Design of Hudsonville showed off this modified Taurus on the Ford stand at the recent SEMA Show and hopes to have its customized parts available through Ford dealerships soon. (Larry Edsall / Special to The Detroit News)

Hudsonville firm's trick-out kit may soon be
available in parts or ready to drive at dealers

Larry Edsall / Special to The Detroit News
November 26, 2009

You can't buy the Superlux version of the Ford Taurus at your local Ford dealership, at least not yet.

But Tommy Zondervan of Hudsonville hopes lightning strikes again after his Superlux Taurus made its debut at the recent Specialty Equipment Market Association (SEMA) automotive aftermarket trade show at Las Vegas.

When he was in his early 20s, Zondervan started creating exterior paint designs and personalized interiors for friends who were building hot rods and custom cars and trucks. His automotive artistry blossomed into Tommy Z Design, which until recently had shops in Troy and Western Michigan (now consolidated into a 4,000-square-foot facility in Hudsonville).

Though he has no formal automotive design education, Zondervan got his big break in 2004 when Chrysler launched its 300C sedan. Zondervan did sketches of how he'd tweak the styling and showed them to several Chrysler dealers.

A dealer in Chicago liked his ideas so much that he offered up a car, which Zondervan used as a full-scale canvas for a customized 300C he displayed at the 2004 SEMA Show. That car received such positive response that Zondervan soon found himself not only designing grille and body kits for vehicles such as the Chrysler 300 and Dodge Charger, but also in the aftermarket manufacturing business.

Earlier this year, he was approached by Ford to apply his style to a Taurus for display on its corporate stand at the 2009 SEMA Show. Ford already had its sporty, aggressive, twin-turbocharged Taurus SHO. The Tommy Z Design vehicle was to show how the Taurus might look as a luxury car.

Zondervan started with the mid-grade Taurus SEL. He created an attractively tasteful, rather than overly aggressively aerodynamic body kit and handsome mesh grilles. He added light-emitting diode (LED) headlamps, some chrome trim and Vibrance by PPG aspen white custom paint. To enhance the stance, he installed Pedders Suspensions XA springs and bolted on 22-inch OZ Racing wheels.

Inside the passenger compartment, he designed special perforated leather and suede seating and trim -- black with white double-stitching -- and created an enhanced audio/video system using Audiovox and Jensen components.

To make sure the car was ready for show as well as go, he freed up the engine's breathing -- air filter and exhaust hardware -- and supercharged the car's 3.5-liter V-6 engine, which now pumps out 430 horsepower.

Now that he's home from SEMA, he's working with his manufacturing partner, Jaycor Inc. of Belding, on tooling to produce similar components that he hopes will allow Taurus owners and Ford dealers to create similar vehicles. He anticipates that the body kit will cost around $1,200; the leather package around $1,000; and the supercharger $2,500-$3,000. Customers will be able to select items a la carte or simply drive away with a dealer-modified turn-key vehicle.


GM to build Buick
Regal in Oshawa
Production to begin in first quarter of 2011; move would require payroll increase of about 600 jobs, union says


Globe & Mail  Nov 26, 2009

General Motors Co. said Wednesday it will build the 2011 Buick Regal in Oshawa, Ont., as part of a commitment to Canada to keep production there in exchange for billions in government aid.

The Canadian Auto Workers union said the new vehicle, to be built alongside the hot-selling Camaro starting in the first quarter of 2011, will require a new production shift at the plant and an increase of about 600 jobs.

“Definitely, when the Buick Regal is introduced, there will be a need to put an additional shift on, which will help recall additional members from layoff,” said Chris Buckley, president of CAW Local 222.

GM has about 1,200 workers on layoff in Oshawa as a result of the brutal downturn in the auto sector that forced both GM and Chrysler Group LLC to restructure under bankruptcy protection.

Mr. Buckley said GM would launch yet another vehicle in Oshawa in the fourth quarter of 2011.

“It's going to be a rear-wheel-drive vehicle,” he said. “All indications are that it is going to be the next generation of Cadillac.”

The new vehicles are part of a production commitment to the CAW and to the governments of Canada and the province of Ontario to launch five new vehicles, including hybrids, from plants in Ontario.

GM was given $9.5-billion (U.S.) in Canadian loans earlier this year to help it avoid liquidation. The CAW also agreed to steep concessions to help the company survive.

On top of the product commitments, Canada and Ontario took 11.7 per cent of the shares in the newly restructured GM in exchange for the loans.

The company also said it would maintain just under 20 per cent of its U.S.-Canada production in Canada, and spend $2.2-billion (Canadian) on capital projects in the country through 2016, as well as $1-billion on research and development.

The Regal is the third vehicle in the production commitment, following the Chevrolet Equinox and the GMC Terrain, two popular crossover utility vehicles built at GM's Cami joint-venture plant with Suzuki Motor Corp. in Ingersoll, Ont.

North American production of the Regal, a mid-sized sedan based on the Opel Insignia, which was named the 2009 European car of the year, will begin early in 2011, GM said.

“The new Regal gives Buick a modern performance sedan and its production here in Oshawa is terrific news for our employees, the CAW, dealers and suppliers,” Arturo Elias, president of General Motors of Canada Ltd., said in a statement.

Separately, GM plans to begin production of the Camaro convertible in Oshawa beginning in the first quarter of 2011.

GM also makes the Impala in a second plant in Oshawa.

The company has Canadian manufacturing plants in Oshawa and St. Catharines, a parts distribution plant in Woodstock, a transmission plant in Windsor, and the joint-venture plant with Suzuki in Ingersoll, all in Ontario. It employs about 9,000 people in Canada.


Ford fixes its own problems
Ford CEO Alan Mulally says Ford's gains will continue and he expects the company to be "solidly profitable" by 2011. But he warns that 2010 will be a challenging year for all of the auto industry. (Paul Sancya / Associated Press)

For Ford Motor Co., the past year really has
been the best of times and the worst of times

Bryce G. Hoffman / The Detroit News
November 25, 2009

Like the rest of the auto industry, Ford sales plummeted worldwide. But the Dearborn automaker also scored major points with American consumers by foregoing a federal bailout and avoiding bankruptcy.

That good will, together with a strong lineup of new cars and trucks, meant Ford fell neither as far nor as fast as the rest of the industry. The company was finally able to pull out of a market share nosedive that began in the mid-1990s. In fact, it gained market share here and abroad while raising the average transaction price of its vehicles.

Influential surveyors including Consumer Reports and J.D. Power and Associates have lauded Ford's quality gains, delivering important endorsements to products such as the Ford Fusion and Fusion Hybrid.

Wall Street has taken notice, too, pushing the price of Ford shares north of $8.50 a year after they bottomed out at just over a buck.

"It's really gratifying to see that everybody is appreciating the Ford plan, plus the progress we are making on the plan," CEO Alan Mulally told The Detroit News.

The question now is can Ford's gains be sustained?

"Absolutely," Mulally said. He recently boosted the company's financial forecast and now expects to be "solidly profitable" by 2011. But Mulally also warned that 2010 will be a challenging year for Ford and the rest of the auto industry.

Sales remain depressed around the world. For Ford and its competitors, that means less revenue at a time when they need to spend more money to meet new fuel economy and emissions regulations.

Ford also faces some unique challenges.

General Motors Co. and Chrysler Group LLC may have damaged their credibility with consumers by filing for Chapter 11, but they also were able to eliminate billions of dollars in debt in bankruptcy court. Moreover, Ford will be more vulnerable in 2011 during the next round of national contract talks with the United Auto Workers after failing to secure the strike protection its crosstown rivals negotiated with the union as part of their government bailouts.

Still, there is no question that Ford has emerged from the turmoil of the past year as the strongest American automaker.

While GM and Chrysler begged for taxpayer aid, Ford, which bet everything on a massive $23 billion financing deal just before the global credit markets seized up, did what America loves best -- pulled itself up by its bootstraps.

That was enough to convince many consumers to visit a Ford showroom.

What they found was a new generation of cars and crossovers that boasted world-class quality and left the automaker's previous ho-hum designs in the dust. Not only was Ford fixing its problems without Washington's help, it was offering cars that rivaled Japan's best.

A year ago, Ford's share of the U.S. light vehicle market was 12.4 percent. Now, it stands at 14.6 percent. More importantly, Ford made those gains without resorting to big incentives. As GM and Chrysler slashed sticker prices and increased rebates, Ford cut back on incentives and raised the price of some of its most popular vehicles. As a result, the company increased its net pricing -- what consumers pay for vehicles, minus any incentives -- by $3.8 billion at the end of September.

"The momentum that we've gained is primarily around the products that we've introduced into the marketplace because, at the end of the day, customers are coming in to buy a product. They're not coming in because a company either did or did not take (taxpayer) money," said Ford Americas President Mark Fields. "At the same time, we've also gotten the benefit of customers saying, 'You know what, we feel good about Ford because you are doing this on your own.'"

Maintaining its momentum will require Ford to keep delivering new and better products, said analyst Aaron Bragman of IHS Global Insight in Troy.

"That's really going to be critical for them going forward," he said. "As we start to see the market rebound, the competition is going to be fierce. But Ford is in a good position because they do have a lot of new product. That's one of the key things that Mulally did -- accelerate the cycle plan."

Next year will see Ford introduce the first in a series of small cars from Europe that are the backbone of its future product strategy. If Ford is to meet its turnaround goals, they need to be an unqualified success.

Jim Farley, Ford's chief marketing officer, is confident they will be. He said the U.S. marketplace changed dramatically over the past year, and so did Ford's place in it. Instead of competing with GM and Chrysler, he said Ford is now competing with Toyota Motor Corp. and Honda Motor Co.

"That's a new place for us in the U.S.," he said. "The good will for the company grew when we decided that we didn't need help. There was a lot more people paying attention to Ford."

But Farley said Ford's work is far from finished -- especially when it comes to consumers' perception of the Blue Oval, which remains colored by years of disappointing products.

"It took a lot of time to get where we are," Farley said. "It's going to take a lot of time to get customers back. But we really have seen tremendous progress."



Toyota to replace 3.8M gas pedals

a top selling Toyota Camry is on display in the showroom at the McGeorge Toyota dealership in Richmond, Va. Toyota Motor Corp. said Wednesday, Nov. 25, 2009, it will replace accelerator pedals on 3.8 million recalled vehicles in the United States to address problems with the pedals becoming jammed in the floor mat.(AP Photo/Steve Helber) (Steve Helber - AP)


The Associated Press
Wednesday, November 25, 2009; 8:09 AM

WASHINGTON -- Toyota Motor Corp. said Wednesday it will replace accelerator pedals on 3.8 million recalled vehicles in the United States to address problems with the pedals becoming jammed in the floor mat.

As a temporary step, Toyota will have dealers shorten the length of the gas pedals beginning in January while the company develops replacement pedals for their vehicles, the Transportation Department and Toyota said. New pedals will be available beginning in April, and some vehicles will have brake override systems installed as a precaution.

Toyota, the world's largest automaker, announced the massive recall in late September and told owners to remove the driver's side floor mats to prevent the gas pedal from potentially becoming jammed.

"The safety of our owners and the public is our utmost concern and Toyota has and will continue to thoroughly investigate and take appropriate measures to address any defect trends that are identified," Toyota said in a statement.

Popular vehicles such as the Toyota Camry, the top-selling passenger car in America, and the Toyota Prius, the best-selling gas-electric hybrid, are part of the recall. It includes the 2007-10 model year Camry, 2005-10 Toyota Avalon, 2004-09 Prius, 2005-10 Toyota Tacoma, 2007-10 Toyota Tundra, 2007-10 Lexus ES350 and 2006-10 Lexus IS250/350.

On Tuesday, Toyota announced a recall of 110,000 Tundra trucks from the 2000-03 model years to address excessive rust on the vehicle's frame.

The recall involving the accelerators was Toyota's largest in the U.S. It was prompted by a high-speed crash in August involving a 2009 Lexus ES350 that killed a California Highway Patrol officer and three members of his family near San Diego. The Lexus hit speeds exceeding 120 mph, struck a sport utility vehicle, launched off an embankment, rolled several times and burst into flames.

A family member in the runaway Lexus made a frantic 911 call moments before the crash, telling emergency responders that the accelerator was stuck and the driver couldn't stop the car. The call ended as someone was overheard urging others to hold on and pray, followed by a woman's scream.

In Japan, Toyota President Akio Toyoda called the fatal crash "extremely regrettable" and offered his "deepest condolences" to the California family.

Investigators with the National Highway Traffic Safety Administration determined that a rubber all-weather floor mat found in the wreckage was slightly longer than the mat that belonged in the vehicle, and could have snared or covered the accelerator pedal.

The government has attributed at least five deaths and two injuries to floor mat-related unintended acceleration in the Toyota vehicles and has received reports of more than 100 incidents in which the accelerator may have become stuck. A Massachusetts-based safety consultant who has investigated the Toyota cases, however, has found more than 2,000 incidents involving 16 deaths and 243 injuries potentially tied to the Toyota gas pedals.

To fix the problem, Toyota and the government said dealers will shorten the length of the accelerator pedal on the recalled vehicles and in some cases remove foam from beneath the carpeting near the pedal to increase the space between the pedal and the floor. They said owners of the ES350, Camry and Avalon would be the first to receive notification because the vehicles are believed to have the highest risk for pedal entrapment.

Toyota plans to install a brake override system on the Camry, Avalon and Lexus ES350, IS350 and IS250 models as an "extra measure of confidence," Toyota and NHTSA said. The brake override system, commonly called a "smart brake," will ensure the vehicle will stop if both the brake and the accelerator pedals are applied simultaneously.

Toyota also plans to make the brake override system standard equipment throughout the Toyota and Lexus lineup starting with January 2010 production of the ES350 and Camry. Most new models will get the equipment by the end of 2010.

Dealers will be instructed on how to modify the pedals before the end of the year and will begin shortening the accelerators in 2010. New replacement pedals are expected to be available for some models beginning in April and will be provided even if the vehicles have already received a modified pedal under the recall.

The automaker and government regulators have been discussing a potential fix for several weeks. In late September, Toyota announced the recall and told owners to remove driver's side floor mats and not replace them until the company had determined a remedy for the problem. The automaker said unhooked floor mats or replacement mats stacked on top of the originals could lead to stuck accelerators.

In early November, Toyota issued a statement saying NHTSA had confirmed "that no defect exists in vehicles in which the driver's floor mat is compatible with the vehicle and properly secured." But in a rare rebuke, NHTSA accused Toyota of releasing misleading information about the recall, saying removing the mats did not "correct the underlying defect." Toyota said it was not the company's intention to mislead anyone.

If a vehicle accelerator pedal becomes stuck and a driver can't dislodge it, Toyota advises drivers to press on the brake with both feet and then shift the vehicle into neutral, which will disengage the transmission. The automaker says drivers should continue braking until the vehicle comes to a stop.

A driver can also try shutting off the engine or turning the key to the "ACC" position on the ignition. Drivers will not lose control of the steering or the brakes. But once the vehicle is turned off the driver won't have the benefit of power brakes or power steering. For vehicles that have a start/stop button for the engine, drivers are advised to hold the button for three seconds to turn it off.


Ford's progress reflected
in stock's rally

Company's moves to skip bailout, avoid bankruptcy
and boost market share pay off

Ford Stock Nov 23, 2009
FORD STOCK Nov 23, 2009

Bryce G. Hoffman / The Detroit News
Nov 24, 2009

A year ago, Ford Motor Co.'s stock was struggling to get back above $1.50 a share, a few days after slamming into the bottom at $1.01 a share.

What a difference a year makes.

On Monday, shares in the Dearborn automaker closed up 9 cents at $8.73. If you had invested $1,000 in Ford a year ago, it would be worth $5,596.15 today.

If you did not, but wish you had, imagine how billionaire investor Kirk Kerkorian must feel.

Last year, his Tracinda Corp. spent nearly $1 billion purchasing 140.8 million shares in Ford at an average price of $7.10 a share. By the end of that October, the casino mogul was cashing in his chips, dumping his Ford stake just over two bucks a share -- a move that would cost him hundreds of millions of dollars.

If he had kept them, Kerkorian's Ford shares would be worth nearly $1.23 billion today.

Those gains have not been lost on other high-rollers. Last week, billionaire investor George Soros revealed that his Soros Fund Management LLC had purchased 7.3 million shares in Ford over the past three months.

Ford Motor Co. CEO Alan Mulally would not comment specifically on Soros' investment, but he said the progress his company has made over the past year makes it an attractive investment target. Ford not only eschewed a federal bailout and avoided bankruptcy, but managed to grow its U.S. market share by nearly two points while increasing the amount of money paid for its cars and trucks by $3.8 billion.

"I can see why people are very interested in investing in Ford," Mulally said. "Our plan is to create long-term value for all the stakeholders."

Stock expert Peter Cohan of Massachusetts-based Peter S. Cohan & Associates said Soros' Ford play is a vote of confidence in the company by one of Wall Street's most savvy financiers.

"It should encourage investors," he said. "He's an extremely shrewd investor."

Unlike Kerkorian, who sought to influence Ford's management with his stock play, Soros appears interested in Ford only as an investment. His stake amounts to just two-tenths of 1 percent of the outstanding shares.

Cohan said the attraction for someone like Soros is obvious.

"Ford didn't need to take government money and it got a lot of cash when people were still giving money away," he said. "Ford is clearly the strongest player. It got ahead of its competitors and is well-positioned for when the economy recovers."

But Ford, like the rest of the automobile industry, still faces significant challenges. Though the company recently raised its financial outlook, Mulally warned that 2010 will be a tough year for his company and its competitors.

Though Ford is traded publicly, the company is controlled by the Ford family through its exclusive ownership of Ford's super-voting Class B shares.



The inside story of the
GM, Chrysler bailouts
Former GM CEO Rick Wagoner, from left, UAW President Ron Gettelfinger, Ford CEO Alan Mulally and former Chrysler CEO Robert Nardelli at the 2008 hearings.

David Shepardson / Detroit News Washington Bureau
Nov 24, 2009

Washington -- Detroit's Big Three automakers came closer than America realized to becoming the Big Two.

General Motors Corp. ended merger talks with Chrysler LLC in November 2008 to focus on getting emergency federal aid, but Chrysler continued to believe a tie-up with GM was its best chance for survival.

In April, as both automakers were surviving on government aid and fighting bankruptcy, Obama administration officials spent two weeks working on a plan for GM to acquire Chrysler's best assets and keep the doors open on a third of its factories.

Some members of President Barack Obama's auto task force saw it as a fallback position if Chrysler failed to reach a partnership deal with Italy's Fiat SpA. Other members opposed it. But top task force officials ultimately decided it was too late in the game for a merger, too complicated and would cost too many jobs compared to an alliance with Fiat.

The GM-Chrysler tale is among new details that emerged in Detroit News interviews with more than a dozen insiders -- automakers as well as government officials -- over the past two months.

They reveal the much greater government role in the historic bailout of both companies than has been disclosed previously.

Faced with the prospect of losing 1.1 million direct and indirect American jobs, as well as a major leg of the nation's economy, the government believed it could not afford to let the industry fail.

In the end, the GM and Chrysler bailout resulted from fortunate timing and the work of a group of unknown Wall Street veterans. Under the aegis of the White House, and without congressional approval, they forced a restructuring that the automakers themselves had been unwilling or unable to accomplish -- even as the saw disaster looming.

Among the other revelations from those inside the auto industry bailout:

• The White House auto team negotiated with billionaire investor Carl Icahn to buy parts supplier Delphi Corp., but the deal wasn't sweet enough for him to sign on. Delphi is now in the hands of its bankruptcy lenders.

• GM told the government it couldn't exit bankruptcy in the end of August or September, but was pressured by the task force to exit in early July.

• GM asked the United Auto Workers to freeze the hourly pension plan; the UAW refused.

2008 changed everything

In 2007, hard-won contracts with the United Auto Workers were heralded as game-changers that would reshape the U.S. auto industry, leveling the playing field with foreign rivals.

But the world changed in 2008.

Gas prices spiked and truck sales fell precipitously. GM announced in June that it would shutter four North American truck plants. And it quietly began trying to line up government help -- just in case.

On Aug. 1 of 2008, GM reported that second quarter revenues dropped 30 percent and it lost $15.5 billion. The company cut production by 300,000 vehicles, canceled its dividend and ordered the elimination of another 5,000 white collar jobs -- 15 percent of the salaried workforce. GM stock slid below $10 a share to its lowest level in 50 years.

A month later, the credit crisis hit. Lehman Brothers collapsed Sept. 15, filing the largest bankruptcy in U.S. history and sparking a worldwide panic. People couldn't get car loans.

U.S. sales fell below 1 million vehicles in September for the first time in 15 years.

By October, GM's position was dire. After losing $80 billion over the previous four years, the automaker was burning through cash at more than $2 billion a month. Privately, its board was considering bankruptcy.

On Oct. 13, GM CEO Rick Wagoner, accompanied by board members Erskine Bowles and John Bryan, asked the Treasury Department for an emergency bailout.

It would turn out to be one of the most significant days in the history of the nation's financial system.

The 8:30 a.m. meeting on Columbus Day, in Treasury Secretary Henry Paulson's office, also included Commerce Secretary Carlos Gutteriez and other key Bush administration officials, according to Paulson's calendar.

During the 40-minute session, GM used a Power Point presentation to explain why it would soon need a government loan to pay its bills.

Bryan, also a board member at Goldman Sachs, where Paulson had been chairman and CEO, was there to introduce Wagoner and help him make GM's case.

"You don't go bankrupt because you lose money; we've been doing that for years. You go bankrupt because you run out of money," Bryan recalled. "That prospect was very much on our minds before that first trip to Washington."

The day got worse for Paulson.

The CEOs of the nation's nine largest financial institutions came to the Treasury and agreed to a government capital infusion of $250 billion to try and stabilize the credit market.

Less than a month later, after meetings with influential lawmakers, GM released devastating third-quarter financial results Nov. 7 and said it might not survive into early 2009 without a government bailout.

GM also said it would drop talks to acquire Chrysler from private equity firm Cerberus Capital Management LP, to focus on winning emergency loans.

Around that time, Paulson directed aides to prepare a contract outlining government financing, in case GM was forced into bankruptcy.

On Nov. 30, a Sunday, Paulson met with Commerce Secretary Carlos Gutierrez and top Bush White House officials, as well as members of the incoming Obama administration.

"At that meeting, we -- the Bush team -- floated a proposal to establish an auto czar," said Keith Hennessey, a top economic adviser to Bush.

The administration would have created the position to advise the president on automakers' "restructuring plan for viability"

"The key to success of this plan was that the Obama team would publicly link arms with us and agree that they would continue the Paulson policy statement when they took over after Jan. 20th.Thus, the auto company's stakeholders would know that they had no wiggle room, and that they had no chance of getting additional funding from the next administration," Hennessey said.

The White House instead negotiated with Senate Democratic leaders in an effort to shift $25 billion for emergency loans for automakers.

Hearings fell apart

The nation's eyes focused on the industry's troubles Nov. 18 and 19,when GM's Wagoner, Chrysler CEO Robert Nardelli, Ford CEO Alan Mulally and UAW President Ron Gettelfinger appeared before House and Senate committees to make their case for federal help.

The session was a disaster. Hostile critics lambasted them for flying expensive corporate jets to Washington to seek taxpayer help, and for failing to clearly articulate why they needed the money, how they'd use it and when they would repay it.The executives were sent back to Detroit with orders to return in early December with detailed plans on how they would restore profits, restructure the industry and ensure their futures.

Having learned at least one lesson, the CEOs drove to Washington for the second round of hearings and presentations. But it wasn't enough. Late on Dec. 11, the Senate blocked auto bailout legislation, leaving it up to President Bush to decide whether the government would step in.

After failing to convince Congress to rechannel money from a $25 billion industry retooling program to a bailout account, Bush went it alone. He reluctantly stepped in on Dec. 19 with $13.4 billion.

But the lifeline came with strings.

The automakers were required to present viability plans to the government -- with a new president at the helm -- by Fe b. 17. They were directed to order fast, deep cost cuts, secure agreements from creditors to eliminate most of their debt, and win UAW concessions to bring labor costs into line with U.S. plants run by foreign automakers.

If they came up short, GM and Chrysler would have little choice but to file for bankruptcy, with few prospects to secure financing to pay for their restructuring.

Michele Davis, a spokeswoman for Paulson, said the administration agreed to rescue the companies in part because Congress didn't act and it "fell into our laps."

"With the economy in a clear downturn," Davis said, "we felt the best option was to provide short-term aid and force the companies to take drastic steps toward viability."

Task force gets to work

The new Obama administration quickly assembled an auto advisory team. Treasury Secretary Timothy Geithner flew to New York to ask Wall Street financier Steven Rattner to head the effort.

The task forceeventually numbered about 12 Wall Street dealmakers and lawyers, supplemented by dozens of people from three consulting firms retained by the government.

It met at 8 a.m. every day, tackling an agenda that went out at 5 a.m. It focused on June 1 as a key deadline for GM, because that was the due date for a $1 billion payment to bondholders.

In early February, GM Chief Financial Officer Ray Young called White House aide Brian Deese to say GM wouldn't submit its viability plan by the Feb. 17 deadline. Larry Summers, head of the White House National economic Council -- and co-auto task force chair -- immediately called GM lobbyist Stuart Eizenstadt, who as a White House advisor had helped craft the 1979 Chrysler bailout. Eizenstadt apologized and assured him that GM would meet the deadline. And it did.

Chrysler executives, who said a merger with GM was its best chance for survival, had lobbied the government to give money to GM to buy Chrysler. But GM rejected it.

While the two automakers met the Feb. 17 deadline -- Ford Motor Co. did not seek federal loans -- GM and Chrysler had to wait more than a month for a decision from the administration. But internally, the task force quickly discarded the plans as inefficient.

Obama rejected the Chrysler and GM viability plans. They were given one last chance to come up with an acceptable turnaround blueprint.

Chrysler had until April 30 to cut its debt, win labor concessions and secure a tie-up agreement with Fiat in preparation for a government-financed Chapter 11 bankruptcy. GM was ordered to take similar same steps by June 1, when a key $1 billion bond payment was due.

The pre-negotiated bankruptcies would allow the automakers to emerge from court protection quickly, shedding their burdensome obligations and saving the good assets.GM's final draft, accepted by the government, eliminated Saab, Saturn, Pontiac and Hummer and retained Chevrolet, Cadillac, Buick and GMC.

Panel split on Chrysler

Chrysler's road back from the brink was marked by harrowing moments.

In mid-March, the task force was split, 4-4, on whether to save it at all.

An economic analysis presented to Obama said up to300, 000 jobs would be lost immediately if Chrysler was liquidated. And the government's costs of liquidating Chrysler -- paying pension benefits, health care coverage to retirees, unemployment insurance -- would be in the billions.

"None of us were brave enough," Rattner said. "We just said to ourselves, 'That's 300,000 jobs in one day, when you have an alternative that's not stupid."

The administration ultimately endorsed the Fiat-Chrysler alliance -- in part because Fiat said it would become much more active in running Chrysler. Fiat CEO Marchionne would also be Chrysler CEO.

Around 10 p.m. April 10, two White House task force members called Nardelli, looking for the final operating plan between Chrysler and Fiat.

"We were under the impression that they were finalizing it," one former task force member said. "The point of the call was to check in and say, 'We are going to need it now.'"

In fact, Chrysler and Fiat remained far apart on some major issues. The task force needed an approved agreement between the two automakers in hand by mid-April, so it could have two weeks to finalize it before the April 30 deadline.

After Nardelli's unacceptable response, the task force's Clay Calhoon, 26,and Brian Osias, 32, were on the first flight from Washington to Michigan the next morning. The two advisors and some consultants arrived at 11 a.m. at Chrysler headquarters in Auburn Hills. They met with Chrysler and Fiat executives, around the massive, board room table.

"We're going to sit in the conference room until we're done," Calhoon told Nardelli.

Calhoon didn't leave the conference room until 2 a.m. Just one key issue was unresolved: What incentives would be needed to meet sales volume goals?

On Sunday, the Fiat and Chrysler team reconvened again to try to nail down the incentives but made little progress until Ron Bloom, the No. 2 official on the auto task force, called Fiat CEO Sergio Marchionne. They resolved it during a five-minute conversation.

Chrysler filed for bankruptcy April 30, after two, non-stop days of final negotiations with Fiat and government officials at the Treasury's New York law firm offices.

Its best assets were sold to Fiat and it emerged from bankruptcy as a new company, Chrysler Group LLC, June 1. The rest of the automaker's holdings were left behind to be sold or liquidated.

Other partners considered

But Fiat wasn't the only potential partner under consideration for Chrysler.

The Detroit News learned that administration officials, led by Calhoon, spent a week in Aprilworking with GM on a plan to acquire Chrysler's best assets and keep the doors open on roughly one-third of its factories.

Those talks reached the highest levels of GM, including Fritz Henderson, who took over when the government ousted Wagoner.

"What do we do in the event that we can't get the Chrysler-Fiat deal done or if the president says the terms are unacceptable to him?" said a person involved in the talks. "We didn't want to just let Chrysler liquidate. Could we save some of the assets? How would that look and how much value would be generated?

Henderson rebuffed overtures from Chrysler in February, but two months later he raised with the task force the possibility of acquiring parts of Chrysler, if a deal with Fiat faltered.

"If the Chrysler deal doesn't go through, we're interested in some pieces of Chrysler," Henderson said, according to a person familiar with the situation.

"We're interested in Jeep. We're interested in a couple of the powertrains."

GM was most interested in Chrysler's jewels: the Jeep brand, Dodge trucks and minivans.

"Fritz's view on the Ram was, it's a brand new Ram. You run it for five years for cash and not do a new one," said a person involved in the talks.

Also under consideration in GM's corporate mind: eliminating Chrysler's dealer network, and selling Chryslers at GM dealerships.

Some task force members believed a Chrysler-GM tie-up made more sense than a Chrysler-Fiat alliance because it could have added $20 billion to GM's market value, lowered the overall cost to rescue the two companies, and benefited the industry as a whole by reducing factory capacity.

On April 19, task force member and Wall Street vet Harry Wilson flew to Washington to make a "passionate plea" for supporting a GM-Chrysler tie-up. But others on the task force showed little interest, saying it was too late short of the Fiat-Chrysler deal falling apart.

But another government official noted that many of the jobs saved would have been in Canada -- and that potentially only one-quarter of Chrysler's U.S. jobs would have been saved. The dominant view became this was only an alternative if the Fiat talks collapsed.

Revenue biggest concern

GM faced more opponents in bankruptcy court, since many attorneys general and other investors who didn't object in the Chrysler case did so in the GM bankruptcy.

GM's biggest concern during bankruptcy was revenue: How much would it lose at a time when nearly all of its plants were shut down?

"We basically battened down the hatches because we really didn't know how long we would be out," said Joe DaMour, executive director of GM's finance staff. He helped lead a team of 40 overseeing the automaker's day-to-day restructuring efforts.

The administration "foamed the runway," to guard against a collapse of GM and Chrysler by guaranteeing vehicle warranties and providing fast, government-backed payments to suppliers.

DaMour said the GM bankruptcy succeed because it had to -- and because of a team of dedicated GM employees.

"You can have a lot of complex explanations for this but we knew we had no choice," DaMour said.

"There isn't this debate about (what) we should or shouldn't do.... We aren't discussing or debating this. This is what we have to do."

"On May 1 and May 15, the auto task force held eight-hour planning sessions on GM's planned bankruptcy filing at the automaker's New York law office. More than 100 participated by phone or in person.

GM planned to present a 300-page slide presentation at the first meeting. The Obama team wasn't interested. Instead, they went through 15 major issues and assigned deadlines to specific people.

With the efficiency of a drill sergeant, task force member and Wall Street vet Harry Wilson, went through each item and got a commitment of when it would be completed.

GM filed for bankruptcy June 1.

CFO Ray Young said that due to its complex accounting system, GM couldn't exit by Aug. 31 or even Sept. 30, the end of a quarter.

Wilson was incredulous: GM would lose at least $100 million a week during bankruptcy, and would be willing to incur as much as $1 billion in additional losses, because it couldn't resolve accounting issues.

"I can't think of a problem in the world I can't solve for a $1 billion," Wilson said, according to participants.

GM exited bankruptcy as General Motors Co. on July 10.

No other choice

Former GM board member John Bryan believes GM's collapse was inevitable -- whoever had been on the board, or in the CEO's office.

"(GM) could not have prepared themselves -- not in the recent years -- for a sales drop of that magnitude, given the cost structure," Bryan said. "That fault belongs to a generation or so." A "few little moves" in recent years, he said, "would not have mattered."

The board had no choice in filing for bankruptcy, Bryan said. "The government told us what to do," he said. "Life outside liquidation rested on choices made by the government."

Key finding #1

Interviews with key government and industry players revealed new details about the auto bailout negotiations and the bankruptcies of GM and Chrysler:

• In April, senior GM executives -- including CEO Fritz Henderson -- held meetings in Detroit with the Obama auto task force about making a new offer to acquire a sizable chunk of Chrysler's assets.

The meetings were initially prompted by a discussion between Henderson and former auto czar Steven Rattner that GM might be interested in buying Chrysler's prized possessions: the Jeep brand, Dodge trucks and minivans, and keeping about a third of Chrysler plants and employees.

But GM's interest -- on the heels of merger talks last summer -- came too late as the Obama administration backed a deal to turn control of Chrysler to Italy's Fiat SpA. Some in the Obama administration argued the deal could have added $20 billion to GM's market value and lowered the overall cost to rescue the two companies.

Key finding #2

• The Bush administration initially planned to announce a package of roughly $25 billion in aid to four companies on Dec. 19: GM, Chrysler, Chrysler Financial and GMAC.

But talks broke down with the two finance companies in the middle of the night -- hours before President George W. Bush's announcement. GMAC would finally reach a deal 10 days later for $7.5 billion in aid, while Chrysler Financial wouldn't get its loans for nearly a month.

Key finding #3

• The Obama auto task force held secret talks in April to sell Delphi Corp. to billionaire investor Carl Icahn. The talks collapsed when Icahn held out for a better deal. Ultimately, the government backed the bid of Platinum Equity, but the Troy-based firm was eventually acquired by its bankruptcy lenders.

Key finding #4

• GM told the government it couldn't exit bankruptcy in the end of August or September, but had to be prodded by the task force to exit in early July.

Key finding #5

• GM asked the United Auto Workers to agree to a freeze of the hourly pension plan; the UAW declined. GM also apologized to UAW President Ron Gettelfinger at one point during the talks over an incorrect labor cost figure submitted to Treasury. Talks between Gettelfinger and Fiat CEO Sergio Marchionne were so heated at one point that Gettelfinger stormed out of a meeting at Treasury.

Key finding #6

• The Obama administration sat in on several GMAC board meetings -- its right as owner of 35 percent stake in the company -- but has since stopped. Auto task force members also held face-to-face talks with American Axle & Manufacturing Holdings Inc. CEO Dick Dauch to finalize a financing deal between GM and the auto supplier.



Safety officials have investigated hundreds of Toyota complaints

Nov 23, 2009

U.S. safety regulators have looked into hundreds of reports of uncontrolled acceleration in Toyota and Lexus vehicles over more than five years. The complaints vary from sudden engine bursts that can be controlled by applying the brakes, to unintended acceleration that persists despite the driver's effort to slow the vehicle.

The reports are linked to 15 fatalities, including four people killed in a 2009 Lexus ES 350 that crashed on Aug. 28 after its driver was unable to slow the car, according to the National Highway Traffic and Safety Administration.

Its investigations and those conducted by Toyota have led to three recalls, the first in 2007 to replace driver-side, all-weather mats that could entrap the gas pedal.

Toyota announced in September that it would recall 3.8 million vehicles. It is now in discussions with NHTSA about new measures to address this long-standing issue.

March 3, 2004 -- NHTSA opens its first investigation into allegations of unintended acceleration in Toyota vehicles equipped with electronic throttle control, also known as drive-by-wire technology. The investigation covered 2002 and 2003 model year Lexus ES 300, Toyota Camry and Camry Solara sedans.

NHTSA's Office of Defects Investigation could not determine the cause of the trouble reported in some complaints because of insufficient information, and said other complaints described unrelated issues. It found nothing abnormal or defective in the pedal configuration, brakes or electronic throttle control. It closed the investigation on July 22, 2004.

Aug. 5, 2005 -- NHTSA investigates a complaint alleging defects in the throttle and brake systems, or a combination of the two, causing unintended acceleration. "Neither the reports, nor the interviews conducted by ODI, identified any vehicle-based cause to explain the incidents," it said. NHTSA closed the investigation on Jan. 5, 2006.

Sept. 14, 2006 -- NHTSA opens an investigation into a complaint of an engine surge in a 2006 Toyota Camry. The Office of Defects Investigation did not find a vehicle-based defect and its investigators did not observe an unintended surge in engine power when they tested the vehicle. Evaluation of a throttle actuator, an electro-mechanical device that opens and closes the throttle in response to commands from the engine control module, showed no component problems. Warranty and parts sales are unremarkable, it said. "These data do not support the existence of a widespread defect or ongoing concern." NHTSA closed the investigation on April 3, 2007.

March 29, 2007 -- NHTSA opened a formal investigation into reports of unintended acceleration, sometimes for long periods, of Lexus ES 350 sedans. While drivers said braking was effective in slowing the acceleration, they were unable to stop the vehicle. They said they weren't able to turn off the engine by pressing the control button. Later, they said they were unaware that it needed to be depressed for fully three seconds to stop a car in motion.

The Office of Defects Investigation said it had "observed that an unsecured Lexus accessory all-weather floor mat can trap the throttle pedal in an open position resulting in significant unwanted acceleration." It said two vehicles it inspected showed brake damage due to overheating. It said Toyota acknowledged that improperly installed mats may have been related to some of the incidents, and agreed to alert owners. On Aug. 8, 2007, NHTSA upgraded the investigation to an engineering analysis to study the problem further.

Aug. 8, 2007 -- The investigation identifies unsecured mats that can entrap the pedal as a cause of unintended acceleration. It said the risk posed by improperly secured mats was not made clear to owners, who sometimes received their new vehicles with loose mats. NHTSA said drivers also need to be told how the ignition button functions. Toyota issued recall notices to owners of Lexus and Toyota vehicles to replace 55,000 all-weather mats with redesigned ones. The investigation was closed Oct. 11, 2007.

Jan. 31, 2008 -- NHTSA investigates allegations of uncontrolled acceleration of a 2006 Tacoma pickup. After studying complaints from other Tacoma owners, it said the information suggesting a possible defect was "quite limited," and closed the investigation on Aug. 27, 2008.

Jan. 14, 2009 -- Toyota recalls 26,500 Sienna minivans to replace retention clips that secure the floor carpet cover, to prevent it from jamming the gas pedal.

Sept. 29, 2009 -- NHTSA issued a consumer alert telling owners of eight Toyota and Lexus models to take out removable driver-side mats and not replace them. Toyota recalled 3.8 million vehicles to address the risk of removable mats jamming the gas pedal. Nov. 4, 2009 -- NHTSA rebuked Toyota after the automaker said the agency had ruled out a vehicle-based defect. The removal of unsecured mats, NHTSA said, "is simply an interim measure. This remedy does not correct the underlying defect in the vehicles involving the potential entrapment of the accelerator by floormats, which is related to accelerator and floor pan design." NHTSA said it was waiting to hear Toyota's plan "to correct this very serious defect."

NHTSA could not determine the cause of early complaints. (Edocs)
An engine surge investigation in the 2006 Camry found nothing. (Edocs)
NHTSA closes an investigation on complaints of 2006 Tacoma. (Edocs)
NHTSA could not determine the cause of early complaints. (Edocs)
Click Above to see Docments

Toyota's image under scrutiny

Safety advocates say acceleration issue may not be easy fix

Christine Tierney / The Detroit News

For years, Toyota Motor Corp. has investigated complaints from drivers saying their Toyota and Lexus vehicles accelerated all by themselves, and the company has identified essentially one cause. The trouble, according to Toyota, occurs when loose or ill-fitting floor mats, carpet covers or detached trim jam the gas pedal.

But after a highly publicized crash in August that killed four people when the driver lost control of a Lexus sedan, Toyota has come under intense pressure to reduce the risk of unintended acceleration.

The Japanese automaker and U.S. safety regulators are discussing changes to the gas pedal, as well as adjustments that would make it easier to stop a car that's accelerating, according to sources familiar with the negotiations. The U.S. National Highway Traffic Safety Administration says 15 fatalities, including the four in August, are linked to hundreds of reports of unintended acceleration of Toyotas it has received since 2002.

While that's a fraction of the casualties associated with some high-profile vehicle-safety cases, such as the Ford-Firestone debacle, the issue is deeply worrying to U.S. safety officials and could be very damaging to Toyota.

It has generated more bad publicity for the automaker, which has been stumbling through a series of misfortunes, including financial losses. Toyota also faces mounting skepticism about its response. Some drivers say they couldn't slow down or stop when they applied the brakes.

"Toyota has always been seen as producing very, very safe, bullet-proof cars," said George Peterson, president of AutoPacific Inc. in Tustin, Calif. "That's the image that has been cultivated for decades. This is making people think, is the Toyota of today the same as the Toyota of yesterday?"

Besides the damage to its reputation, Toyota faces a financial risk from lawsuits. The issue could be costly, Peterson said, if the company is found to be at fault -- and if juries are convinced Toyota knew about the problem.

Toyota is expected to outline ways to reduce the risk of unintended acceleration as early as next week. It is expected to redesign the pedal so that it can't be entrapped by a loose or ill-fitting mat. "We're very confident that the root cause is a pedal-trapping by an unsecured or inappropriate floor mat," said Brian Lyons, a spokesman for Toyota Motor Sales in Torrance, Calif. "We're looking at a vehicle-based remedy to help avoid that entrapment."

Toyota also is considering a system that would prevent the vehicle from accelerating if any pressure is being applied to the brake. This technology is already available on some cars, mostly German, and is recommended by independent safety experts.

A perplexing problem

U.S. safety investigators say they receive complaints of unintended acceleration involving many brands. But some safety advocates say Toyota has received more than its share -- particularly since it adopted drive-by-wire technology 10 years ago. In cars equipped with this system, a driver stepping on the gas pedal sends an electronic signal to the throttle.

Clarence Ditlow at the Center for Auto Safety in Washington, D.C., said its database shows that "since the late '90s, Toyota has generated more complaints on unintended acceleration than any other manufacturer."

But unlike certain defects, such as corrosion or faulty components that can easily be identified, unintended acceleration is a term that has been used to describe a wide range of occurrences and can be hard to diagnose.

There may be several causes, including driver error, say government and independent experts. There could be a problem with the brakes, acceleration or transmission. Or the electronics controlling the engine or transmission may be calibrated incorrectly.

A federal safety official likened the Toyota investigation to the long, frustrating inquiry in recent years into reports that cruise control deactivation switches on some Ford Motor Co. vehicles were causing fires. That led to a big recall by Ford, which has nonetheless preserved its reputation for building good cars.

Volkswagen AG's Audi brand suffered a near collapse in U.S. sales for several years from the mid-1980s to the early 1990s after a flurry of reports that Audi cars were prone to unintended acceleration. But after years of investigations in three countries, no defect was found in the vehicles.

Audi adopted a fail-safe measure preventing the transmission from shifting out of park unless the driver is applying the brake.

Since 2003, Audi cars have been programmed to automatically stop accelerating if there's pressure on the brake. Such a solution is one of the measures that NHTSA and Toyota are discussing to help prevent some of the incidents that customers described.

Toyota rebuked by NHTSA

Complaints range from sudden surges of engine power that can be controlled by applying the brakes to more frightening instances of unintended acceleration at high speeds. That was the situation that preceded the crash in Santee, Calif., near San Diego, of a Lexus ES350 driven by Mark Saylor, an off-duty California Highway Patrol officer. He and three family members were killed.

A month later, owners of eight Lexus and Toyota models were told to remove the driver-side mats, and Toyota later issued its largest-ever U.S. recall -- for 3.8 million vehicles.

Investigators looking at Toyota vehicles that crashed after alleged unintended acceleration, including the Lexus in California, found mats jammed near the gas pedal.

But this month, when Toyota cited a NHTSA document as evidence the mats were the sole cause of the problem, the agency rebuked the carmaker.

On Nov. 4, NHTSA said merely removing the mats didn't remedy the underlying defect, which it said was "related to accelerator and floor pan design."

But safety advocates say the mats and pedal configuration also don't explain all the complaints.

"The evidence continues to surface that we're dealing with more than a mechanical interface between the floor mat and the pedal," said Sean Kane, founder of Safety Research & Strategies Inc. in Rehoboth, Mass.

Kane, who has identified around 2,000 reports of unintended acceleration in Toyota vehicles since 1998, said some drivers saw dashboard lights flashing in a way that suggests an electronic glitch.

In 2002, soon after adopting drive-by-wire technology, Toyota issued a technical service bulletin to recalibrate the engine control module to prevent the vehicle from surging at certain speeds. That, Kane said, suggests that an electronic problem "is not out of the realm of possibility."

Toyota says it hasn't found such a problem. "From the reports and in our investigations, we've found no evidence of electronic glitches in the software or in the engine control system," Lyons said.

NHTSA officials also said that over more than five years of investigations, they have not found a defect in the electronic throttle.



Trebek tours Ford plant
before 'Jeopardy!' taping
"Jeopardy!" host Alex Trebek spent Thursday at Ford Motor Company in Dearborn filming special video clues for upcoming episodes. (Ford Motor Company)

Kimberly Hayes Taylor / The Detroit News
Nov 22, 2009

Dearborn -- Alex Trebek, host of "Jeopardy!," one of the nation's most popular quiz shows, made a rare visit to Metro Detroit Thursday to tape clues for the show at Ford Motor Co.

His appearance means that sometime soon, "Jeopardy!" fans will see clues about the automotive pioneer. But if you want to know exactly when the Ford trivia clues will air on the show that runs 7:30 p.m. weekdays on WDIV-Local 4, Trebek says "You'll have to watch every day to catch them."

During the day, Trebek spent time at a Ford assembly line, and says he was blown away by the modern technology that makes it easier for assembly workers to do their jobs. In fact, the surprisingly hilarious Trebek says he wants to take one of the robotic arms home to put in his garage to make his work around the house easier.

While taping some clues on the lawn at the Ford Research and Innovation Center in Dearborn, Trebek learned that Henry Ford, who introduced the Model T in 1908, selected Detroit because he was born on a farm in Dearborn. The host also wanted to know why other auto makers selected the region, and learned the Detroit River made it convenient to transport the vehicles. When he asked how many acres Ford Motor Company covered, he was surprised to find out the properties covered many miles of real estate.

Trebek says he has fond memories of Detroit because he took his first flight from Miami to the Detroit area many years ago, had two aunts who lived in Detroit in the 1950s and an uncle who worked for the J.L. Hudson Department store in downtown Detroit. The Canadian also acknowledged he grew up as a Red Wings fan, but changed his allegiance when the team's star player, Canadian Gordon "Gordie" Howe, left the Wings in 1980.

Perhaps most importantly, Trebek says he was so impressed with Ford technology that he's decided to purchase a new Raptor pickup truck next year. Trebek says he has another reason for his special allegiance to the Ford Motor Company.

"Ford is the only American automaker that didn't ask for a bailout," he says.

In addition to that, Trebek says he knows Michigan has the nation's highest unemployment rate, even higher than California's, and he wanted to show his support for the state.

"We want you folks to know we're aware of that, and anything we can do to cheer you up and brighten up your day, we're here for you."


Ford Motor to invest $2.3B in Brazil

5-year project updates, expands production in South America plants

Bryce Hoffman / The Detroit News
Nov 21, 2009

Ford Motor Co. will invest nearly $2.3 billion in Brazil over the next five years to modernize factories and expand production in South America's largest market.

Ford Americas President Mark Fields outlined the investment plan at a ceremony Friday at the company's manufacturing complex in Camaçari in the northern state of Bahia, sharing the podium with Brazilian President Luiz Inacio Lula da Silva.

More than half of the money will be spent to expand production at the factory, which is Ford's most advanced assembly plant in the world, and to modernize production at Troller Veículos Especiais S/A in Horizonte, Ceará, which Ford bought in 2007. The rest will be reserved for future product investments.

Ford spokeswoman Jennifer Flake said it represents the largest five-year investment in Ford do Brazil's 90-year history.

"It will give us greater manufacturing flexibility," she said.

Michael Robinet, vice president of global vehicle forecasting at CSM Worldwide in Northville, called the investment well-timed.

"It is an important market," he said, adding that Brazilian consumers are becoming more sophisticated and are no longer satisfied with cast-off models from Europe and the United States. "Going forward, Ford knows that it will be a critical market for global platforms."

Robinet said it is unlikely Ford will use its added capacity in Brazil to export to America because of distance and currency considerations. The Brazilian car market has been growing this year, thanks to low borrowing costs and government incentives.

Ford is the fourth-largest automaker in this key emerging market after Fiat SpA, Volkswagen AG and General Motors Co.

Flake said the investment will allow Ford to increase the output of its Camaçari plant by 50,000 annually. The factory, which produces the EcoSport compact sport utility vehicle and a series of products based on the old Fiesta, already produces about 250,000 vehicles each year. About 1,000 new jobs will be added at the factory.


Why Ford has become a winner
Racecar driver James Hinchcliffe praises the car maker for the huge improvement in its product

Globe & Mail Nov 20, 2009
James Hinchcliffe

It may have been one small step for Motor Trend magazine, but the selection of the 2010 car of the year certainly was one giant leap for Ford Motor Co. This week it was announced that the 2010 Ford Fusion won the Motor Trend car of the year award. It was the first time since 2003 that a Ford had manage to claim the coveted prize.

I, personally, am very happy that the Fusion took home top honours this year. It gives some well-deserved credit to the only one of the struggling “Big 3” car manufacturers that has actually made real progress in the last few years. The reason I am so happy that Ford has been recognized for its efforts to turn the company around is because of the way it went about it; unlike their Detroit-based brethren, they tried to solve their issue from the showroom instead of the boardroom.

For years we were hearing about the declining popularity of North American cars and the take over of the market share by the leaders out of Europe and Japan. There were explanations and theories about labour costs and people's sudden aversion to buying big gas guzzling cars and SUVs. These were true enough and did contribute to the problem. But at the core of it all, irrespective of what was being created overseas, was the undeniable fact that the cars they made were junk.

Now that might seem a bit harsh. I am sure there are lots of people who own, or owned, a mid-90's to mid-2000's Ford, Chevy or Chrysler product and thought it was great. I'm sure it was. But the fact is there were less people on your side than there were against you. “Junk” is a relative term, of course. Were the cars absolutely unbearable, unreliable and unsafe? No. But compared to what else was out there, buying one would have been a bit like turning down a week vacation in Maui to see the touristy bits of Nebraska.

While the news kept breaking of company restructuring and managerial rearranging, the sad news was the product was left for what it was: simply undesirable. It had been out- styled, out-engineered and outclassed by the competition. For years the U.S. auto makers kept pumping out cars that looked like bars of soap on wheels and left a lot to be desired when driven. They were uninspiring to look at, bland to drive and not all that reliable.

Take the Chevrolet Impala, for example. I look at that thing and can't think of one single attribute that would make it a desirable car to own, other than the fact that Dale Earnhardt Jr. drives one and people move out of your way on the highway because they think you're a cop. For too long now I have looked at the North American cars and can't help but think “rental car.” Again, there are a few exceptions; the Corvette is timeless, the new Camaro and Challenger are funky, but you can't carry umpteen sub-par models on the back of a few good ones.

That is why Ford deserves some credit. A few years ago the light bulb went on and they started updating the only part of the company that the consumer sees every day: the cars. What was so puzzling was that Ford and Chevy were both doing well in the European markets, albeit with cars that they didn't sell over here. Was it that big a stretch to believe that maybe they would be popular here too? Did someone not clue into the fact that every time there was a commercial on TV for the Focus it said in small print, “European model shown”? It was better looking!

It took these companies too long to realize that North Americans were ready to embrace change and move away from the big, boxy cars of yesteryear and toward smaller, funkier, more efficient cars like our European neighbours. Ford made the move first and it has been paying dividends ever since.

Ford was the only US auto maker to turn down bailout money from the government, and they actually posted a profit in the second quarter of this year. This has to be largely because their product on the road improved so dramatically.

They started coming out with cooler looking cars, like the Edge. Place it next to the SUVs that came before it like the Explorer and Escape and it looks like the “before” and “after” shots of the lucky guest on Oprah's makeover show. Even things that are a little overboard for me, like the Ford Flex, are selling well. And of course the Fusion is now an industry leader. All this came because they focused their efforts in the right place.

This new fleet of Fords boasts better quality, more focus on things like fuel efficiency, improved driving experience and, certainly not least, vastly improved looks. Not only are they keeping up with the competition, they are leading the pack.

It has been a long time coming, but I am glad that when someone asks me what new cars to look at, I can say, without hesitation, “Have you checked out a Ford lately?”

James Hinchcliffe is a Toronto-based racing driver with the IndyCar Lights circuit.

Prosecutor to appeal bond of man charged in Ford theft

Doug Guthrie / The Detroit News
Nov 20, 2009

Detroit --A federal prosecutor said Thursday she will appeal a judge's decision to grant bond to a Chinese citizen accused of stealing up to $32 million worth of Ford Motor Co. engineering plans.

Xiang Dong Yu, also known as Mike Yu, 47, of Beijing was a Ford product engineer for 10 years. He left the company and moved to China in 2007, allegedly taking with him computerized copies of about 4,000 pages of confidential documents.

Yu was arrested last month at Chicago's O'Hare International Airport when he returned from China.

The government says a laptop computer Yu was carrying contained thousands of pages of proprietary Ford documents and a large number of confidential documents belonging to another company not named at Yu's arraignment on charges of theft of trade secrets, attempted theft of trade secrets and unauthorized access to a protected computer Thursday in U.S. District Court.

Although Yu has remained in federal custody since his arrest, Magistrate Judge Mark A. Randon on Thursday tentatively ordered his release on $100,000 bond to Pastor Peter Wu of the Chinese Gospel Church in Livonia. The church has rented Yu an apartment in Westland.

Randon delayed issuing his order to release Yu to give federal prosecutors time to appeal his decision.

Assistant U.S. Attorney Cathleen Corken told the judge Yu might flee.

"His whole life is in China," said Corken, who claimed that although the government has seized Yu's passport, he could walk into a Chinese consulate and get new travel documents.

"We have no extradition treaty with China," Corken said.

Government agents discovered on Yu's computer an application for Canadian citizenship and passport. Yu's lawyer, George Donnini, argued the government is unfairly assuming that any Chinese citizen is a flight risk. He said his client would accept conditions that included travel restrictions and an electronic tether.

According to a federal indictment, Yu had access to and made copies of "system design specification documents" prior to leaving his job in Dearborn in 2007.

Ford declined to comment.

If convicted, Yu could face up to 10 years in a federal penitentiary.


Ford Subaru, VW Top Insurance industry safety picks

KEN THOMAS Nov 19, 2009

The Associated Press

WASHINGTON–Ford, Subaru and Volkswagen lead the insurance industry's annual list of the safest new vehicles, according to a closely watched assessment used by car companies to lure safety-conscious consumers to showrooms.

The Virginia-based Insurance Institute for Highway Safety awarded its "top safety pick" on Wednesday to 19 passenger cars and eight sport utility vehicles for the 2010 model year. The institute substantially reduced the number of awards compared with 2009, because of tougher requirements for roof strength.

Ford Motor Co. and its Volvo unit received the most awards with six, followed by five awards apiece for Japanese automaker Subaru and German automaker Volkswagen AG and its Audi unit.

Chrysler Group LLC received four awards followed by two each for Honda Motor Co. and General Motors Co.

Toyota Motor Corp., BMW AG, Mazda Motor Corp. and Mitsubishi Motors Corp. were shut out in the annual IIHS review.

Ford's recipients include the Ford Taurus and Lincoln MKS passenger cars and the Volvo S80 and C30 passenger cars and the XC60 and XC90 SUVs.

Ford said in a statement it is "committed to providing customers with safe vehicles for a broad range of real-world crash conditions.''

Subaru recorded winners with the Subaru Legacy, Outback and Impreza cars and Tribeca and Forester SUVs. Subaru was the only automaker with an IIHS winner in all four vehicle classes in which it competes.

The automaker, which has bucked the brutal U.S. sales market with a 13 per cent increase during the first 10 months of 2009, attributed its safety success to a unique engine design that sits low in the vehicle chassis and moves down and under occupants in a frontal collision.

Tom Doll, executive vice president and COO of Subaru of America, said the awards were a "tribute to the engineering that goes into Subaru products.''

Volkswagen scored with the 4-door versions of the Jetta, Passat and Golf, the Audi A3 and the Volkswagen Tiguan, a small SUV. Mark Barnes, Volkswagen of America's chief operating officer, said the "safety of our cars is of the utmost concern, from the initial design stages all the way through the maintenance procedures at dealerships.''

Chrysler won the award for the Chrysler Sebring and Dodge Avenger sedans equipped with optional electronic stability control, the Dodge Journey midsize SUV and the Jeep Patriot with optional side thorax air bags.

Scott Kunselman, Chrysler's senior vice president-engineering, said the awards underscore the Auburn Hills, Mich., automaker's ``engineering capability and leadership in occupant protection.''

General Motors Co. and Honda Motor Co. both received two awards. GM was recognized for the Buick LaCrosse and the Chevrolet Malibu while Honda won for 4-door versions of the Civic with optional electronic stability control and the Honda Element.

Other winners included the Nissan Cube, the Kia Soul and the Mercedes C Class.

The vehicles are selected for best protecting motorists in front, side and rear crash tests based on Institute evaluations during the year. The vehicles are required to have electronic stability control, or ESC, to qualify for the award. Earlier this year, the Institute said vehicles would need to receive its highest score in its roof strength evaluation to qualify the safety pick designation.

"With the addition of our roof strength evaluation, our crash test results now cover all four of the most common kinds of crashes," said Institute president Adrian Lund. "Consumers can use this list to zero in on the vehicles that are on the top rung for safety.''

The Institute awarded its top prize to 94 vehicles in 2009 and attributed the decline in awards this year to the roof strength requirement. The Honda Accord and the Ford Fusion both dropped off the list because 2010 versions didn't earn high enough scores on the roof test.

The Toyota Camry would have made the list, the Institute said, if it had received the highest rating in rear crash protection. The Institute said the Camry's seats and head restraints were rated marginal for protection against whiplash injuries.


Fans mark end of the Edsel line
The Edsel was introduced in 1957, and became an almost overnight automotive bust. Ford discontinued the model in 1959. (Ankur Dholakia / The Detroit News)

Enthusiasts gather 50 years after end of the line for Ford dud

Bill Glauber / Milwaukee Journal Sentinel Nov 19, 2009

Racine, Wis. -- Before the Ford Pinto, AMC Pacer and Chevy Chevette, there was the Edsel.

It was a vision of Detroit at its mid-20th century worst, an overhyped, overpriced automotive monstrosity produced by the Ford Motor Co.

The oval front grill was ridiculous -- some suggested it looked like a toilet seat. The workmanship during the first model year was mediocre and the vehicle became a national joke. The car was named after Henry Ford's son, Edsel.

It was introduced in September 1957, became an almost overnight automotive bust and was quietly shelved Nov. 19, 1959. There, the story might have ended, an American dream turned to American rust.

But in this country, there are many people who love the unloved, especially when the object of their desire packs eight cylinders under the hood.

David Hooten is one of those whose heart flutters at the sight of an Edsel. He is the president of the Wisconsin Edsel Club, which has about 30 members.

This week, Hooten will join a few dozen other Edsel enthusiasts from around the country in making a pilgrimage to Louisville, Ky. At the site of an old Edsel plant, they'll celebrate the 50th anniversary of the car's demise.

"The car had such a bad rap," Hooten said. "I bought one just to be different."

Just how different can be found inside his garage.

Hooten owns a restored Edsel from the final model year, 1960, when the last of the vehicles rolled off the assembly line.

It is an Edsel Villager, a two-door station wagon with a tailgate.

For an 18-foot-long, 4,100-pound vehicle with flat bench seats and no seat belts, it doesn't handle too badly.

It goes from zero to 60 in about 15 seconds and, amazingly, gets around 15 miles per gallon in highway driving. And, given that the steering wheel is roughly the size of a tire, it's pretty easy to maneuver around town.

Hooten, who is 49 and works as an auto body mechanic, has been driving Edsels since he was in high school. He sticks to his belief that the cars got a bad rap.

OK, maybe the 1958 Edsel models, which, he said, weren't very well made and featured such things as push-button transmission in the steering wheel and a self-lubricating front suspension. The other two model years were just fine, he said.

For Edsel enthusiasts, there really is a certain beauty in the vehicle and sadness about the failure of the car to find a market.

Beyond becoming a punch line, though, the Edsel provides a reminder that Detroit has miscalculated in the past only to rebound. That's something to take comfort in during a time of auto bankruptcies and cash-for-clunkers sales.



2010 Ford Fusion named Motor Trend's 'Car of the Year'
Angus MacKenzie, left, Motor Trend Magazine editor-in-chief, hands the trophy for Car of the Year to Ford Group Vice President Derrick Kuzak. (Bryan Mitchell / Special to The Detroit News)

Magazine's staff cites Ford's improvements, sedan's broad appeal

Bryce G. Hoffman / The Detroit News Nov 18, 2009

Dearborn --Motor Trend on Tuesday named the 2010 Ford Fusion its "Car of the Year."

The award marked the second consecutive year that Ford Motor Co. claimed one of the influential magazine's top honors. Last year, the 2009 F-150 pickup claimed "Truck of the Year."

Ford's midsize sedan beat out 22 other contenders, including the new Toyota Prius, Nissan 370Z and BMW 7 Series.

Members of the magazine's editorial staff told The Detroit News they were impressed by the improvements Ford has made to every aspect of the Fusion since it debuted in 2005.

"Ford has proven its resilience in these tough times by delivering to market a car with broad appeal to a broad range of consumers," said Motor Trend Editor-in-Chief Angus MacKenzie.

"The Fusion range has matured into a competitive roster of midsize sedans, able to compete with sales juggernauts such as the Toyota Camry and Honda Accord."

Despite one of the worst markets in automotive history, the Fusion has set a new full-year sales record this year, gaining market share and becoming the best-selling car from any U.S. automaker.

CEO Alan Mulally called the Motor Trend award "another proof point" that Ford's turnaround is working.

Ford's new products have been drawing accolades all year from key arbiters of public sentiment, such as Consumer Reports and J.D. Power and Associates.

But analyst Erich Merkle of Autoconomy.com in Grand Rapids said the Motor Trend award is even more influential.

"It's one of the most important honors," he said, adding that it can only strengthen "already impressive" sales.

Motor Trend made the announcement at a special ceremony at Ford world headquarters.

"Cars just don't happen," editor MacKenzie told a crowd of Ford employees. "Every one of you here in this room has a little piece of this trophy."

Motor Trend was particularly impressed with the new Fusion Hybrid.

"What it means is that you can have an economical and a fun product. You don't have to make trade-offs. It doesn't have to be odd looking," said Nancy Gioia, director of Ford's electric vehicle programs. "It shows what an American company can do."

Ford got an endorsement of a different sort this week from billionaire investor George Soros.

His Soros Fund Management LLC revealed Monday that it had purchased 7.3 million shares in Ford over the past three months. That helped push Ford's share price to $9 Tuesday for the first time in two years, before settling back to close at $8.98 -- a gain of 27 cents, or 3.1 percent.

Derrick Kuzak, Ford's global product development chief, said the Motor Trend award, other public recognition of Ford's progress and the company's financial performance have given a big boost to employee morale.

"Last year, it was the F-series," he said. "We really need to start thinking of this as an annual event at Ford."



GM on the road to paying
back bailout loans
General Motors CEO Fritz Henderson speaks to the media in Detroit on Monday. Rebecca Cook/REUTERS

Auto maker will start payments next month, but GM's equity value
must rise to $66-billion for Ottawa, Ontario to get their money back

Globe & Mail Greg Keenan and Shawn McCarthy
Novemebr 17, 2009

General Motors Co. has promised to begin paying back part of the bailout money provided by the federal and Ontario governments, but taxpayers are unlikely to get all their money back unless the auto maker's market capitalization hits a level it has never reached.

GM will repay $1.54-billion (U.S.) of the $9.5-billion it borrowed from the two governments by making eight quarterly payments of $192-million starting next month, company officials said Monday as they revealed the first financial results for GM since it emerged from Chapter 11 bankruptcy protection on July 10.

Repaying U.S. and Canadian taxpayers is “a personal commitment,” said GM chief executive officer Fritz Henderson. GM will first repay the $1.54-billion directly.

But the longer-term payback plan involves GM becoming a widely held public company again, allowing governments to monetize their shareholdings.

The U.S. and Canadian governments hold 72.5 per cent of the common shares: 11.7 per cent of those are owned by the federal and Ontario governments.

Ottawa and Ontario also hold about $400-million worth of preferred shares.

The governments would need to receive about $7.6-billion from the proceeds of a GM initial public offering if they are to be repaid all the $9.5-billion they provided to the company.

But the total equity value of GM must amount to more than $66-billion if all governments are to be repaid in full, according to an analysis by the U.S. government's Government Accountability Office (GAO). That value could be a tall order for GM; the GAO study showed GM's market capitalization peaked at $57-billion in 2000.

“It is my mission to disprove the GAO,” Mr. Henderson declared, “to create value in the company, generate results in the company so in fact the taxpayers can get a return on the investment.” GM is preparing for an IPO in the second half of next year, he added.

The federal government still hopes to be repaid in full, despite Prime Minister Stephen Harper's comments in June that Ottawa was not counting on getting money back from the sale of the equity stake.

It could take eight years to unwind the equity position, but Ottawa will move as quickly as possible, while still aiming to maximize its return. Other opinions suggest governments could be repaid if GM's market capitalization hits $57-billion.

“We are not in the auto business for the long term,” a senior official said Monday. “We expect to see taxpayers' dollars returned to the government.”

GM added that it contributed $4-billion to its Canadian pension plans to restore them to health, confirming filings it made with Ontario pension regulators in September.

The announcement of the loan payback came as the auto maker reported that revenue and market share rose, structural costs fell and billions of dollars of debt were wiped out.

But one thing did not change – the company lost money in the equivalent of the third quarter.

The results are “certainly better than our plan going into bankruptcy, but nevertheless it is a loss and you cannot be satisfied with it,” Mr. Henderson told reporters.

GM lost $1.2-billion in the period July 10-Sept. 30, which was better than an expected loss of $4.2-billion was forecast with its bankruptcy filing. Results were better than expected in North America, although GM is still losing money in its home market. It lost $651-million before interest and taxes. It also posted a loss in Europe, another troubled market where it is trying to restructure its key Adam Opel GmbH division.

Profits in Latin America and the Asia-Pacific region, which includes China, did not offset losses in North America and Europe. Asia-Pacific operations registered $429-million in earnings before interest and taxes.

A full comeback for GM depends, however, on vehicle markets improving around the world, particularly in North America and Europe. GM also needs to roll out more hit vehicles that replicate the success of such Canadian-made vehicles as the Chevrolet Camaro and Equinox and GMC Terrain, while executing a successful restructuring of Opel.

“We need at least another year of consistently improving results” before assessing whether GM can return to full health, said industry analyst Bill


GM's $1.2B loss signals
a turn-around
General Motors Corp. headquarters in Detroit is seen in this 2008 file photo.

Automaker plans to start repaying U.S. government loans in December

Nov 16, 2009 - Toronto Star

DETROIT–General Motors Co. says it lost $1.2 billion (U.S.) from the time it left bankruptcy protection through Sept. 30, far better than it has reported in previous quarters and a sign that the auto giant is starting to turn around its business.

The company also says it will begin repaying $6.7 billion in U.S. government loans with a $1.2 billion payment in December. It could pay off the full amount by 2011, four years ahead of schedule.

GM said its improved performance was fueled by new products including the Chevrolet Camaro muscle car, and the Chevrolet Equinox and GMC Terrain midsize crossover vehicles. The company's top sellers through October were the Chevrolet Silverado pickup truck and Impala full-size car.

Also, GM's global presence helped the company, particularly in China, where its sales of 478,000 in the third quarter increased 6 per cent over the second quarter.

The company cautioned that the earnings numbers mean little because they don't comply with U.S. accounting standards and cover only the part of the quarter after GM left Chapter 11 bankruptcy protection on July 10.

Even more unusual is the $79.4 billion profit the troubled automaker is reporting for the first nine days of the third quarter, when it remained under bankruptcy court protection but was able to scrap colossal amounts of debt and other obligations from its balance sheet.

"We have significantly more work to do, but today's results provide evidence of the solid foundation we are building for the new GM," CEO Fritz Henderson said in a statement.

Chief financial officer Ray Young said it's impossible to compare the third-quarter results to any previous quarter because GM is still reviewing the value of its assets and liabilities post-bankruptcy to comply with accounting principles.

"Direct comparisons are not necessarily applicable. You can make some judgments in terms of trends," Young said.

GM maintains the numbers show a company making progress, riding dramatically reduced structural costs to a far better performance than the $6 billion loss GM reported in the first quarter, the last full quarter for which its numbers met accounting standards.

GM took in $3.3 billion more cash than it spent for the third quarter, far better than the $10 billion the company burned through during the first quarter.

Its third-quarter revenue totaled $26.4 billion, also an improvement over the first quarter when it saw revenue drop nearly 50 per cent from the same period in 2008 to $22.4 billion. Revenue was aided by sales boosts in July and August from the U.S. government's Cash for Clunkers rebates.

GM said its global market share was 11.9 per cent in the third quarter, up three per centage points from the first half of the year. The U.S. share stayed flat for the quarter at 19.5 per cent.

Many customers stayed away from GM showrooms in the first and second quarters as it headed into bankruptcy protection, fearing the company wouldn't be around to honor warranties and service their vehicles.

Young said GM accountants are in the process of cleaning up the new company's books, revaluing assets and liabilities and changes to pension and health care costs that came from bankruptcy and a new contract with the United Auto Workers union.

GM expects to meet accounting standards when it reports full-year results for fiscal 2009, but those figures probably won't be released until March as accountants go through the complex process of figuring out just how much the company is now worth.

But Young said the third-quarter results still are useful to management in spotting trends and measuring whether the company is making progress.

GM lost $78 billion from 2006 through the first quarter of this year. The gargantuan losses and debt eventually choked the company to the point where it could no longer operate without government help.

GM entered bankruptcy protection with roughly $94.7 billion in debt. It emerged with $17 billion, including the $6.7 billion owed to the U.S. government. The government has given GM a total of $52 billion, $45.3 billion in exchange for a 61 per cent equity stake in the company.

The automaker also says it will begin repaying $1.4 billion it owes to the Canadian and Ontario governments in December. The loan repayments will come from escrow accounts set up for the company by the U.S. Treasury Department and Canadian governments. GM also has paid $700 million on a $1.3 billion loan from the German government to keep GM's Opel division in operation. The balance will be repaid this month, GM said.

Although the company reported positive cash flow for the third quarter, it does not expect that to continue into the fourth quarter because of the government loan repayments and a $2.8 billion payment to help Delphi Corp., its former parts division, out of bankruptcy protection.

GM has said it plans to sell stock to the public late next year so taxpayers can recoup at least part of their remaining investment, though GM Chairman Ed Whitacre said last week the timing of any GM IPO remains uncertain and depends on when the company returns to profitability.


Ford vehicle sales outlook:
'Worst is over'

Bryce G. Hoffman / The Detroit News
Nov 15, 2009

Ford Motor Co.'s top sales analyst said this November U.S. sales appear to be at least as strong as October, meaning the industry has once again found its footing after one of the worst declines in history.

"So far, so good. We won't fall backwards from October," said George Pipas, head of sales analysis and forecasting at Ford. "The worst is over -- both from an economic standpoint and from an automotive standpoint."

However, he warned that the recovery remains fragile, largely because too many Americans remain out of work.

"(Unemployment) is a drag on consumer psychology," Pipas said. "The recession may be over and the recovery may have begun, but for many, many consumers it may not feel like it's over even 12 months from now."

As a result, Ford is projecting only modest sales gains in 2010.

Speaking Friday at the Automotive Press Association, Pipas said the industry that emerges from this downturn will be changed dramatically, with more consumers opting for smaller cars and crossovers. He said these vehicles will represent the largest market segment in the United States by 2013.

That is partly due to concerns about fuel prices, which Pipas said will remain volatile. He predicted that gasoline will hit $4 a gallon again -- probably next summer.

Analyst Jim Hall of 2953 Analytics LLP in Birmingham said that is convenient, considering that Ford has shifted its entire product strategy in that direction. But he believes new, fuel-saving technologies will keep American motorists in larger vehicles.

"Some of the best of these (technologies) are too expensive to put into small cars," Hall said, adding that innovations like advanced six-speed transmissions and smaller turbocharged engines should allow automakers to meet tougher federal emissions requirements with larger vehicles, too.

"There's no penalty for big in this country."

But Pipas said the shift to smaller vehicles is about more than fuel prices.

He said it reflects changing demographics and a new, less-ostentatious aesthetic.

"Consumers in the future will be more careful about living within their means," he said.


Ford fast-tracks new cop car to replace Crown Vic

Bryce G. Hoffman / The Detroit News
November 14, 2009

Ford Motor Co. today confirmed that it is developing a new police interceptor to replace the Ford Crown Victoria when production of that model ends in 2011.

As The Detroit News first reported in August, the Dearborn automaker has decided to abandon the elderly Crown Vic platform in favor of an all-new police sedan, which will most likely be built off the new Ford Taurus platform.

"We have heard the repeated requests from the law enforcement community to continue uninterrupted support of the law enforcement community," said Ford Americas President Mark Fields. "Ford is answering the call with the new Police Interceptor -- engineered and built in America."

Ford said the new vehicle -- dubbed the Ford Police Interceptor -- will offer greater durability, better safety, stronger performance and greater fuel-efficiency than the venerable Crown Vic, which is the leader in the law enforcement segment, accounting for 75 percent of the police pursuit business in the United States today.

The new Police Interceptor is being developed with input from Ford's Police Advisory Board, which includes representatives from major police departments around the country.

"Ford's commitment to the law enforcement community produced the Crown Victoria, the benchmark police vehicle," said Lt. Brian Moran, fleet manager for the Los Angeles County Sheriff's Department and a member of the advisory board. "This commitment has continued, and Ford has been working closely with the Police Advisory Board on developing the new Police Interceptor. I am confident that the next-generation Ford police vehicle will meet the future needs of the law enforcement community and will set the new standard."

Ford said it will unveil the new model in the first quarter of 2010 to give law enforcement agencies time to develop transition plans and outfitters time to develop aftermarket equipment for the vehicle.

"Ford long has supported our public servants with vehicles that work as hard as they do," said Ken Czubay, head of marketing, sales and service in the United States. "We intend to build on this legacy with a new generation of municipal and police vehicles that set even higher standards."


Ford Fusion has record year

Ford Fusion

Bryce G. Hoffman / The Detroit News
Nov 13, 2009

Sales of the Ford Fusion have topped 151,000 units this year, making it the best-selling car from a domestic manufacturer.

Ford Motor Co. today said its popular midsized sedan already has set a new annual sales record -- pasting its previous high of 149,552 units set in 2007.

"It's extraordinary that a car could set a sales record in an environment where overall industry sales are down 26 percent from a year ago," said Ford sales analyst George Pipas.

In the first 10 months of this year, Fusion sales were 15 percent higher than they were during the same period in 2008, making it one of the top 10 best-selling vehicles in the country.

Fusion sales received a big boost from the new Fusion Hybrid, which now accounts for nearly 20 percent of all Fusion retail sales. And Ford said more than 60 percent of those buying the hybrid model are converts from other brands -- primarily Toyota and Honda.

It also has been helped by stellar ratings from influential publications like Consumer Reports, which says its quality is now superior to competing models from Japan's leading carmakers.

The Fusion was introduced in 2005 as a 2006 model. It is produced in Hermosillo, Mexico.


Kansas Ford plant voting
on strike over workload

Bryce G. Hoffman / The Detroit News
Nov 13, 2009

Workers at Ford Motor Co.'s Kansas City Assembly Plant in Claycomo, Mo., are holding a strike authorization vote today after a disagreement over workloads, but no work stoppage is expected.

The dispute began during the company's annual "rebalancing" talks with the union, which are aimed at increasing the plant's efficiency.

According to people familiar with the situation, the United Auto Workers feels that some of the proposed changes would give some workers too many tasks to perform. A strike vote is typically taken in such cases as a way of increasing pressure on the company, though these rarely result in actual work stoppages.

However, the situation at the Kansas City plant, which produces the Ford F-150 and Escape, the Mercury Mariner and the Mazda Tribute, remains volatile after 92 percent of UAW members there rejected a recent agreement on concessions between the union and Ford.

Ford spokeswoman Marcey Evans said senior managers are at the plant, negotiating directly with local leaders and leaders of the UAW's national Ford section.

"We are working together with the union to address their concerns," she said. "We have a contractual process that we follow to address such issues, and this is part of that process."

While several strike votes have been taken nationwide, Evans noted that none have resulted in a work stoppage at any Ford plant in the past 20 years.


No flash, but plenty of dash

It's practical, affordable, comfortable and well laid out. If those are your criteria, this is a compact you should definitely be looking at

2010 Ford Focus

Headshot of John Heinzl

JOHN HEINZL - Globe & Mail

November 12, 2009

Mention the Ford Focus, and certain adjectives jump to mind: Practical. Affordable. Unassuming.

Exciting? Exhilarating? Uh, no.

So when I arrived to pick up my test car, a sporty Focus SES model, I was pleasantly surprised to find it adorned with 17-inch aluminum rims, a dark chrome grille, fog lamps and a rear spoiler. Far from boring, the car looked ready for a road rally.

I had a different sort of endurance test in mind, however: A week of highway and city driving with my wife and two kids, aged four and seven. There would be no mud-splattered windshields, but Cheerios getting wedged between the seats was a distinct possibility.


Inside the car, the pleasant surprises continued.

The Focus's black and silver interior exuded a refined look, and the radio and climate controls were logically laid out and intuitive. Another nice feature was the "driver's message centre" that displayed the time, outdoor temperature, radio information and vehicle direction. Located in the centre of the dash-top, the display was easy to glance at without taking my eyes off the road. Presumably, this reduces the odds of swerving into a ditch while trying to read the name of the song that's playing.

On the road, I was impressed by the Focus's crisp handling. The SES sedan - a notch below the top-of-the line SEL - has a performance suspension that makes for nimble cornering while maintaining a fairly supple ride. In other words, it's a fun car to drive, not the bland econo-box I had expected. The car feels secure and surefooted, unlike some other small cars that drive more like go-karts.

When I asked my wife what she thought of the Focus, she said it seemed solid and well built. "If I hadn't known it was a Ford I would have thought it was a Japanese car," she said. Consumer Reports gives the Focus an above-average grade for reliability and a coveted "recommended" rating.


The good news for families: The rear of the Focus easily accommodates two child seats. The bad news? That's about all you're going to get back there.

I had assumed that because the Focus advertises itself as a five-seater, we'd be able to fit three people in the back. Wrong. In fairness, the problem isn't unique to the Focus - two child seats are going to eat up most of the back seat of any compact, rendering the centre position uninhabitable by anyone wider than a slice of processed cheese.

But that's why it's called a compact, and not a minivan. That said, our two kids had plenty of room, and there was even space left over for my four-year-old daughter's travelling accessories: two baby dolls, two blankets and a fuzzy, wheeled suitcase.

Up front, mom and dad also travelled in comfort, thanks to the ample leg room and seats that provided good lumbar support.

As for cargo capacity, the Focus's trunk can't compete with a minivan or SUV. But put a roof rack on this baby and you're good to go just about anywhere.


Our car came with a $700 "premium" sound system, but when I tuned the satellite radio to my favourite seventies channel, I was disappointed: The bass was muddy and the overall sound lacked clarity.

Compared with the top-of-the-line tune box in the Ford Flex I tested this year, the Focus's sound system fell short. At highway speeds, significant wind and road noise compounded the stereo's shortcomings.

I'm fairly particular about my music, having toiled in several unsuccessful and short-lived rock 'n' roll bands in my parents' basement and elsewhere. Other people may not be bothered by the Focus's stereo and, certainly, there are more important considerations when choosing a vehicle - safety, for example.


One thing that must be said about the Focus is that it packs a lot of features for the money: Four-wheel antilock brakes and electronic stability control are standard on all Focus models.

So is the MyKey system, which allows parents to program specially coded keys to limit the vehicle's top speed to 129 km/h. The system can also limit the stereo volume and activate warning chimes when the vehicle reaches speeds of 72 km/h, 88 km/h and 108 km/h.

Other standard features across the Focus lineup include dual-stage front airbags and side-curtain airbags in both rows, remote keyless entry and power locks. Sync - Ford's voice-activated communications system for Bluetooth-enabled cellphones and media players - is standard on the SES and top-of-the-line SEL models. Two 12-volt power outlets are also standard - a good thing if you're planning a long road trip with kids who carry portable video games and other devices.


The Focus has some tough competition in the Honda Civic, Mazda3 and Hyundai Elantra. But if you're looking for a vehicle that delivers value, reliability, good fuel economy and is fun to drive, the Focus SES is worth considering.

My only regret is that I didn't get to test the five-speed manual. As much as I enjoyed zipping around in the four-speed automatic, driving the SES with a stick would have been even more fun. And, as long as we're talking about value, it's worth noting that the five-speed costs $1,150 less.


Type: Compact sedan

Base Price: $20,399; as tested, $23,699

Engine: 2.0-litre, DOHC, four-cylinder


140 hp/136 lb-ft

Transmission: Four-speed automatic

Drive: Front-wheel-drive

Fuel economy (litres/100 km):

8.4 city/5.8 highway; regular gas


Why is Nov. 11th blooming?
The moment of silence becomes two minutes. A commemorative day becomes a week. As more veterans die and more soldiers' bodies return, Canadians have a growing interest in Remembrance Day


From Wednesday's Globe and Mail Published on Wednesday, Nov. 11, 2009

The annual Remembrance Day is growing like poppies.

The televised bodies being brought home from Afghanistan have made a difference. The military used to bury casualties where they fell.

The 20,000 Second World War veterans who die each year - 400 a week - have brought more focus to the day. In the 1990s, there were 400,000 veterans. In March, the Department of Veterans Affairs said there were 163,450. Now only 155,000 remain. Their average age is 86.

Former governor-general Adrienne Clarkson's powerful eulogy at the dedication of Tomb of the Unknown Soldier in 2000 caught the nation's attention. As did the media coverage of the 50th anniversaries of D-Day and VE-Day in 1995 and, three years before that, of the controversy over the CBC television documentary The Valour and the Horror and its allegations of Canadian military brutality.

It all means that, since the early 1990s, Nov. 11 has blossomed. That represents an extraordinary cultural shift for Canadians, who only a few years ago displayed a marked inclination to ignore their armed forces, or see them solely as peacekeepers.

"There's a real fascination among young people about the war experience and, surprisingly to me, particularly the First World War," said Queen's University military historian Allan English. "I think what it is showing is a real kind of renaissance and interest in part of our history."

For years there was a one-minute commemorative silence at 11 a.m. - marking the 11th hour of the 11th day of the 11th month when the guns fell silent in Europe in 1918 to end the First World War. Now there is a two-minute silence, formalized by a unanimous motion passed last week by members of the House of Commons asking Canadians at home, at work, in school, on the street, to pause to mark those who died for Canada.

The Department of Veterans Affairs has gone beyond a commemorative day for veterans and instituted a commemorative week.

The number of people attending the ceremony at Ottawa's National War Memorial in 1993 was 8,000. In 2003, it was 25,000. CBC's television audience for the ceremony in 1993 was 750,000. In 2003, it was two million. This year, with Prince Charles in attendance, it almost certainly will be greater.

The polling firm Ipsos Reid reported this week that 20 per cent of Canadians surveyed said they would attend a Remembrance Day ceremony today - up from 16 per cent last year.

"I'm astonished to find my 10-year-old granddaughter is singing Remembrance Day songs in school," said military historian Jack Granatstein, former head of the National War Museum.

Last night, the Prime Minister was a featured speaker at a Toronto gala in support of Canadian military families, titled True Patriot Love. Veterans Affairs has created a "How Will You Remember" site and a popular Canada Remembers Facebook fan page. Schools and universities are suddenly redoing faded, weatherworn memorials to students who died in war.

Why the interest in war and not in other parts of our history?

"Part of it is that war fascinates people. It's dramatic. It's violent. It's interesting things, tragic things, heroic things, and people like good stories and that's part of history - telling a good story," Prof. English said.

Senior Royal Canadian Legion official Robert Butt said: "For a while, probably during the 1970s and 1980s, it wasn't de rigueur to commemorate veterans because a lot of people looked at commemorating veterans and their sacrifice as a celebration of war.

"But I think a lot of that has changed. And as our vets grow older and people start to realize that pretty soon ...

"We've only got one First World War vet left. You know, people do grow older and they die every day. But the big change is that they're bringing bodies home. It's there on TV for everybody to see."

The old and the young, the veterans and the serving soldiers, they die every day.

As the coffins are flown out of Afghanistan draped in the Maple Leaf flag, Prof. English said, "it brings home the reality that maybe Canadians hadn't seen or experienced for some time."

It is also giving the Legion a long supply of Silver Cross mothers - when only a few years ago they'd all but run out.

And the two-minute silence? That was actually the original 1918 time of silence, but as interest in remembrance faded, Mr. Butt said, it was shortened to one minute. In 1999, the Legion pushed it back to two minutes.

Ford confirms plant
closing as GM invests


From Tuesday's Globe and Mail Published on Tuesday, Nov. 10, 2009

Ford Motor Co. has made it official, confirming that it will shut its St. Thomas Assembly Plant in Southwestern Ontario in the third quarter of 2011.

A letter making the closing official was distributed to the 1,500 employees yesterday, the same day that General Motors of Canada Ltd. was announcing that its Cami Automotive Inc. operation in Ingersoll, Ont., about 45 minutes east of the Ford plant, is receiving a $90-million upgrade to increase production capacity.

The good news-bad news scenario for the Ontario-based auto industry and two plants contrasts sharply with the recent history of the two companies. That history includes a trip through Chapter 11 bankruptcy protection for General Motors Co. and a surprise third-quarter profit at Ford, which stayed out of bankruptcy protection and did not receive a government bailout.

Nonetheless, "unprecedented economic conditions and market forces have required the company to aggressively restructure our business and to consolidate our capacity in order to position the company for future success," Jim Tetreault, Ford's vice-president of North American manufacturing, said in a letter distributed to employees yesterday. "The vehicles manufactured at the St. Thomas Assembly Plant will no longer be required in our product portfolio and no incremental product could be identified to be manufactured at the facility," Mr. Tetreault said.

Those vehicles are the Ford Crown Victoria, Mercury Grand Marquis and Lincoln Town Car full-sized sedans, pushed off in recent years mainly to fleet customers such taxi companies and police forces.

But the gas guzzlers are pariahs now among governments, which are forcing the fleet owners they regulate and own to purchase more environmentally friendly vehicles.

Canadian Auto Workers president Ken Lewenza said although Ford made it clear during recent contract talks that the plant is closing, "this is very tough news."

Mr. Lewenza praised GM and the federal and provincial governments, however, for the GM investment, which will bring 150 Cami workers back from layoff and lead to increased production of Chevrolet Equinox and GMC Terrain compact crossover utility vehicles.

Retooling one of two body shops at Cami will enable the plant to increase production by about 40,000 vehicles a year.



Demand for GM's
Camaro blistering
Demand for the 2010 Camaro is blistering, with 3-month wait times and soaring sales. But the Canadian Auto Workers union says GM isn’t revving production.

3-month wait times and soaring sales. But
union says GM isn't revving production

Nov 10, 2009 - Tony Van Alphen

General Motors is jacking up output and jobs for workers at the CAMI assembly plant in Ingersoll because of demand for its crossover vehicles, but their union wants the company to also add more production for a hot model in Oshawa.

Chris Buckley, president of Canadian Auto Workers Local 222, said Monday the company should be adding a second shift and another 800 jobs at its Oshawa complex to meet soaring demand for the Chevrolet Camaro muscle sports car.

Buckley said in an interview that customers are waiting an average of three months for the model, which increases the risk of losing business.

"At a time like this, when GM is struggling so much, we should be seizing the moment," he said.

Buckley added that even if a second shift may be only temporary and lead to layoffs again in Oshawa because of a decline in demand, the company should take advantage of any market interest.

Buckley said he has written two letters to GM chief executive officer Fritz Henderson. But a senior GM official replied that the parent company has no plans to boost Camaro production because it expects demand to ease after a hot start.

Stew Low, GM's director of communications, confirmed the current average delivery time for Camaros is about 12 weeks and the company has scheduled Saturday overtime to meet demand.

However, customers have said waiting times in some cases are much longer for the popular car .

GM stopped building the iconic car earlier this decade in Ste.Therese, Que., but began producing it again in Oshawa in January. The company has promoted it heavily with newspaper ads carrying the headline "Lust Conquers All."

About 1,000 workers produce 440 Camaros daily at the Oshawa car complex. The company produces the Chevrolet Impala on another line in the complex.

There is speculation that GM will start building a convertible version of the Camaro late next year. It is planning a Buick model and more jobs for the complex in early 2011.

GM confirmed Monday that it would invest $90 million in CAMI, a joint venture with Suzuki Motor Co. The company is retooling a body shop in the plant that will boost annual production capacity from about 200,000 to 240,000.

Mike Van Boekel, the CAW's plant chairman, said the investment will partially remove a "bottleneck," and speed up output. It will also mean the eventual recall of 150 laid-off workers.

The Star reported in September that GM was considering an investment for the body shop changes but the company said it was premature to discuss the situation.

CAMI started a third shift and added 350 workers in October to meet heavy demand for the Chevrolet Equinox and GMC Terrain crossover vehicles.


GM to spend $100-million on retooling Ontario plant
An auto worker puts a wiring harness in an empty vehicle body during production of the General Motors' Chevrolet Equinox, Pontiac Torrent and the Suzuki XL7 at the CAMI Automotive facility in Ingersoll, Ontario. Dave Chidley/CP

Greg Keenan

Toronto Globe and Mail Nov 9, 2009

General Motors Co. will invest nearly $100-million to increase production capacity at one of its Canadian assembly plants, a move that signals the auto maker's growing confidence in the auto recovery and robust consumer demand for the two vehicles made at the plant.

The upgrade to Cami Automotive Inc. will be announced this morning at the plant in Ingersoll, Ont., sources familiar with GM's plans said.

The investment is designed to increase output of the Chevrolet Equinox and GMC Terrain crossover utility vehicles, which have experienced hot consumer demand and helped GM produce its first monthly U.S. sales gain in 21 months in October.

The move, which comes about four months after GM emerged from Chapter 11 bankruptcy protection with the help of the U.S., Canadian and Ontario governments, reverses a recent trend of slashing capacity at its North American operations.

But although it is a sign that the financial health of the automotive industry and the company is improving, it does not likely herald a wider expansion on GM's part in the domestic auto sector – at least, not right now.

Cami now has the capacity to make about 250,000 vehicles a year.

GM will increase that by retooling one of two body shops in the joint venture plant and making other adjustments. Those include such efforts as utilizing space and equipment that has been sitting idle since the auto maker's partner, Suzuki Motor Co. Ltd., halted production of its XL7 crossover utility vehicle earlier this year.

The retooling, which is expected to cost about $90-million, will take place over the next seven months and lead to the recall of about 150 workers who are on layoff, sources said.

Another 350 workers were recalled last month when GM restored a third shift of production at the plant. When this project is completed, about 2,200 workers will be fully employed and none will be on layoff.

GM is striking now, while the Equinox and Terrain are popular, because vehicles are the most profitable when they are new or redesigned models and profit-sapping incentives are not needed to move them off dealers` lots.

The auto maker closed a full-sized pickup truck plant in Oshawa, Ont., in May and closed one of its car plants in that city earlier this decade. It also closed several U.S. plants as part of a restructuring that left the three governments as the company's largest owners, with 72 per cent of its shares. Ottawa and Ontario own about 12 per cent.

While GM was heading toward bankruptcy protection in May, Cami began cranking out a redesigned version of the Equinox and it is now GM's second highest-selling crossover utility vehicle, behind the larger Chevrolet Traverse.

Sales of Terrain soared 124 per cent last month from September levels and were 80 per cent higher than sales in October, 2008, of the vehicles it replaced, the Pontiac Torrent and GMC Envoy.

An increase in production from the 54,942 vehicles Cami has produced so far this year will also benefit parts makers, including Magna International Inc., which turns out about $1,800 (U.S.) worth of parts for each of those vehicles, including the seats.

The Canadian Auto Workers union, which represents workers at the plant, pressed GM to increase capacity at CAMI instead of assembling Equinox and Terrain at another plant, after signing a deal in September that cut benefits and froze wages and pensions. In return, GM agreed to make the replacement products for the two crossovers at Cami after 2014.

The plant, which started as a GM-Suzuki joint venture in 1989, has never reached full capacity, peaking at 196,598 in 2006.

A source at one supplier noted yesterday that it has been a “boom and bust” operation for 20 years.

“We don't have a whole lot of faith in their ability to sustain these high volumes past next August,” the source said.


Olive: Can Chrysler be fixed?

Fiat's Marchionne is taking a 'weird' approach to putting the brakes on automaker's demise

Toronto Star Nov 8, 2009

Sergio Marchionne and his executives set the appropriate tone this week at their marathon, six-hour-long unveiling of Chrysler's rescue strategy. The strategy is bizarre, and so was the meeting.

In his impassioned windup to the more than 300 industry analysts, dealers, government officials and auto journalists gathered at Chrysler's headquarters in suburban Detroit, Marchionne quoted Bill Clinton, Machiavelli and Bobby McFerrin.


Marchionne, who spent most of his career in Toronto before a short stint with an Italian firm brought him to the attention of a then-crippled Fiat, had allowed earlier in the day that he bought a Fiat in 1968 in Toronto and was not impressed.

"If you had told me then I would be running Fiat, I would have laughed my head off."

Chrysler's salvation, should it come about, is entirely tied to its "Fiat-ization." To the adoption of Fiat styling, engine and drivetrain technology, and supposedly state-of-the-art manufacturing methods.

Decades after Fiat was driven out of a North American market where it had failed dismally, the stigma of "Fix it again, Tony" still falls readily from the lips of auto enthusiasts when the word Fiat is mentioned. Why remind us?


Fiat's Canadian boss bragged that Chrysler's upscale Town and Country minivan, assembled in Windsor, is moving through Canadian showrooms like "chickenpox through a kindergarten class." Veteran auto analyst Nick Bunkley, who was live-Twittering the event, tweeted: "I can't make this crap up."

Marchionne has had precious little to say about his plan to restore Chrysler to viability since it exited bankruptcy in June. He did give one interview in which he complained that Chrysler was in much worse shape that he had imagined. A real confidence builder, that. Marchionne was at it again on Wednesday, boosting morale with his observation that Chrysler's in trouble "but it's not terminal"

This desultory tone was consistent with Marchionne's regard for Chrysler since Day One last spring. He insisted then that he would not take the reins at Chrysler, until Washington told him that was not on. He held out for a gratis 35 per cent stake in Chrysler until Barack Obama told him that was too greedy. (Marchionne had to settle for 20 per cent.)

He made war on Chrysler dealers by loading them up with inventory and then shutting them down. He fired the heads of the Dodge and Chrysler brands, posts to which he had just promoted them, when they broke Marchionne's directive not to talk to the auto press at the Frankfurt auto show. Omniscience and pettiness aren't an ideal mix in a turnaround CEO, whose troops already balk at keeping Marchionne's work hours. (The boss gets by on four hours' sleep.)

Despite four months to prepare, Wednesday's crucial tone-setting presentation fell flat. Not only from the gaffes, but the shoot-the-moon goals Marchionne proclaimed, described by one of the analysts at the Detroit event as "boldly delusional."

As one executive after another talked of doubling sales of a brand or boosting market share by unrealistic amounts, there were collective gasps in the audience. What are these guys smoking?

Still, it was a friendly audience. The auto press would love a Chrysler comeback story. There had to be a less petty way for Marchionne to deal with unstated skepticism than to say it is a "worldwide sport of beating people who are down."

The truth about Chrysler is that it's not down, but out. In a glut of global capacity, what the industry needs is for this chronically mismanaged firm to go away. Instead, Washington, Ottawa and Queen's Park have extended a total of about $14 billion in emergency loans to a company that hit the wall in the early 1970s, again a decade later, and survives now only on government life support – the latter an expression of goodwill that Marchionne might someday show some appreciation for.

Fiat has none of its own money on the line in this latest gambit to make Chrysler sustainably viable. It got its 20 per cent equity stake in the firm in exchange for taking on the task of fixing it. Marchionne has vowed not to commit a single euro of Fiat's own money to reviving Chrysler. Fair enough, since Fiat itself is bleeding cash back home in Europe.

In a nutshell, Marchionne proposes to spend $23 billion (U.S.) to develop 21 new bestselling vehicles that will roughly double Chrysler's North American market share in the short space of three or four model years. To make Chrysler profitable in just two or three years – something that earlier Chrysler owner Daimler AG could not do in nine years – and to pay off its $14 billion in government emergency loans by 2014.

Chrysler's sales volume has cratered by 50 per cent over the past two years. Its year-over-year market share has plummeted to 7.9 per cent in October from 11.3 per cent.

Where is the $23 billion (U.S.) going to come from, if not from Fiat? From a miraculous upturn in sales of Chrysler's current, unpopular product line, which will get a slapdash sprucing-up (inexpensive improvements to interiors, exterior trim and so on).

"It's cosmetics," shrugged Rebecca Lindland, of IHS Global Insight, telling the Detroit Free Press she cannot imagine that showroom dust-collectors like the Chrysler Sebring and Dodge Avenger are suddenly going to move like H1N1 through a crowded subway car.

Those 21 new Fiat-based models won't start arriving at Chrysler dealers for at least two years – the time needed to retool Chrysler plants, and for Chrysler hands to learn Fiat's manufacturing methods. That's too late. A resurgent Ford Motor Co. will have replaced its entire lineup by then. Also, its other rivals won't be watching grass grow under their feet.

The real problem is the Fiat-ization of Chrysler. Americans have never taken to Fiat styling. Fiat is the unlikeliest candidate to erase Chrysler's abysmal reputation for poor quality. Fiat itself ranks in the bottom quarter of more than 20 brands in J.D. Power's latest customer satisfaction survey in the company's core European market.

The word crapshoot comes to mind to describe what Marchionne is embarked on, that's how pie-in-the-sky it is. Except in that game, you play with your own money.


Jobless rate hits 8.6% as
modest gains evaporate

Forecasters expect the rate will breach 10% in 2010
after 43,200 jobs were lost in October, all part time

Nov 7, 2009

October's job numbers are bleak, a deflating reminder that economic recovery is a slow beast, indeed, and that jobs cut in a slowdown take some time to come back, if at all.

After two months of moderate job growth, employment across the country fell by 43,200 jobs last month, all of them part time, Statistics Canada said Friday.

The drop-off pushes Canada's unemployment rate up 0.2 per cent to 8.6 per cent, which many, including the Organisation for Economic Co-operation and Development, predict will continue to climb, reaching around 10 per cent in 2010.

This erases the positive growth in September of about 30,000 jobs and demonstrates that employers are still hesitant to take on new hires or replace fired staff as this epic downturn begins to unwind.

"(This) undoes much of the surprisingly strong reported improvement in September," Erin Weir, an economist with the United Steelworkers, wrote in a note.

Most of the job losses came from Alberta (14,900), British Columbia (12,900) and Ontario (12,000).

Down south, the news was even more grim, with the United States' unemployment rate breaching the double digits to land at 10.2 per cent, the highest since April 1983.

In Canada, most of the month's disappointing declines came from retail, wholesale and natural resources.

The data, contained in Statistics Canada's Labour Force Survey, showed women aged 25 and older and youths between 15 and 24 accounted for all job losses in October.

"October was a reality check for a Canadian labour market that had been seeing a lot of hiring without much to show for it in terms of production," Avery Shenfeld, CIBC World Markets' chief economist, wrote in a research note.

"October's report hinted that the earlier run-up may have, in part, been statistical noise ... Put the last three months together, and the trend shows very small net hiring on average, a result that is much more consistent with the limited growth we've thus far seen in economic output."

The Canadian Auto Workers said October's job losses highlighted the need for more government stimulus and that service-sector job losses are inevitable when core, unionized sectors are hit.

Ken Lewenza, CAW president, said workers who are still employed face a difficult future.

"The challenge now is that workers in these largely non-unionized industries do not have the same transitional supports and services provided to unionized employees, which creates an even heavier burden for them during bad economic times," Lewenza said.

The job losses would have been even worse, but the 43,200 was offset by a gain of 27,500 in the nebulous "self-employed" category, which many economists discount because it could be involuntary and unproductive.

"We are always skeptical about the self-employed category, but most so during times of recession," writes Stewart Hall, an economist with HSBC Securities (Canada).

"It is fair to ask just what the 27.5 thousand newly self-employed are doing with their time and what kind of contribution they are making to GDP at this point in the economic cycle."

Since employment in Canada peaked in October 2008, the economy has shed around 400,000 jobs.

But the latest numbers, Weir writes, show the first full year of employment data since the economic crash took hold.

And the conclusions are not positive.

"A sectoral breakdown implies a disproportionately large loss of relatively good jobs," Weir writes. "More than half of the employment decline, 218,000, was in manufacturing.

"Construction and other goods-producing industries eliminated a further 112,000 jobs.

"The entire service sector shrank by 70,000."

It wasn't all bad news, though, with full-time employment, including self-employment, increasing by 16,500 jobs.

Also on the plus side, construction jobs were up, as were transportation and warehousing.

The manufacturing sector continued to fare poorly.

"The ongoing pressures to Canadian manufacturing remain evident as inventories continue to be drawn down and firms remain hesitant about boosting production," TD Bank economist Grant Bishop wrote in a note.


Inflatable seatbelts
coming to Ford Explorers

Ford says the new inflatable seat belts distribute the force of a crash over five times the area of a standard seat belt. (John T. Greilick / The Detroit News)

Bryce G. Hoffman / The Detroit News - Nov 6, 2009

Dearborn --For Srini Sundararajan, the new inflatable seat belt system that Ford Motor Co. debuted Thursday represents the culmination of a decade of work and the realization of his dream to make automobile transportation safer.

The 47-year-old biomedical engineer has spent nearly half of his 21-year career at Ford working on the first-ever system, which will debut on the new Ford Explorer next year and promises to provide unprecedented protection for back seat passengers -- particularly for children and the elderly.

"It's exciting. It's thrilling," he said Thursday. "We are finally done!"

Ford's new system incorporates small air bags inside the rear seat belts. These are deployed during a crash, spreading the force of impact over five times more area of the body than conventional seat belts, thereby greatly reducing pressure on the chest and helping to control head and neck motion.

Dr. Stewart Wang, a leading trauma surgeon at the University of Michigan and an expert on automobile crash injuries, said Ford's new seat belt air bag could be a real life saver -- especially for children and the elderly who are most vulnerable and most often sit in the rear passenger seats.

"It's hard to know for sure ahead of time, but this air bag has tremendous benefit by increasing the surface area (of the seat belt), and that allows them to restrain the torso better on a frail body," he said. "I think that the potential benefits are quite substantial."

Ford said the optional safety device, the first ever offered by an automaker, will ultimately be available on all of its cars and trucks worldwide for a "modest" additional cost.

The company unveiled its first prototype of the new safety system at the Detroit auto show in 2001. Since then, Sundararajan has led the team working to take the seat belt air bag from the show stand to the showroom. He says it has been an arduous journey.

The original plan was to put the system in the trunk of the vehicle, but Sundararajan said it rattled. He and his team then moved to other configurations before fixing on a location beneath the rear seats.

That worked, but the system was too expensive.

"We wanted to make it affordable for everybody," Sundararajan said. "That was a real challenge."

Ford wants to make this a mainstream offering.

That is why it is breaking with its recent practice of introducing new cutting-edge technologies in its Lincoln brand and only making them available on Ford products a year or two later.

"This is really about improving family safety, and we really think the Explorer fits that," said Sue Cischke, Ford group vice president in charge of sustainability, environmental and safety engineering.

Analyst Erich Merkle of Autoconomy.com said the seat belt air bag will resonate with parents, adding that it builds on other safety innovations the automaker has introduced in recent years that have helped the Dearborn automaker claim more five-star safety ratings from the federal government than any other manufacturer.

"Safety certainly gives you a competitive advantage," he said. "It's one more thing Ford is doing right."


Stay Home if You Have Swine Flu, Unless You Work at Wal-Mart

By Mary Kane 11/5/09 Washington Independent

During the summer, when swine flu was not yet a widespread reality in the United States, giant retailer Wal-Mart made the news for being in talks with the government about possibly distributing the swine flu vaccine through its extensive network of stores.

But now the swine flu has Wal-Mart under scrutiny for a very different reason: Accusations that the retailer is leaving employees infected with swine flu little choice but to come to work, due to its punitive sick leave policies.

Citing a report by the National Labor Committee, the Institute for Southern Studies’ argues on its blog Facing South that Wal-Mart is essentially contributing to the spread of swine flu by making it financially prohibitive for employees to miss work when they fall ill.

Employees of the Arkansas-based retail giant — even its food handlers — feel they have no choice but to work when they’re sick. That’s because the company gives workers demerits and deducts pay for staying home when they’re sick or caring for sick children.

It gets worse:

The situation is particularly difficult for Wal-Mart workers who are single parents. The NLC reports on an instance in which an employee got a call from her four-year-old’s preschool telling her to pick up the child, who had a fever of 103 degrees F. Despite the fact that the employee had already worked for four hours that day, she got a demerit point for leaving and lost her wages for the rest of the day.

The report says: “Parents have no choice but to load their children up with Motrin and Dimetap to mask their symptoms so they can go to school.”

Which, of course, leads to a vicious circle of other children at school becoming sick, and spreading it in their families. Not to mention the misery of a sick child facing a full day of school.

What’s particularly interesting is that Wal-Mart includes on its Website some information about swine flu, including frequently asked questions. Here’s the answer to “What should I do if I get sick?”

Stay away from others as much as possible to keep from making others sick. Staying at home means that you should not leave your home except to seek medical care. This means avoiding normal activities, including work, school, travel, shopping, social events and public gatherings.

Unless you work at Wal-Mart. Then, you’d better make it in for your shift if you don’t want your pay docked or possibly lose your job. From Facing South:

Wal-Mart has a demerit system that punishes workers who cannot come to work due to illness. Employees who miss a day due to sickness receive a one-point demerit and lose eight hours of wages.

Employees with more than three absences a six-month period face discipline, and a fifth absence — even for a sick day — will result in what the company calls “active coaching” by management.

A sixth absence leads to what Wal-Mart calls “Decision Day,” when a worker can be either terminated or put on a year-long trial period during which time he or she can be fired for any infraction and cannot be promoted.

The swine flu sometimes can cause people to miss an entire week or more of work. At Wal-Mart, that could get you fired.

Somehow, I don’t think that’s what the Center for Disease Control was hoping for this flu season, as it tries to contain a life-threatening virus. Wal-Mart’s labor policies have long been contentious, but this one could actually create a public safety issue. If these allegations are true, it may be time for public health officials to step in somehow, perhaps with fines for the retailer for keeping flu-stricken employees on the job. And let’s not just pick on Wal-Mart; it’s very possible that other low-wage retailers and business are doing the same thing. Maybe the best option in the absence of any government action is for customers to walk away. Is a bargain really worth it if employees are forced to work while sick with the flu — and potentially help to spread an unusually dangerous virus?


Ford Workers Should Be Applauded, Not Ridiculed

by Norm Kujawa | Mon, 11/04/2009

Editor’s note: Ford workers rejected a proposed concessions package last week that included a six-year wage freeze for new hires (who make half of current workers’ pay), combining of skilled trades, and giving up the right to strike for contract improvements. Ford had made some weak assurances of continued work and offered a $1,000 bonus.

The United Auto Workers announced the vote as 70 percent 'no' among production workers and 75 percent 'no' in skilled trades. UAW President Ron Gettelfinger’s home local in Louisville, Kentucky, voted no by 84 percent. The Dearborn Truck unit, whose president broke with International officials to urge a ‘no’ vote, rejected by 92.5 percent.

The pre-vote period was characterized by rank-and-filers producing leaflets that they distributed in the plants, and at least one raucous meeting in which UAW VP Bob King was shouted down.

UAW officials said they would not bring the concessions package back for a re-vote but would wait until the contract expires in fall 2011 to negotiate again.

To read how the Detroit newspapers tell it, you would think that union members dealt a death blow to Ford Motor Company when UAW-Ford workers voted overwhelmingly against another round of concessions to their 2007 contract. Rather than place blame for a corporate failure that may not occur, news media should applaud union members for doing something they have not done in over 30 years – vote against the wishes of their top union leaders.

While published reports have said that Ford will have a large, business-threatening debt load in 2011, workers in 2009, eight months after giving concessions at their leadership’s request, do not see the urgency to give more to Ford, especially since Ford reported financial gains in the second quarter, and—right after the vote—announced a $1 billion profit for the third quarter.

Concessions were double-edged idea

The drive to ask the membership for concessions was likely a double-edged idea from Ford management and UAW leaders, long known for their labor-management harmony. Management, seeking to reduce the predicted debt load and reach competitive equality with General Motors and Chrysler, whose workers were forced to give concessions due to the GM and Chrysler bankruptcy filings, thought workers would be understanding of their needs and voluntarily give up more from their contract, even while seeing increased sales and profits since voting to help the company with previous concessions.

The UAW sought to maintain pattern bargaining, a staple of the union since Walter Reuther’s days as president. Pattern bargaining, done by the UAW for over 60 years, was always a tool to bring the workers in the weakest bargaining position to equality with workers in the strongest bargaining position. This is the first time that pattern bargaining has been attempted to bring the strongest company down to achieve the pattern with the poorer companies.

With the GM and Chrysler concessions last May, Ford workers stood ahead of their brethren in many areas, including entry worker pay, job classifications, and work rules. Instead of waiting out the contract, the UAW chose to bring the Ford workers in line with GM and Chrysler workers now, at a time when Ford has been selling the government, the media, the public, and Wall Street on the idea that their business plan, management team, and labor relations are the best of the three U.S. auto companies.

No clear explanation

Ford workers said throughout the process that they had given back enough and did not see the necessity in giving the company more from their contract while increased sales and profits were being announced. They certainly do not feel that they have to endure the same pain that GM and Chrysler workers were forced to endure by the U.S. government. Yet the International UAW kept insisting that the concessions were necessary, without clearly explaining the financial situation that Ford may find themselves in in two years.

Attempts were made by Ford management to tell workers how bad the business situation might be in two years. Executives were sent to plants around the country to give slide show presentations and give gloom-and-doom speeches. After the tentative agreement was reached, UAW-Ford negotiators traversed the same path across the country to explain the concessionary agreement to a confused membership. The necessity to give concessions to a company announcing profits certainly confused many union members, and is something that UAW members have not seen before.

Several employees, not wanting to risk the future of their plant, voted for the concessions. Several plants were promised product if the agreement passed, while others would be considered for product. Giving up the right to strike and freezing wages for new hires for six years, not just the remainder of the current contract, was not a concern to those that voted for the agreement.

Workers change course

Unconvinced of Ford’s impending 2011 failure and tired of being asked to foot the bill for management’s business failures, UAW members at Ford chose not to stand by but to be an active participant in the labor relations process. Management, with the UAW’s buy-in, was able to present a good business case for concessions just a few months previously. They have not done so in this instance.

In the past, workers went for the money. This time, despite a $1000 bonus offered if the agreement passed, workers declined the money and instead stood up for what they believed was right. The years of being told they had to sacrifice again and again had finally taken a toll.

Some reporters and bloggers have said that UAW members cannot see the big picture, and undoubtedly Ford management and UAW leadership feel the same way, but asking for concessions while telling the world of your profitability simply isn’t smart.

Shop floor a forgotten place

While UAW members get ridiculed for making too much money, having too good a benefit package, and apparently not understanding big business, the know-it-all commentators and those negotiating concession packages have either forgotten, or know nothing about, the shop floor and working conditions auto workers perform under.

Today’s auto factories are nothing like the factories of decades ago, but the culture and environment inside the auto factories is still highly stressful. The much-talked-about relationship between Ford management and the UAW has not rolled down to the shop floor. In the real Ford plant world, employees have to deal with supervisors that care more about the numbers of product being produced than how it is being done, and management that seemingly cares more about climbing the next rung on the corporate ladder than managing effectively.

These realities, coupled with a selection process that discourages the best candidates from getting involved in union leadership, has led to a chaotic environment that places workers in a survival mode where every day brings new challenges, new drama, non-stop politics, and few escapes from the pressure that workers constantly find themselves under. Fixing the way business is conducted inside plant locations would go a long way toward fixing the mindset of the workforce where harmonious labor relations, spoken so highly of at the corporate level, are just a fantasy.

Workers have been beaten down by the media, the general public, and their own union and company leadership for so long, it should not have been a surprise to anyone that the concessions agreement was voted down. Those that were surprised simply are out of touch with the reality of worklife inside an auto plant. Perhaps this is the beginning of a new workers revolution, one that will gain the respect of those that negotiate on their behalf and redefine the direction of the UAW.

[Norm Kujawa was editor of the UAW Local 3000 Guide for 17 years. Local 3000 represents workers at AutoAlliance, the Mazda-Ford joint venture in Flat Rock, Michigan.]


Onward from assembly

Globe and Mail Published on Thursday, Nov. 05, 2009

The Canadian Auto Workers have acted effectively and prudently in obtaining from Ford Motor Co., by negotiation, a favourable ratio of vehicle production in Canada to sales in Canada. But in the longer term, the interests of Canada lie in an automotive industry that is more specialized, more advanced and more environmentally sustainable.

Starting in 1965, the Canada-United States Automotive Products Agreement, popularly known as the Auto Pact, stipulated for a ratio of not less than 133 per cent between Canadian vehicle production by U.S.-owned manufacturers and sales of such vehicles in Canada. The Auto Pact helped lead to the Canada-U.S. free trade agreement and thence on to NAFTA - broader treaties that eventually superseded the Auto Pact.

The CAW made a neo-Auto Pact with Ford last week, in a year when the productions-to-sales ratio may fall below 100 per cent. In return, the union made concessions on wages, benefits and other matters, and acquiesced in the closing of an assembly plant at St. Thomas, Ont. It was more sensible than the United Auto Workers in the U.S., who self-defeatingly voted this week against concessions, in effect benefiting Mexican auto workers.

This low production-to-sales level is probably an extreme, at a short-term nadir in North American demand for cars. But the ratio is unlikely to return to its height of 1995, when it rose to 207 per cent. One major reason is an inevitable shift of production to the lower-wage economy of Mexico, as well as to the southern United States.

Between the signing of the Auto Pact in 1965 and the 1995 peak, the overall trend of this ratio was upward, but there were ups and downs, often just as steep as the recent decline. These fluctuations mostly reflected the larger business cycle.

In particular, after the recession of the early 1990s, the Canadian auto-parts industry remade itself and became much more competitive. Canada should concentrate on its continuing strength in making parts. Assembling cars in St. Thomas or elsewhere is not essential to the Canadian economy. The Canadian industry should also take advantage of its role in Ford's plans for redesigned and new models in Oakville, Ont., to develop excellence in design.

It is even more important for the Canadian auto industry to lead in the coming green economy. Canada is in danger of being left behind; that will be all the more damaging if there is a green automobile renaissance in the United States.


St. Thomas plant closure
may doom 10,000 jobs
The St. Thomas assembly plant is seen in this file image.

Nov 4, 2009 Canadian Press

The closure of Ford's assembly plant in St. Thomas, Ont., will not only affect the 1,400 workers currently employed at the facility, but also thousands more in the auto parts and transport industries.

Auto industry analyst Bill Pochiluk says approximately 2,500 jobs will be lost among auto parts suppliers in both Canada and the United States as a result of the closing.

And Canadian Auto Workers economist Jim Stanford says as many as 10,000 jobs in total could be lost due to the spinoff effects on the community of St. Thomas and surrounding areas.

The plant's closure will also cost the St. Thomas area more than $3 million in tax revenue.

The St. Thomas region of southwestern Ontario has been hit hard by the distress in the Canadian manufacturing sector and the auto industry in particular.

Stanford says it's probably the second-hardest hit community in Canada after Windsor, Ont.



Led by double-digit increases of Ford Fusion
and Taurus
October Highlights:

  • Overall vehicles sales were up 20% compared to last October
  • Car sales increased 8% compared to same period last year
  • Ford Taurus sales rose 57%
  • Ford Fusion sales were up 65%
  • Ford Mustang sales increased 8%
  • Ford Flex sales rose 38%, best October on record
  • Ford Edge sales were up 38%, best October on record
  • Ford Escape sales increased 19%, best October on record
  • Ford F-Series sales were up 59%
  • Ford Explorer sales increased 21%
  • Ford Expedition sales were up 46%
  • Lincoln MKX sales rose 90%
  • Overall Lincoln sales jump 22%

OAKVILLE, Ontario, November 3, 2009 – Ford Motor Company of Canada, Limited saw sales increase 20.1 per cent compared to the same period last year marking the company's fifth consecutive month of year-over-year sales gains. Strong sales were led by the award-winning Ford Taurus, which was recently named "Best New Family Car" in the over $30,000 category by the Automobile Journalists Association of Canada (AJAC).

Also, Ford Fusion and Ford Taurus delivered strong performances with sales increases of 64.5 per cent and 57.1 per cent respectively.

October also marked the twelfth consecutive month of market share growth, with cars and trucks from both Ford and Lincoln showing sales increases.

"We are making steady progress and remain fully focused on our plan to build a strong and sustainable Ford," said David Mondragon, president and CEO, Ford of Canada. "Consumers are seeing the signs of recovery and are gaining confidence in the quality, fuel efficiency, safety and smart technology incorporated in our new product lineup. In fact, 90 per cent of our sales come from our new models."

In addition to the 8.4 per cent increase in car sales, total truck sales were up 23.6 per cent compared to last October. The results were driven by products like the Ford Taurus, Fusion, Escape and F-Series along with the Canadian-built Ford Flex, Ford Edge and Lincoln MKX.

Due to its overwhelming success, Ford is extending its 'Recycle Your Ride' program through until January 4, 2010. With this program, consumers turning in 15-year-old (or older) vehicles for recycling will get up to $3,000 toward the purchase of a new vehicle. Ford's scrappage program builds on the Canadian government's 'Retire Your Ride' initiative which offers $300 and other benefits to eligible participants. So far, Ford of Canada has been able to scrap 1,419 clunkers under the program -- more than any other automaker.

"The Recycle Your Ride program is helping Canadians afford new vehicle ownership and is great for the environment because these older, high-polluting vehicles are taken off the road," said Mondragon. "The key to the success of Ford's program is reaching out to dealers and consumers directly so that getting a refund from the program is fast and easy."

Ford Motor Company of Canada, Limited
October 2009 Vehicle Sales




% Change

Total Vehicles








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January - October








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January – October





U.S. slump batters auto
making in Canada
Manufacturers on track to produce fewer vehicles in Canada than they sell for the first time since 1964

Greg Keenan

Globe and Mail Tuesday, Nov. 03, 2009

For the first time since 1964, auto makers are on pace to produce fewer vehicles in Canada than they sell here – a development that has alarmed the Canadian Auto Workers union and underscores how badly the severe slump in the U.S. market has hammered Canada's largest manufacturing industry.

As a result, tucked into the new labour contract between the CAW and Ford Motor Co. of Canada Ltd. lies a mini auto pact, a Ford-specific clause that replicates a key feature of the 1965 agreement between Canada and the United States that guided Canadian automotive policy for more than three decades until the World Trade Organization shot it down in 1999.

In return for agreeing to cuts in benefits as well as other concessions, the CAW wrung a commitment from Ford that it will manufacture more vehicles in Canada than it sells here.

That commitment comes amid a 38-per-cent fall in production by auto makers in Canada for the first nine months of 2009, compared with last year.

The production decline is yet another demonstration of the long arm of the Great Recession and has been accompanied by massive layoffs that have rippled through parts suppliers and cascaded throughout Ontario, Canada's only auto-producing province.

“I'm incredibly worried about it,” CAW president Ken Lewenza said on Monday.

When the union urged the federal government in 1999 to fight the WTO ruling that ended the auto pact, the Liberal government of the time said there was no reason to worry because Ford, Chrysler Canada Ltd., and General Motors of Canada Ltd. were exceeding requirements that they make one vehicle in Canada for every one sold here, Mr. Lewenza recalled.

“We said: ‘We're not worried about today, we're worried about long term.' Sooner or later, if you don't have the investment, the reality is that you don't have the product and then you don't have the commitment of the Auto Pact.”

As part of the Ford deal, he said, the CAW tried but failed to get the company to agree to a penalty if it didn't meet the production-to-sales commitment.

Such an enforcement mechanism would also have replicated another clause in the auto pact, which the federal government used for several decades to lever investment out of the Detroit Three.

The plunge in production to less than the level of sales in Canada this year is likely temporary because of the collapse of the U.S. market, the destination for about 85 per cent of the vehicles manufactured here, noted industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. But the long-term decline is a worry, he said.

“What should be of concern is the fact that we have been deteriorating in this variable for a long time,” Mr. DesRosiers said.

The production-to-sales ratio, which compares the number of vehicles built to the number sold in Canada, peaked in 1995 at 207 per cent, meaning auto makers assembled more than two vehicles in Canada for every one that was sold. The ratio fell last year to 124 per cent although it has averaged 151 per cent this decade, compared with 179 per cent in the 1990s.

Mr. DesRosiers forecast that it will slide to 140 per cent between 2010 and 2019, while production in Mexico soars, pushing that country's ratio to 230 per cent over the same period.

As of the end of September, auto makers produced 1.013 million vehicles in Canada and sold 1.125 million.

While the CAW gained some protection from Ford with the agreement members approved on the weekend, another element of the same deal will reduce production further.

Ford will close its St. Thomas Assembly Plant near London, Ont., in 2011, cutting its vehicle manufacturing operations to a single plant.

Mexico, on the other hand, is likely benefit from another development in the Ford world – the rejection by the United Auto Workers of a contract that matched concessions that union gave Chrysler and GM earlier this year.

Higher costs at U.S. plants will drive more vehicle production to lower-cost Mexico, analysts said.

Mr. DesRosiers pointed out, however, that there is some good news for Canada in another measure of vehicle output.

Canada's share of North American vehicle production has held its own at about 17 per cent, which is the second-highest figure on record. U.S. production has fallen more than Canadian production, driven in part by shutdowns of more than a month at almost all Chrysler and GM plants while they were in Chapter 11 bankruptcy protection.

“So it's North America that's screwed up and within a screwed-up market, we're holding our share. … We're not growing, but we're not declining yet.”


Gettelfinger says failed Ford pact worth modest price

David Barkholz
Automotive News | November 2, 2009 - 4:29 pm EST

GettelfingerDETROIT -- UAW President Ron Gettelfinger (pictured) said today that the Ford-UAW contract modifications rejected overwhelmingly by Ford's 41,000 hourly U.S. workers would have saved the automaker just $30 million.

In a phone interview today, Gettelfinger said he pushed the modest concessions to lock in future product commitments at Ford plants and to bring the Ford agreement with the UAW into pattern with union agreements with General Motors Co. and Chrysler Group.

Gettelfinger said a little-publicized provision of the modifications would have allowed the UAW to call a strike at Ford if the company failed to meet its product commitments. The UAW had no such provision to strike over product commitments in its GM and Chrysler contracts, he said.

A key reason that rank-and-file voters opposed the new concessions was wording that required binding arbitration over any bargaining impasses in the 2011 contract talks.

Gettelfinger said the UAW agreed to binding arbitration to bring the Ford contract into pattern with no-strike clauses negotiated this year with GM and Chrysler.

“In good times, you establish a pattern, and in bad times, you stay with the pattern,” Gettelfinger said.

He said he saw no long-term damage resulting from the contract rejection either to Ford or the UAW.

The UAW announced today that 70 percent of voting Ford production workers rejected the contract, while skilled trades workers turned it down by 75 percent.

Gettelfinger said that after paying each of the 41,000 hourly workers a $1,000 bonus called for in the modifications, or $41 million, the contract would have saved Ford just $30 million.

Ford spokeswoman Marcey Evans declined to comment, except to note that the rejected modifications were more about operating improvements than saving Ford money. In addition to binding arbitration, the modifications called for combining some skilled trades and a freeze on wages for entry-level workers.

Gettelfinger said the Ford product commitments, which meant job security for union workers, were airtight and approved by Ford's board of directors.

If Ford had failed to live up to those commitments, the union had an immediate right to strike over that issue, Gettelfinger said.

The contract language also had a caveat that product commitments were subject to market demands, he acknowledged.

But “market demand” is often debatable, providing the union with the ability to strike in a close call. “It had real teeth,” Gettelfinger said.

Gettelfinger credited Ford in the negotiations with sticking to a pledge not to ask for additional concessions on retiree health care.

On Jan. 1, Ford must make a $1.9 billion payment into a UAW-administered voluntary employees' beneficiary association, with at least $1.3 billion of the amount in cash and the rest in Ford stock. In contrast, GM negotiated a much bigger reduction in the amount it must pay in cash Jan. 1 -- to $585 million.

All told, Ford must pay $6.5 billion of a $13.2 billion obligation to the VEBA in cash, while GM's cash payment is just $2.5 billion for an obligation that was $20 billion before new concessions were negotiated just before the automaker's bankruptcy filing June 1.

Said Gettelfinger: “Ford kept its word.”


UAW rejects new concessions
to Ford, no new talks

* UAW membership rejects concessionary deal with Ford
* Says Ford's Q3 results reflect workers' past concessions
* Says will not return to bargaining table

DETROIT, Nov 2 (Reuters) - The United Auto Workers union overwhelmingly rejected a proposed cost-cutting deal with Ford Motor Co on Monday, delivering a setback for the automaker as it seeks to bring its labor costs in line with U.S. rivals.

The UAW said that 70 percent of production workers and 75 percent of skilled trades workers voted to reject a proposed agreement the union leadership and Ford negotiated in October to change the 2007 contract.

The deal would have brought the automaker's labor costs in line with General Motors Co [GM.UL] and Chrysler Group LLC, both of which won additional concessions as part of their government-financed bankruptcies.

UAW President Ron Gettelfinger said in a statement the union's past concessions have positioned Ford to be a strong competitor in a tough market and its surprise quarterly net profit announced early on Monday provided further evidence of the contributions the workers have made.

"While we will not be returning to the bargaining table, our ... membership will continue to work with Ford on a daily basis in an effort to keep new products coming into our plants," Gettelfinger said.

The UAW represents about 41,000 U.S. factory workers at Ford.



Note: The following statement is attributable to Joe Hinrichs, group vice president, Global Manufacturing and Labor Affairs, Ford Motor Company.

Dearborn, Mich., Nov. 2 – We appreciate the UAW leadership for working with us to reach a tentative agreement on further modifications to our national labor agreement. Ford is disappointed that the additional changes were not ratified.

In March, the UAW-Ford membership ratified changes to the 2007 UAW-Ford national labor agreement and the Voluntary Employee Beneficiary Association health care trust that went most of the way in moving Ford to competitive parity with foreign-owned automakers. The additional modifications we sought recently were designed to honor pattern bargaining and provide Ford with similar additional efficiencies as those ratified this year for our domestic competitors. 

All of us at Ford are absolutely committed to continuing to make progress on our transformation plan, and we will take the necessary steps to be competitive with the best in the business. 

Moving forward, we will work with the UAW to discuss the next steps to ensure Ford remains competitive so we can continue to make product commitments and invest in our manufacturing facilities here in the United States.


Ford rebounds to $1-billion profit

Tom Krisher and Dee-Ann Durbin

Dearborn, Mich. — The Associated Press Published on Monday, Nov. 02, 2009 7:23AM EST Last updated on Monday, Nov. 02, 2009 7:52AM EST

Ford Motor Co. (F-N7.00-0.30-4.11%) earned $1-billion (U.S.) in the third quarter, fuelled by U.S. market share gains, cost cuts and the government's Cash for Clunkers rebates.

The Dearborn, Mich.-based auto maker on Monday reported net income of $997-million, or 29 cents per share. Ford says it now expects to be “solidly profitable” in 2011. Previously the auto maker said it would be break-even or better.

Shares of Ford, the only Detroit auto maker to dodge government aid and bankruptcy protection, rose 50 cents, or 7.1 per cent, to $7.50 in pre-market trading.

The latest results signal that Ford's turnaround is on more solid ground. The company lost more than $14.6-billion in 2008 and hasn't posted a full-year profit since 2005. While it made a profit in the second quarter, that was mainly due to debt reductions that cut its interest payments.

Its North American car and truck division – a key business – posted a pretax profit of $357-million, its first quarter in the black since early 2005. Ford cited higher pricing, lower material costs and increased market share for the improvement.

The earnings came despite an $800-million revenue drop. But Ford said it cut costs by $1-billion during the quarter.

Ford still faces obstacles in its turnaround. Last week, workers overwhelmingly rejected an agreement with the United Auto Workers that would have brought Ford's labour costs in line with rivals General Motors Corp. and Chrysler LLC. Workers objected to clauses limiting their right to strike and freezing entry-level wages, and felt the company was healthy enough and didn't need further concessions.

Ford also has $26.9-billion in debt, up $800-million from the second quarter.

Ford didn't quantify the impact of Cash for Clunkers, which offered buyers payments to trade in their vehicles. The program helped Ford cut costly incentives and raise production. It also won buyers; the Ford Focus and Ford Escape were among the top five sellers in the program. Ford sales were up 17 per cent in August thanks to the program.

Ford also has benefited from consumer goodwill after it declined government bailout money and didn't go into bankruptcy over the summer as GM and Chrysler did. Ford grabbed sales from its rivals, posting the largest increase in market share of any auto maker in September. Ford expects an overall gain in U.S. market share in 2009, a feat it hasn't accomplished since 1995.


Ford concessions accepted in vote

'No one should mistake workers' approval as
satisfaction' with new union deal: CAW leader

Tony Van Alphen Business Reporter
Nov 2, 2009

Ford workers have voted overwhelmingly to accept concessions after their union warned them the company would soon start pulling more production out of Canada without cuts in labour costs.

About 83 per cent of production, skilled and office workers approved changes to their contracts Sunday that will freeze wages and increase benefit costs for the next three years at the sputtering automaker.

Ratification protects key production in Oakville and Windsor but other terms of the deal will close Ford's St. Thomas assembly plant in less than two years. That will eliminate about 1,500 Canadian Auto Workers jobs, plus employment for thousands of others who supply parts and services in the region.

It will lower Canada's share of Ford's North American production to 10 per cent from 13 per cent.

In bargaining, the union had vowed to maintain the 13-per-cent level. Instead, CAW, representing about 7,000 workers, negotiated a "closeout" agreement for the St. Thomas plant that will provide significant pension incentives and severance packages for those choosing to leave the company.

"No one should mistake workers' approval as satisfaction with the new agreement," CAW president Ken Lewenza said in a statement. "Members had faith in the union to negotiate the best agreement possible and protect their interests over the long term, but the problems faced by industry cannot be resolved at the bargaining table."

He noted governments must realize Canada's industrial base is quickly eroding along with the middle class.

CAW promoted a policy of no concessions in contracts for several years but recession and a major auto-industry downturn seriously weakened that hard-line stance.

In a brochure for weekend membership meetings, CAW said Ford "threatened" to start transferring plans for new engines at its Windsor operations and models for the Oakville assembly complex, elsewhere, soon.

"Make no mistake: Ford's top executives were ready to start pulling out of Canada if we did not reach this agreement," three senior union leaders state in the brochure. "They threatened us explicitly to move the new Coyote engine and the future replacement for the Edge/MKX right out of Canada. Moreover, they wouldn't wait until 2011 to start the process." Detroit-based Ford said last month its Canadian plants had the highest labour costs of any place where it operates and, if that continued, it would affect future investment here.

The previous contract, which expires in 2011, had left Ford workers at a competitive disadvantage after their counterparts at General Motors of Canada Ltd. and Chrysler Canada accepted concessions earlier this year so those teetering automakers could qualify for billions of dollars in government aid.

Despite an upswing in its financial and market fortunes, Ford still has a higher debt burden than GM or Chrysler and will close more plants with unused capacity continentwide, the union said. "We must position ourselves to hang on to every job we possibly can in Canada," said the message in the CAW brochure.

Ford workers in the U.S. have rejected contract concessions in the past week, which means the money-losing company will still struggle against its rivals in the U.S.

The deal here will freeze wages and a cost-of-living allowance until September 2012. It eliminates a week of holidays for workers at the three production locations and a parts depot in Brampton.

Workers earning about $34 an hour and retirees will lose or pay more for some benefits. Pensions for workers and retirees will remain intact. New workers will start at 70 per cent of the current top rate with gradual increases to 100 per cent after five years; they must contribute $1 an hour to help fund a pension plan and will get lesser benefits during layoffs.

The closeout at St. Thomas will offer retirement incentives of up to $90,000 for eligible workers, plus vouchers for new vehicles worth $35,000, or $25,000 in lieu of autos.

Workers with eight or more years service who lose jobs will receive $100,000, a $30,000 vehicle voucher, or $25,000 in lieu of an auto, and six months of health coverage. Those with at least five years would get $75,000, the temporary health care coverage and vehicle voucher.

Ford will offer special incentives for workers to retire or leave its Oakville and Brampton operations in 2011 to create job openings so some St. Thomas staff can relocate.

CAW-Ford Bargaining Report Brochure Nov 2009



CAW Members at Ford
Approve New Agreement

Head Table

November 1, 2009

(Toronto) Thousands of CAW members working at Ford facilities in Oakville, Windsor, St. Thomas and Bramalea have voted in favour of a new agreement, ratifying the deal by 83 per cent during a series of meetings held over the past two days. The deal was reached on October 30 between the two sides.

“No one should mistake workers’ approval as satisfaction with the new agreement,” said CAW President Ken Lewenza. “Members had faith in the union to negotiate the best agreement possible and protect their interests over the long term, but the problems faced by industry cannot be resolved at the bargaining table.”

Kim Clout

We need government and policy makers to wake up to the fact that the country’s industrial base is rapidly eroding and with it, the entire middle class.”

The deal is the second cost-cutting agreement reached between the CAW and Ford in 18 months and includes cuts to benefits, a reduction in vacation, break times and co-pays on health care, all of which were pattern items from the agreements with Chrysler and General Motors. 

Ken Lewenza

During the negotiations Ford also announced it would be closing the St. Thomas assembly plant in 2011, eliminating 1,400 jobs in the already hard-hit community. Workers at the plant manufacture the Ford Crown Victoria, Mercury Grand Marquis and Lincoln Town Car.

CAW LOCAL 584 Members

“This has been an extremely stressful and difficult year for Ford workers, just as it has been for hundreds of thousands of workers right across the country,” said Mike Vince, chairperson of the CAW-Ford Master Bargaining Committee and president of CAW Local 200.  “Our members have been dealing with terrible insecurity as a result of financial crisis and recession and this new agreement will give a greater deal of job security right until 2012.”

The new agreement expires on September 17, 2012 and covers approximately 7,000 Ford workers.

The results by location are as follows:

CAW Local 1520, St. Thomas
Production:  80% in favour
Skilled Trades: 81% in favour
Combined total: 80% in favour

CAW Local 200, Windsor
Production: 81% in favour
Skilled Trades: 75% in favour
Combined total: 80% in favour

CAW Local 707, Oakville
Production: 90% in favour
Skilled Trades: 91% in favour
Combined total: 90% in favour

CAW Local 584, Bramalea
Total: 85% in favour

CAW Local 240
Office: 100% in favour

CAW Local 1324
Office: 83% in favour

Combined Totals:
Total Production: 84% in favour
Total Skilled Trades: 81% in favour
Total Office: 94% in favour

Overall total: 83% in favour



Ford's mantra of difference was taken to heart by its UAW workers

Nov 1, 2009 BY TOM WALSH

UAW workers to Ford Motor Co. and Chief Executive Alan Mulally: “We think we’re OK where we are.”

That’s the clear message in a decisive rejection by Ford hourly workers of the Dearborn automaker’s latest plea for concessions on pay and work rules to match what Chrysler and General Motors gained in bankruptcy.

And it’s proof that words can come back to haunt you.

Remember Mulally’s statement of Nov. 18, 2008, testifying before Congress?

When asked whether he would work for $1 a year during the auto industry crisis, Mulally replied, “I think I’m OK where I am.” (He made $4.9 million last year in salary bonus and benefits, and was awarded stock options valued at $8.7 million.)

You can bet the rank-and-file workers remember.

They also remember Ford management’s repeated use of the word “different” over the past year, intended to set Ford apart from crosstown rivals GM and Chrysler.

If Ford is so happy being different and better off than GM and Chrysler, the workers are asking, what’s wrong with us being better off, too?

Ford was different, its executives said, because it didn't run out of cash like GM and Chrysler.

Different because it didn't take taxpayer money to survive like GM and Chrysler.

Different, different, different. Pounding the drumbeat of difference clearly has helped Ford's public image, its car and truck sales and its stock price.

But when it comes to the wages, benefits and work rules of its UAW workforce, Ford doesn't want to be different. It wants the same labor cost savings that GM and Chrysler achieved in Chapter 11 bankruptcy.

It's easy to understand, in that context, the defiance so many Ford UAW workers have shown in recent days toward coughing up another round of contract givebacks.

They're OK with being different.

That doesn't mean, however, that Ford is wrong to ask for more concessions.

Indeed, Ford must keep insisting on cost parity with GM, Chrysler, Toyota, Honda and every other major competitor if the company is to survive and prosper.

Ford's management must continue to push the envelope on costs. Otherwise, by repeating the old cycle of avoiding confrontation by appeasing its labor union, Ford risks winding up again with the bloated legacy costs and debt loads that have made the Detroit automakers so uncompetitive with foreign rivals for the last 25 years.

Alan Mulally, Ford's president and chief executive officer, along with Executive Chairman Bill Ford Jr. and the rest of the Dearborn hierarchy, have stated bluntly that Ford Motor cannot allow itself to be disadvantaged by the bankruptcies of GM and Chrysler.

And, in fact, they convinced UAW President Ron Gettelfinger and UAW Ford Vice President Bob King that the history of pattern bargaining among the Detroit Three should be kept intact. Ford should get the no-strike clause, more flexible work rules and a freeze on entry-level worker pay that GM and Chrysler had been granted.

To persuade the concessions-weary UAW workers in the Ford plants to go along, a number of promises were made about where production of future models would be located. And the jobs that go along with those decisions, of course. Workers also were offered $1,000 bonuses.

But even with those sweeteners, the UAW rank and file has turned its thumbs down.

So what now?

Wall Street lifts an eyebrow of worry about Ford's future? Gettelfinger and King, the would-be successor to Gettelfinger as UAW president, have a little egg on their faces because they couldn't deliver a ratification vote?

So what?

Both sides need to regroup, jawbone some more and do whatever it takes to ensure that Ford stays competitive and keeps its momentum.

There's no need for an immediate revote.

Nor would it be wise for Ford management to take a high-profile, obviously punitive action like relocating production of some promising new model from Michigan to Mexico.

Still, it must be steadfast about cost control. This is the Detroit auto industry's last chance to get it right. No time for weak knees.

But it should remember to choose its words carefully.


Download the flyer in favor of contract changes (PDF)

Download the flyer in opposition to contract changes (PDF)


October 31. 2009

Ford deal with UAW
goes down to defeat

Bryce G. Hoffman and Louis Aguilar / The Detroit News

In a fatal blow to an accord with Ford Motor Co., United Auto Workers members at three of the automaker's largest locals voted Friday against ratification of the proposed contract changes.

At the Dearborn Truck Plant, 93 percent of the votes were cast against the agreement; 53 percent of workers casting their ballots at the Romeo Engine Plant voted against the deal. And at UAW Local 862 in Louisville, which represents workers at both the Louisville Assembly Plant and Kentucky Truck Plant, 84 percent voted no.

Though UAW voting will not be completed nationwide until Sunday, enough plants now have rejected the deal to make it virtually impossible for the agreement to win enough votes for approval.

"I think it's over," said Gary Walkowicz, one of union dissidents who has led the opposition to ratification. "People are saying 'No more.' We've had enough concessions already. We've given up enough already."

While the UAW pact is headed for defeat, the Canadian Auto Workers announced a tentative agreement Friday with Ford that matches concessions union members already gave to General Motors Co. and Chrysler Group LLC.

UAW members at Ford have been angered by language that limits the union's right to strike over pay and benefit increases in the next round of national contract talks in 2011.

Workers at GM and Chrysler already approved a much broader "no strike" clause as part of agreements negotiated during those companies' government-mandated bankruptcy reorganizations earlier this year.

Union dissidents say Ford already is doing better than GM and Chrysler and does not warrant the same treatment.

But UAW leaders say giving Ford at least a measure of parity with its cross-town rivals is essential to ensuring the continuation of pattern bargaining.

CAW President Ken Lewenza made a similar pitch to his members Friday.

"Pattern bargaining has done wonders for our members, and it stays in place," he said of the new deal with Ford. "Without a pattern, Ford would be trying to extract more from our members."

Deal means more work

The tentative agreement between Ford and the CAW exactly matches the terms the union negotiated with GM and Chrysler as a condition of the Canadian government's bailout of those automakers earlier this year -- including a wage freeze for the life of the contract, a freeze on cost-of-living adjustments after June, the elimination of one paid week off and increased insurance co-payments.

In exchange, Ford agreed to add additional work at its Windsor engine factory and committed to bring a new global platform to its Oakville Assembly Plant sometime after 2012. About 10 percent of Ford's1 North American production will remain in Canada, which is equal to its sales there.

But Ford will close its assembly plant in St. Thomas, Ontario, in September 2011 when production of the Ford Crown Victoria1 and Lincoln Town Car ends. That means approximately 1,400 Ford CAW members there will lose their jobs, along with about 6,000 workers employed by suppliers and other companies that support Ford's operations there, according to the union.

"This is devastating for Canada," Lewenza acknowledged, though he said the CAW had negotiated "good" severance benefits for its members, along with a commitment by Ford to offer early-retirement packages at its plants in Windsor and Oakville that could create openings for workers who want to stay at Ford.

Lewenza said the only alternatives were much worse.

"They actually talked about disinvesting in Canada if we didn't extend the pattern to them," he said.

"Our costs are high, relative to U.S. plants -- particularly given the strength of the loonie."

Workers at some UAW plants that voted against the new deal with Ford also are worried that they could lose work if the agreement fails to win ratification.

UAW members at Ford's axle factory in Sterling Heights began circulating a petition Friday calling for a revote after local leaders warned that Ford could transfer new products promised to that plant to a German supplier.

However, UAW President Ron Gettelfinger told reporters later that he would not approve another vote.

More locals reject Ford pact

On Thursday, workers at three more U.S. Ford factories voted against the proposed contract changes, which also would freeze wages and benefits for new hires and give the company greater flexibility in how it deploys employees.

Workers at two Chicago-area complexes soundly rejected the modifications Thursday, as did UAW members at Ford's parts factory in Saline.

Approximately 80 percent of workers at UAW Local 588, which represents workers at Ford's Chicago Stamping Plant, voted against the deal, while 70 percent voted no at UAW Local 551, which represents the Chicago Assembly Plant. At Saline, 75 percent of workers voted against ratification.

While the UAW is not releasing official figures until voting is completed, at least 11 locals now have rejected the agreement. At least four have voted in favor of ratification. A simple majority of Ford's 41,000 UAW-represented workers must approve the deal for it to pass.

While Lewenza stressed that the UAW vote is "not relevant to our decisions here," he said CAW members are certainly aware of the surprise opposition to the U.S. agreement. But he urged them to think differently.

"Our members face a critical choice," Lewenza said.

"Ford is not in good financial shape. ... They have a lot of debt."

What Ford does have, he said, is new product that is beginning to win back consumers in both Canada and the United States, and he said workers need to do what they can to help the company's turnaround succeed.



Retirees Thanksgiving Luncheon Oct 9, 2009

CAW Local 584 Retirees

Click here for more Pictures


RETIREMENT LOST: A Multimedia series
by The Toronto Globe & Mail

Click on picture below to see video of their story

(Note: Short advertisement at the beginning)

John Mlacak, a former Nortel manager, stands to lose as much as 30 per cent of his monthly $3,000 pension.
John Mlacak 73
Former Nortel Manager faces a 30% pension loss

Leroy Pickett 67
Leroy Pickett 67
39 Years at a steel factory, his pension cut by 30%

Ernie MacInnis 58
Ernie MacInnis 58
Laid off from his factory job of 40
years, he's living on a pension that's
underfunded by 10 per cent

Fielding Smith 62

Fielding Smith, 62
After 41 Years of work he now
collect bottles for extra cash

Why Avtar Loodu may have to borrow from his kids
Avtar Loodu, 60
His company went bankrupt with a
30 per cent pension deficit








CAW LOCAL 584 Annual Golf
Charity Classic Sept 19, 2009


More UAW locals
vote no on Ford deal

Canadian union reaches tentative
agreement with U.S. carmaker

Bryce G. Hoffman and Louis Aguilar / The Detroit News
Oct 31, 2009

In a fatal blow to an accord with Ford Motor Co., United Auto Workers members at three of the automaker's largest locals voted Friday against ratification of the proposed contract changes.

At the Dearborn Truck Plant, 93 percent of the votes were cast against the agreement; 53 percent of workers casting their ballots at the Romeo Engine Plant voted against the deal. And at UAW Local 862 in Louisville, which represents workers at both the Louisville Assembly Plant and Kentucky Truck Plant, 84 percent voted no.

Though UAW voting will not be completed nationwide until Sunday, enough plants now have rejected the deal to make it virtually impossible for the agreement to win enough votes for approval.

"I think it's over," said Gary Walkowicz, one of union dissidents who has led the opposition to ratification. "People are saying 'No more.' We've had enough concessions already. We've given up enough already."

While the UAW pact is headed for defeat, the Canadian Auto Workers announced a tentative agreement Friday with Ford that matches concessions union members already gave to General Motors Co. and Chrysler Group LLC.

UAW members at Ford have been angered by language that limits the union's right to strike over pay and benefit increases in the next round of national contract talks in 2011.

Workers at GM and Chrysler already approved a much broader "no strike" clause as part of agreements negotiated during those companies' government-mandated bankruptcy reorganizations earlier this year.

Union dissidents say Ford already is doing better than GM and Chrysler and does not warrant the same treatment.

But UAW leaders say giving Ford at least a measure of parity with its cross-town rivals is essential to ensuring the continuation of pattern bargaining.

CAW President Ken Lewenza made a similar pitch to his members Friday.

"Pattern bargaining has done wonders for our members, and it stays in place," he said of the new deal with Ford. "Without a pattern, Ford would be trying to extract more from our members."

Deal means more work

The tentative agreement between Ford and the CAW exactly matches the terms the union negotiated with GM and Chrysler as a condition of the Canadian government's bailout of those automakers earlier this year -- including a wage freeze for the life of the contract, a freeze on cost-of-living adjustments after June, the elimination of one paid week off and increased insurance co-payments.

In exchange, Ford agreed to add additional work at its Windsor engine factory and committed to bring a new global platform to its Oakville Assembly Plant sometime after 2012. About 10 percent of Ford's1 North American production will remain in Canada, which is equal to its sales there.

But Ford will close its assembly plant in St. Thomas, Ontario, in September 2011 when production of the Ford Crown Victoria1 and Lincoln Town Car ends. That means approximately 1,400 Ford CAW members there will lose their jobs, along with about 6,000 workers employed by suppliers and other companies that support Ford's operations there, according to the union.

"This is devastating for Canada," Lewenza acknowledged, though he said the CAW had negotiated "good" severance benefits for its members, along with a commitment by Ford to offer early-retirement packages at its plants in Windsor and Oakville that could create openings for workers who want to stay at Ford.

Lewenza said the only alternatives were much worse.

"They actually talked about disinvesting in Canada if we didn't extend the pattern to them," he said.

"Our costs are high, relative to U.S. plants -- particularly given the strength of the loonie."

Workers at some UAW plants that voted against the new deal with Ford also are worried that they could lose work if the agreement fails to win ratification.

UAW members at Ford's axle factory in Sterling Heights began circulating a petition Friday calling for a revote after local leaders warned that Ford could transfer new products promised to that plant to a German supplier.

However, UAW President Ron Gettelfinger told reporters later that he would not approve another vote.

More locals reject Ford pact

On Thursday, workers at three more U.S. Ford factories voted against the proposed contract changes, which also would freeze wages and benefits for new hires and give the company greater flexibility in how it deploys employees.

Workers at two Chicago-area complexes soundly rejected the modifications Thursday, as did UAW members at Ford's parts factory in Saline.

Approximately 80 percent of workers at UAW Local 588, which represents workers at Ford's Chicago Stamping Plant, voted against the deal, while 70 percent voted no at UAW Local 551, which represents the Chicago Assembly Plant. At Saline, 75 percent of workers voted against ratification.

While the UAW is not releasing official figures until voting is completed, at least 11 locals now have rejected the agreement. At least four have voted in favor of ratification. A simple majority of Ford's 41,000 UAW-represented workers must approve the deal for it to pass.

While Lewenza stressed that the UAW vote is "not relevant to our decisions here," he said CAW members are certainly aware of the surprise opposition to the U.S. agreement. But he urged them to think differently.

"Our members face a critical choice," Lewenza said.

"Ford is not in good financial shape. ... They have a lot of debt."

What Ford does have, he said, is new product that is beginning to win back consumers in both Canada and the United States, and he said workers need to do what they can to help the company's turnaround succeed.

  Autoworkers "challenge
logic of capitalism"

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Ford to close St. Thomas
assembly plant

Workers to vote this weekend on closeout deal
after union says there's no way to avert shutdown

Ford will close its St. Thomas, Ont., assembly plant and wipe out about 1,500 direct jobs and employment for thousands of other workers in less than two years under a concessions contract with the company's main union.

After fighting Ford hard for years, the Canadian Auto Workers union conceded Friday it has no more bargaining power to save the plant because of continuing poor demand for its full-size cars and no future models on the drawing board.

Furthermore, the union said Ford demanded cuts in labour costs to stay competitive or it would no longer invest in Oakville or Windsor.

In announcing a tentative three-year deal for concessions, CAW president Ken Lewenza said the union will keep pushing for new models and demand may still pick up but he wasn't optimistic.

"We shouldn't be kidding anyone," a sombre Lewenza told reporters after reaching the deal at the end of five days of bargaining.

He noted that in addition to losing 1,500 jobs at the 42-year-old plant in September 2011, the shutdown will slash employment for another 6,000 to 8,000 workers in the region who supply parts and services.

"Nothing can compensate for that," he said.

As part of the new contract, the union negotiated a "closeout" agreement for workers in St. Thomas that will cushion the financial blow and offer some transfer opportunities to other operations in Oakville and Brampton.

More than 7,000 workers who earn an average of about $34 an hour are eligible to vote this weekend on the deal that includes a freeze on wages and cost-of-living allowance; reduction in holiday time and higher payments for benefits. Retirees also face extra costs.

"The changes are painful," Lewenza said.

Stacey Allerton Firth, Ford's vice-president of human resources, said the company would not discuss details of the deal until after the vote.

The concessions are similar to what workers at General Motors of Canada Ltd. and Chrysler Canada accepted earlier this year, so those companies could qualify for billions of dollars in government aid and stay alive.

Although Ford – which did not seek taxpayer aid – has a strong product lineup and some market momentum, Lewenza stressed the company is "not in good financial shape" yet because of a high debt load.

Under the deal's terms, the union said Ford indicated it will eventually add two more vehicles to its Oakville complex and assure engine work in Windsor.

But the St. Thomas closing will still reduce Ford's North American production in Canada to 10 per cent from the current 13 per cent.

It will be the fifth major light-vehicle assembly plant to close in Ontario or Quebec since 2002. GM has closed car and truck plants in Ste. Therese, Que., and Oshawa; Chrysler shut down a commercial van in operation in Windsor, and Ford stopped output at its truck factory in Oakville.

The union had pressed Ford to find new products for the St. Thomas plant and it submitted numerous proposals to cut costs and make it financially more attractive.

But production has dropped annually for 10 years and the move to a one-shift plant a few years ago made it a logical candidate to close at a time when Ford is losing market share and operating with excess capacity.

Output at the plant, which assembles the Crown Victoria, Mercury Grand Marquis and Lincoln Town Car, slid to less than 110,000 last year, from almost 270,000 in 1998.

Talks fizzled for weeks as the union insisted Ford maintain a presence in St Thomas.

But union officials said Ford made it clear Canada would lose future investment if workers did not accept the closing and concessions.

"To simply do nothing would be irresponsible and increasingly risky," said Mike Vince, chairman of the union's bargaining committee.

"They (Ford) have options and we were not prepared to roll the dice," added Lewenza.

He said the union could have walked away from bargaining and enforced the existing contract until 2011, but it would have weakened the union's position later with no chance of securing the strong monetary provisions of the closeout agreement for St. Thomas, or improving chances for new products in Oakville and Windsor.

Provisions for workers at the St. Thomas plant include retirement incentives of up to $90,000; allowances of a maximum of $100,000 to leave the company and vouchers to buy new Ford models.



CAW, Ford reach deal; St. Thomas plant to close but Oakville will get new vehicles

The Canadian Press | Friday, October 30th, 2009 3:52 pm

Canadian Auto Workers president Ken Lewenza says the union has reached a deal with Ford Canada that will see Ford close its 1,600-employee plant in St. Thomas, Ont., but add two new vehicles to its assembly line in Oakville, Ont.

Ford's engine plant in Essex, near Windsor, will also get additional work over the life of the new contract, which will expire in 2012.

Workers still need to ratify the agreement, which cuts labour and other costs for the car producer.

The union has agreed to give the automaker the same concessions it gave General Motors and Chrysler in negotiations earlier this year, including cuts to some benefits and time off.

Lewenza says Ford has agreed to keep 10 per cent of its total North American manufacturing in Canada.

This is down slightly from the current level of 13 per cent.

Ford has said all along that it intends to close its St. Thomas plant in 2011 due to declining demand for the full-sized cars it builds there.\


Greg Keenan

Globe and Mail Friday, Oct. 30, 2009

The Canadian Auto Workers union has struck a tentative agreement with Ford Motor Co. that includes a commitment that the company's Canadian operations will manufacture 10 per cent of the vehicles Ford makes in North America, but also means the end of the line for its St. Thomas, Ont., assembly plant.

“We couldn't save St. Thomas … but we got good severance [packages] that take care of the majority of the people,” a source involved in the talks said Friday.

That means the loss of about 1,600 jobs at the plant, which has been on the endangered list for several years because of waning demand for full-size, rear-wheel drive cars that go into taxi and police fleets.

Ford has agreed, however to add a new vehicle to its Oakville, Ont., assembly plant, which is operating on two shifts and now manufactures Ford Edge and Flex and Lincoln MKX and MKT crossover utility vehicles.

“Part of the investment in Oakville is a global platform, a significant investment which will drive another product,” said one source involved in the negotiations.

The auto maker also agreed to build more vehicles than it sells in Canada, the sources said.

In return, the CAW has agreed to give Ford the same concessions it gave Chrysler Canada Inc. and General Motors of Canada Ltd. earlier this year when those two auto makers were seeking a bailout by the federal and provincial governments.

The terms of those deals include cuts in time off and other benefits and contributions of $1 for every hour worked by newly hired employees to the companies' pension plans, the first time CAW members will make a direct contribution to their own pensions.

The deal comes after four days of intense bargaining that resumed on Monday. The two sides began talks in September, but broke off amid a union insistence that Ford agree to maintain a 13 per cent manufacturing footprint in Canada.

That footprint represents about 7,000 jobs at the Oakville and St. Thomas assembly plants and two engine plants in Windsor, Ont.

There is no new product for one of the engine plants in Windsor that is slated to run out of work early in the next decade.

There are no new engines to put in the plant, the sources said, but the commitment to the 10 per cent footprint means Ford will almost certainly have to find new work for the plant.

It was clear from the beginning of the talks that Ford would not agree to keep St. Thomas open, the sources added, even though it would not acknowledge that it planned to close the plant, saying merely that it had no new products beyond 2011.

The CAW agreement comes amid growing unrest among the United Auto Workers in the United States about a tentative agreement that union has reached with Ford.

Several locals have turned down the deal, in part because it eliminates workers' right to strike over economic issues when the current contract expires, calling instead for arbitration.

Ford promised the UAW that new vehicles would be built at several U.S. assembly plants and also that the Transit Connect commercial van, which is now built in Europe, would be assembled at a UAW plant if demand rises enough to warrant North American production.


Sterling Heights Ford UAW local may ask for revote

Workers fear 'no' vote will lose axle work for site

Oct 30, 2009

Bryce G. Hoffman / The Detroit News

Ford Motor Co. could shift work promised to its Sterling Heights axle factory as part of a tentative agreement with the United Auto Workers to a German supplier after the local union voted overwhelmingly against the deal, according to a union source.

Now, some workers there are organizing a petition urging UAW President Ron Gettelfinger to call for a revote.

Spurred on by union dissidents who say the time for concessions is over, rank-and-file members at plants across the country have cast their ballots against the proposed contract changes, which were negotiated by Ford and UAW leaders earlier this month. While the union has not released any numbers, people familiar with the situation said about 3,000 more workers have so far voted against ratification than have voted in favor of it.

Under the terms of the agreement, Sterling Axle was supposed to get new rear-wheel drive work that would have added about 100 jobs. Now, union sources fear that work will be given to Getrag Corp., a German supplier with a nonunion factory in North Carolina. Local union leaders also were told Ford is considering outsourcing other components made at the plant, where 80 percent of workers voted against ratification.

The company says any change in its plans for Sterling will not come until after voting is completed at all locals.

"We haven't made any decision," said Ford spokesman Mark Truby. "We're not going to comment on future product sourcing during the ratification process."

With voting scheduled to continue through Sunday at the remaining UAW locals, momentum could still shift in favor of the agreement. But Ford executives have little hope of that happening.

"This may be the start of a little hard ball," said David Cole, chairman of the Center for Automotive Research. "If Ford can't be competitive on labor, I think we'll see more outsourcing."

On Thursday, results from two Ohio locals were released, providing more bad news to the company and union leaders. UAW Local 420, which represents workers at Ford's Walton Hills Stamping Plant, voted 88 percent against ratification. At UAW Local 863, which represents workers at the Sharonville Transmission Plant, 75 percent of workers voted no.

Now, attention is focused on UAW Local 862 in Louisville, where workers from Ford's Kentucky Truck Plant and Louisville Assembly Plant are casting their ballots.

That is Gettelfinger's home local, and the UAW president traveled there on Sunday to urge members to support the deal.

Opponents are critical of a clause that would limit the UAW's right to strike in the upcoming 2011 contract negotiations. But Ford says these limits are necessary to maintain a measure of parity with its domestic competitors, which negotiated even broader "no-strike" deals with the UAW during their recent bankruptcies.

The deal also offers the promise of new work to plants like Sterling Axle.

"I don't think people here really understood that the work we had been promised was contingent on ratification," said Sterling Axle UAW member Brian Pannebecker, who voted in favor of the agreement and is now helping to organize a petition in support of revote.


Dear Detroit
Putting glass panes into the doors of a Chevrolet Camaro on the assembly line at General Motors

While you’re under the hood, here’s five things we’d like to see fixed

Christopher Shulgan

From Friday's Globe and Mail Oct 30, 2009


Ford Motor Co. has taken a hard line against bringing alternative energy vehicles such as plug-in electrics to market—until recently, that is. Although Ford marketed the Ranger electric vehicle in the 1990s to conform with California alternative-energy regulations, and later launched the Escape Hybrid SUV, the company maintained it wouldn’t develop new vehicles until a proven demand existed. “If customers aren’t buying them, we’re not making them,” proclaimed Ford’s senior manager of energy storage, Ted Miller, to a reporter in 2008.

But soon, gas prices spiked, customer demand for electric options grew, and Ford watched as General Motors won attention for its Chevy Volt, due out in 2010. Now Ford was too far behind to catch up: Thanks to the Gogolian bureaucracy that ensnarls North American vehicle manufacturers, a typical product development cycle is four to five years.

Fortunately for Ford, Magna founder Frank Stronach and his design staff came to the rescue. Stronach had discussed the market potential of electric vehicles with his executive VP of new product creation, Ted Robertson, in January, 2008. Six months later, with help from Magna’s R&D budget for things electric, Robertson shipped a working EV prototype to the company’s Ontario headquarters.

“Great,” Stronach said, staring at what appeared to be a typical Ford Focus. “What is it?”

“It’s your electric car,” Robertson said.

Robertson’s team had placed an electric drivetrain in a Ford Focus for no other reason than it was convenient—the engine compartment and trunk size had the right dimensions. But the test drives went so well (for this writer’s review, see below) that Stronach suggested approaching the automaker for an unconventional partnership. “I want you to go show this to Ford,” said the auto parts magnate. “Tell them we want to get into the electric car business. Are they interested?”

Magna’s timing was good: Robertson approached Ford just as it was reconsidering plug-in electrics. Forced into the unusual position of playing catch-up, Ford’s engineering staff realized a Magna-engineered Focus would enable them to get an all-electric vehicle on the market soon after the Volt’s debut. The company introduced its BEV (battery electric vehicle) model at the 2009 Detroit Auto Show—barely a year after Stronach first mentioned the idea to Robertson.

“The Ford-Magna deal would never have been done 10 years ago,” says Ron Cogan, editor and publisher of Green Car Journal. “Granted, it was a case of exceptional timing and initiative on Magna’s part. Serendipity exists—but then again, in any other time, Ford wouldn’t have been so open to Magna’s approach. It’s a unique time in the auto industry.”

The bankruptcies of Chrysler and GM, and the difficult climate over all, have made the Detroit Three more open to new ideas than ever before, Cogan says. He compares the Ford-Magna arrangement to Daimler AG’s purchase of a 10% stake in electric pioneer Tesla Motors, announced in May for a reported double-digit million-euro sum. That deal, too, was an example of an established auto manufacturer acknowledging that superior expertise existed outside its own walls.


In Detroit, the development of a new vehicle has traditionally been a secretive, top-down process. An executive issues a directive to a corps of designers and engineers, who huddle in high-security facilities as they develop the thousands of elements that constitute a prototype, which is only unveiled to the public once it’s been exhaustively test-driven and refined.

Jay Rogers wants to demolish that model. Through his company, Local Motors, of Wareham, Massachusetts, the former U.S. marine captain and Harvard Business School grad is attempting to apply open-source business theory to carmaking.

The open-source philosophy gained mainstream prominence in the 1990s with such free software programs as the Linux computer operating system and the Mozilla project, which grew into Firefox—now the second-most popular Web browser after Internet Explorer. Writing code for the programs, like any open-source task, was the work of a community of volunteers who collaborated transparently, with the help of online message boards. The approach has since been applied to disciplines as varied as encyclopedia-writing (Wikipedia) and clothing design (the Chicago-based company Threadless).

“Local Motors is a quantum leap past these iterations,” says Karim Lakhani, an assistant professor at Harvard Business School who specializes in studying open-source communities; he’s also a member of the Local Motors strategic advisory board. “No one has ever used the open-source model in a sector where the barrier to entry is so high.”

Here’s how it works: Local Motors stages contests that challenge volunteers to design facets of a specific vehicle (prizes range from a few hundred dollars to $10,000). A network of auto design students and moonlighting engineers post their ideas to the company website, where they’re judged and voted on. The best and most popular elements are incorporated into the design.

There is a “green” element to all this, but it’s not immediately evident from the company’s debut vehicle, a burly off-road racer called the Rally Fighter. First conceptualized by Sangho Kim, who now works for Subaru in Japan, the model gets much better fuel mileage than comparable vehicles. (The Local Motors pipeline includes some explicitly green models like the electric Boston Bullet.)

Since the design work in the Local Motors model focuses on aesthetics and the particular needs of the model at hand, most parts are sourced from conventional suppliers—the Rally Fighter’s engine, for example, is a diesel-powered 3.0 litre BMW 335d with the sort of specs that activate the salivary glands of adrenalin addicts: 265 horsepower on a suspension system with 18 inches of vertical tire movement. The prototype is slated for its first tests in November.

Rogers says the company caters to the same customization trend that made hits of the Mini and Toyota Scion. “When you drive down the road in a Ford Taurus, people’s heads don’t turn,” says Rogers. “Great design turns heads. We’re trying to create head turners.”

On one level, Local Motors hearkens back to the glory days of Fifties hot rods and grease monkeys, when significantly more drivers knew their carburetor from their alternator. Only 3,000 Local Motors Rally Fighters will be built, with the majority of manufacturing slated to begin next June at a micro-factory in Phoenix. Another innovation? About 60 hours worth of the final assembly will be conducted by the vehicle’s owner, operating under the guidance of factory staff.

Will the company ever appeal to a wider audience than car hobbyists? Rogers hopes so, drawing comparisons between his company and the way Michael Dell popularized extreme customization of personal computers. On another level, it doesn’t matter. The open-source nature of Rogers’s product development cycle means his break-even point is only 200 vehicles per model. His ultimate goal is to persuade better-established automakers to open up their R&D cycles, which he thinks is bound to create more efficient vehicles in a more sustainable way. “I’m not in this to be a gazillionaire,” says Rogers. “I do want to make a profit. But more importantly, I want to change the world.”


What if shopping for a car were easy? What if you could go to a single storefront and test drive a half-dozen subcompacts made by different manufacturers? And what if you didn’t have to negotiate with Larry, the commission-hungry salesman? What if the listed price was the amount you paid, end of story?

That last part isn’t a new idea: Back in 1985, it was one of the founding principles of Saturn LLC, established as a pseudo-independent arm of General Motors to combat incursions into North America by Japanese and German automakers. Saturn dealerships were supposed to be on the side of the buyer. They didn’t try to upsell; they didn’t bargain. The unusual strategy helped to create a fanatically devoted community of Saturn owners.

Problem was, GM didn’t do enough to provide those Saturn owners with new vehicles to buy. So, with Saturn poised to evaporate in the wake of the great industry shakeout of 2009, billionaire Roger Penske, the former race car driver and turnaround specialist, went after the Detroit brand. His plan? Quit manufacturing, period—offload it. Instead, use the Saturn dealership network to sell cars built by a variety of manufacturers, including brands from China and India. Call it the auto version of cosmetics retailer Sephora.

The idea made a certain amount of sense. Anyone who has ever bought a car knows it’s a painfully slow process, requiring visits to a half-dozen or so different dealerships, where each salesperson attempts to engage the customer in time-wasting negotiations. Penske’s idea was an audacious move in the right direction. Perhaps too audacious—the deal collapsed in late September, days before closing, after Penske failed to find anyone to build Saturn vehicles for him.

Still, there is at least one other sign that Detroit is changing the way it sells cars. In August, GM mounted a pilot project to sell its cars through eBay. With 225 of California’s 250 GM dealers participating, the automaker allowed prospective customers to bid on new vehicles at such mini-sites as gm.ebay.com and chevy.ebay.com. Although the websites attracted 960,000 searches during the first week, sales were lukewarm: Only 45 cars sold over the first nine days. It turned out that consumers were using the sites to educate themselves, then heading into a dealership for a test drive.

So, the conventional dealership isn’t dead yet—much to the relief of North American automakers. “If Walmart existed in 1900, then maybe we’d all be buying our cars at a big-box store,” says auto consultant Dennis DesRosiers. “But they didn’t, and the manufacturers invested in these dealership networks, and now they’re forced to protect them.” Anti-trust laws and dealer-manufacturer agreements also make it difficult for manufacturers to experiment with new retail outlets, which inevitably compete with existing dealerships. For the time being at least, we’re pretty much stuck with Larry.


The internal combustion engine gets a lot of flak from the new, “green” Detroit. Critics want to bolster its fuel efficiency by coupling it with an electric engine, à la hybrid vehicles like the Toyota Prius. Or they want to scrap it altogether and rely on all-electric vehicles.

But what if gas is getting a bad rap? Some automotive engineers believe the problem isn’t gas engines—it’s that Detroit executives didn’t prioritize R&D that could have produced ultra-efficient gas-driven vehicles.

Take a company like suburban Detroit’s EcoMotors, which has audaciously announced a goal of developing a vehicle that gets 160 kilometres per litre—by 2011, no less. The model they’re using makes the idea seem even more implausible: Its technology dates back to the 1930s.

The design employs an opposed piston/opposed cylinder engine, a concept that was pioneered by the German aircraft manufacturer Junkers & Co. during the Nazi regime. Conventional auto engines have vertical cylinders in which pistons push down on a crankshaft to create the rotations that power the car; the force is directed downward, and the design wastes a lot of energy on friction because the pistons travel relatively long distances. EcoMotors’ technology has horizontal cylinders with pistons on either end of the cylinder—two pistons per cylinder, with a single crankshaft between the cylinders. As a result, the pistons don’t have to travel nearly so far; more power goes to the crankshaft; and there’s a lot less friction.

The opposed piston/opposed cylinder engine hasn’t taken the world by storm previously because earlier designs used twin crankshafts, creating engines that were fussy and prone to break down. EcoMotors’ founder Peter Hofbauer’s decision to use only a single crankshaft makes the motor simpler and more reliable.

What does all that mean for non-gearheads? First, there are fewer of the nasty emissions that have earned diesel its bad reputation. Plus, EcoMotors’ engine is 30% lighter and provides 50% better mileage than comparable conventional engines. EcoMotors’ 2.5-litre engine will weigh 135 kilograms less than the 6.5-litre powerhouse used by truck manufacturers today—while providing the same amount of power. And with only a few small design tweaks, the engine can run on regular gasoline as well as alternatives like ethanol; it can also act as the gas power source in hybrid cars.

EcoMotors’ engine grew out of a fact some electric vehicle aficionados like to forget: Power density is a measure of the horsepower generated by a fuel source. Comparing similar weights of contemporary lithium-ion batteries (the standard in electric cars) to plain old gasoline, gas still generates more horsepower—by a factor of 100. “Batteries have made significant progress, but liquid fuel remains the medium we think most important,” says Don Runkle, EcoMotors’ CEO. He should know. As the former head of GM’s advanced engineering division, he was the executive who oversaw GM’s late, lamented EV-1.

Who’s paying for all this R&D? The design grew out of a research project conducted for the U.S. military by Hofbauer, who’s best known as the engineer who pioneered the diesel engine designs used today by Volkswagen. Once Hofbauer developed the prototype, Vinod Khosla, the Sun Microsystems co-founder turned hard-headed eco-investor, put up the venture capital; exactly how much capital, Runkle won’t say.

Khosla’s no dreamer. His unblinkered take on green technologies has caused him to slam hybrid vehicles as overly expensive; he’s looking for ultra-fuel efficiency that can play in China and India. Cheap, fuel-efficient and powerful—maybe these whiz kids can manage the tricky combo that’s so far eluded the rest of Detroit.


Electric cars can be unnerving. Forget to charge the battery and there’s a chance your morning commute could end at the side of the road. But what if you could stop into a station on your way to work and switch your near-dead battery for a charged one? And what if you could do it in less time than it takes to fill a conventional car’s gas tank?

That’s the proposition being marketed by the California-based company Better Place. Here’s how it works: In addition to a more extensive grid of plug-in “charge spots,” battery swap stations are scattered around cities the way gas stations are today. Drivers roll their rides into a garage bay, where automated machinery exchanges a weak battery for a fully charged one and, voila, your vehicle has another 160 kilometres of juice.

Under the Better Place model, the company owns, stores and maintains the batteries. Drivers purchase one of a variety of pay-as-you-go plans—a 500-km bundle, for instance.

Company spokesman Joe Paluska argues that the switchable battery model makes financial sense for consumers. Exclude the cost of a $15,000 lithium-ion battery, and the typical electric vehicle costs about the same as a diesel-powered one. And if governments subsidize electric vehicles, as they’ve indicated they will—the Ontario government, for example, has announced subsidies for buyers ranging from $4,000 to $10,000—then it’s possible that EVs with Better Place plans could have lower upfront purchase costs than their conventional counterparts.

Skeptics like Paul Scott, a vice-president at the educational non-profit organization Plug In America, call the model an attempt to apply gas-based thinking to the electric world. Scott points out that auto manufacturers would need to standardize their battery layout to accommodate the Better Place switching mechanism—something he doesn’t think is likely to happen. “If you know the auto industry, that’s just a non-starter. They can’t agree on anything,” he says. Drivers may also find the arrangement inconvenient, particularly since chargers that can restore a battery in less than an hour are expected to be available soon. Scott asks, “Why would you bother going to a charge station when you can just charge your vehicle at home?”

Still, the Better Place model is gaining momentum. The company has partnered with the Renault-Nissan alliance; Renault’s 2011 Fluence ZE electric vehicle will be sold in Denmark and Israel with a Better Place charging plan; and Better Place swap stations and charge spots are slated to begin operating next year in both countries. Closer to home, the company has teamed with Bullfrog Power, which will provide the electricity for charge spots in Ontario. As part of the planning process for the network, Better Place intends to open a demonstration centre in Toronto in 2010.

But the company’s biggest ambitions are in China, where market research suggests only 2% of the population own vehicles. “Our view is that China will skip conventional vehicles and move directly to electrics,” says Paluska. “Just like they skipped land lines for cellphones.”

Well, maybe. And maybe all those Chinese drivers will opt to charge their batteries themselves.


Fusion top family sedan,
Consumer Reports says

About 90 per cent of Ford, Mercury and Lincoln products
were found to have average or better reliability


Globe and Mail Published on Thursday, Oct. 29, 2009

Consumer Reports says the most reliable four-cylinder family sedan - other than the gasoline-electric Toyota Prius hybrid -isn't the Honda Accord or Toyota Camry, but Ford's Fusion, which received a major makeover for the 2010 model year.

"It's rare for Consumer Reports to see family sedans from domestic car makers continue to beat the reliability scores of such highly regarded Japanese models as the Camry and Accord," said David Champion, senior director of Consumer Reports' Automotive Test Center.

In releasing the results of CR's 2009 Annual Reliability Survey, Champion said the last domestic sedan that had better reliability than the Camry and Accord was the Buick Regal in 2004. General Motors no longer even produces the Regal.

Champion said CR's research confirms that Ford can now claim world-class reliability, something the other two Detroit auto makers cannot do. About 90 per cent -46 of 51 models - of Ford, Mercury and Lincoln products were found to have average or better reliability. (Mercury products are not sold in Canada).

In CR's latest study, even the upscale Lincoln MKZ topped its rivals, the Acura TL and Lexus ES.

For nearly two years, Ford officials have said they will not launch new models if there is any question about quality. Bennie Fowler, Ford's vice-president for quality, says that during launches he worries constantly, sleeping "with one eye open, the other closed."

If so, he's not been getting much sleep. Since 2008, Ford has launched critical new models such as the Ford Fusion sedan, Lincoln MKS sedan, Ford Flex crossover, Ford F-150 pickup, Lincoln MKZ sedan and MKT crossover, Ford Mustang coupe, Ford Transit Connect van and Ford Taurus sedan. Among next year's critical launches will be the the 2011 Fiesta subcompact.

To get quality right, Fowler and other Ford executives rely on a combination of renewed discipline, new digital planning tools and weekly reviews with CEO Alan Mulally.

A key change: Ford has reduced manufacturing feasibility issues -- the discovery during prototype builds that the vehicle can't be manufactured as designed -- by up to 90 per cent.

Digital, or virtual tools, are now used throughout the entire vehicle-planning process. For instance, the tools helped Ford catch a problem early on in the 2009 F-150 development. The assembly simulation revealed that the truck's transmission would bump into its steering gear during installation.

As a result, Ford changed the assembly order to put the transmission in ahead of the steering gear. In the past, that problem may not have been discovered until physical pilot builds and even then a quick fix might have offered only a temporary solution.

Grinding out such details is essential in the car business, but it's not as exciting or tantalizing as creating alliances, buying companies and offering bold promises of a high-technology future. In Ford's case, says Champion, the company now has a track record of sustained quality.

The results of the latest CR study can be found in December's annual auto issue to hit newsstands Nov. 3. The findings are based on responses on more than 1.4 million vehicles owned or leased by subscribers to Consumer Reports or its Web site, http://www.ConsumerReports.org.

The survey was conducted in the spring of 2009 by Consumer Reports' National Survey Research Center and covered model years 2000 to 2009.

In Ford's case, such models as the Flex crossover did well, but there is still work to be done at the upscale Lincoln division - where some models scored below their Ford equivalents.

All-wheel-drive versions of the Lincoln MKS, MKX, and MKZ - essentially high-end versions of the Ford Taurus, Edge and Fusion - all ranked below average.

As for other auto makers, of the 48 models with top reliability scores, 36 are Asian. Toyota accounts for 18; Honda, eight; Nissan, four; and Hyundai/Kia and Subaru, three each.

Japanese vehicles were ranked highly, for the most part. All Honda and Acura products have average or above-average reliability. At Toyota/Lexus, only the Lexus GS AWD ranked below-average for reliability.

Among the Koreans, the Hyundai Elantra and Tucson and the Kia Sportage got top marks. The new Hyundai Genesis V-6 is ranked better than average; the V-8 version is ranked average. Kia's Sedona minivan and Sorento SUV scored below average.

For the Europeans, CR says Mercedes-Benz has fixed many troubling issues and now most models are ranked average or better. The GLK did exceptionally well in its first year in CR's survey.

At BMW, the 535i sedan and X3 SUV declined in reliability, and the 135i scored below average. Some BMW models have average or better reliability, but the 328i model is the only one tested and recommended by CR.

At Volkswagen and Audi, the VW Rabbit (Golf) and the VW Passat CC earned top scores. The VW Jetta is the only diesel recommended by CR. At the other end of the spectrum, the Audi Q7 SUV is ranked much worse than average. Meanwhile, the VW Touareg has the worst new-car predicted reliability score in the survey.

All of Volvo's sedans are ranked average or better, while only the Porsche Boxster is ranked below average from that sports car maker.

As for the Detroit auto makers other than Ford, 20 of the 48 GM models Consumer Reports surveyed earned average reliability scores, while the Chevrolet Malibu V-6 has shown better-than-average scores and is on par with the most reliable family sedans. The Buick Lucerne did well in Consumer Reports road tests, and it scored average in reliability.

Chrysler remains a problem. More than one-third of Chrysler products are ranked much worse than average, including its new car-based SUV, the Dodge Journey. Consumer Reports does recommend the redesigned Dodge Ram 1500 pickup after ii scored well in road tests and reliability.


Ford lauded for
'world-class' reliability

Detroit -- Ford Motor Co. is the most reliable domestic automaker, and continued quality improvements have brought its vehicles almost bumper to bumper with its Japanese competitors, Consumer Reports magazine said Tuesday

Consumer Reports says carmaker has
achieved 'world-class' quality status

Alisa Priddle / The Detroit News
October 28, 2009

Detroit -- Ford Motor Co. is the most reliable domestic automaker, and continued quality improvements have brought its vehicles almost bumper to bumper with its Japanese competitors, Consumer Reports magazine said Tuesday.

"Ford has secured its position as the only Detroit automaker with world-class reliability," Consumer Reports said in releasing its 2009 Annual Car Reliability Survey to the Automotive Press Association here.

The endorsement for Ford comes as Detroit's Big Three fight to retain market share against strong foreign competitors and as General Motors Co. and Chrysler Group LLC strive to show the government and American taxpayers that a strong domestic auto industry is worth saving and can lead the field. GM and Chrysler, however, didn't fare as well as Ford and still have work to do, Consumer Reports said.

This is just one more proof point, but it's a great testament because that's not a statement (Consumer Reports) has always made about us," said Bennie Fowler, Ford's global quality chief.

And it's the result of dedicated work to get there.

When Ford first closed the quality gap with Honda and Toyota a few years ago, "we didn't know if it was a fluke or if they could maintain it," said Rik Paul, automotive editor for Consumer Reports. But Ford continued to produce well-made vehicles that testers and readers appreciate.

Ford CEO Alan Mulally spoke repeatedly about reliability when he took over the company, and he visited the magazine to better understand and address lackluster findings that the company's vehicles had previously suffered.

Efforts at Ford today include a system that sends information about a problem to team members on the assembly line within 24 hours of a vehicle being brought into a dealership so changes can be made to correct the issue and prevent a recurrence.

Toyota, which consistently does well in the survey, also takes any slips seriously -- such as the Lexus GS that was rated below average.

"Historically, when a car's quality has slipped, the problem is rectified the following year," said Toyota Motor Corp. spokesman Curt McAllister. "We're not sure what the problem was with the GS, but we will go through the data with Consumer Reports."

About 1.4 million readers submitted data on vehicles from 2000 to 2009 model years, and the reliability results augment staff road tests of current vehicles to determine whether a vehicle is recommended to buyers.

Toyota and Honda Motor Co. still dominate the industry for long-term reliability, and the Honda Insight topped the list as the single most reliable vehicle. The Volkswagen Touareg was last in the survey. Of the 48 models with top reliability scores, 36 were Asian brands. Toyota had 18; Honda had eight; Nissan Motor Co., four; and Hyundai Motor Co./Kia Motors Corp. and Subaru each had three.

GM had some "bright spots" and appears to be on the right track if new vehicles such as the Chevrolet Malibu are any indication, but Chrysler "still struggles" and has a long way to go with only a single vehicle recommended by the testers and readers of the magazine. Last year, the Auburn Hills automaker had none recommended.

Bankruptcy filings by GM and Chrysler did not affect results -- the survey was taken in the spring before the companies completed their stints under Chapter 11 protection, Paul said. And bankruptcy should not affect next year's results if readers are objectively noting things that break on their cars, Paul said.

Of 48 GM models, 20 were average. The all-wheel-drive Chevrolet Traverse/Buick Enclave crossovers did well, and the magazine now recommends the Chevrolet Silverado/GMC Sierra light-duty pickups.

"Consumer Reports is one of several third-party inputs GM takes seriously because we realize the influence it has on purchase decisions," said Jamie Hresko, GM vice president of global quality.

Chrysler faces the biggest challenge. Its three brands are among the four worst, and more than a third of Chrysler products are rated much worse than average. Only the Dodge Ram 1500 is recommended, and there are few new cars and trucks on the horizon to boost future scores, Paul said.

As bad as that sounds, it is an improvement over last year when the Chrysler Sebring was the worst single vehicle on the list and no models were recommended.

Chrysler will detail efforts to restore quality in its five-year business and product plan to be unveiled Nov. 4 and is expected to talk openly about the need to correct quality and other errors committed under previous owners. Chrysler's newest partner, Fiat SpA, has implemented its manufacturing processes and quality controls, and improvement already can be seen, Chrysler spokeswoman Jodi Tinson said.

Warranty claims have been reduced 30 percent in the last 18 months, she said, adding that "the Ram represents where we are going."

The problem, said Consumer Reports senior auto engineer Jake Fisher, is that Fiat in Europe is known for its style, not its quality.

"There could be a lot of very pretty cars broken down on the side of the road," Fisher said.

That should not be the case for Ford products, as about 90 percent had average or better reliability, according to the survey.

The Ford Fusion and Mercury Milan beat out the Honda Accord and Toyota Camry for the second year.

"It's rare for Consumer Reports to see family sedans from domestic carmakers continue to beat the reliability scores of such highly regarded Japanese models as the Camry and Accord," said David Champion, senior director of Consumer Reports' Automotive Test Center. The last domestic that had better reliability than the Camry and Accord was the Buick Regal in 2004, he said.

GM's Malibu with a V-6 also did well and "is on par with the most reliable family sedans," Champion said.

Ford's upscale Lincoln brand did not fare as well. All-wheel-drive versions of the Lincoln MKS, MKX and MKZ came in below average. But the MKZ was ranked stronger than the Lexus ES or Acura TL.

The Honda Accord dipped in overall ratings, something Honda spokesman Chuck Schifsky said is not uncommon for a new car. "Customers may have problems with new features and technology they are not used to. But I think the study showcases the hallmarks of the Honda brand: durability, quality and reliability."

The Nissan Armada/Infiniti QX56 large SUVs have brought their reliability up to average, but the magazine expressed concerns with the rear-drive Nissan Titan pickup, Quest minivan and tiny Versa sedan.

Continuing their quality climb are Hyundai and Kia. Scoring well were the Hyundai Elantra and Tucson and the Kia Sportage. Hyundai's foray into the luxury segment with the Genesis proved above average with the V-6 and average with the new V-8 engine. Not as strong are the Kia Sedona minivan and Sorento SUV.

"The results are not an anomaly," said Hyundai spokesman Dan Bedore. "They are the dividends of our huge investment to improve quality."

Small cars fared well. Of 37 in the survey, 20 scored above average, including the Honda Fit, Scion xD and VW Golf.

Half of the 42 family cars tested were above average, including five of eight hybrids in this segment (Prius, Fusion, Milan, Camry and Nissan Altima hybrids).

Among the least reliable vehicles in their class are the all-wheel-drive Lexus GS, Nissan Versa and Subaru Impreza WRX.

European automakers showed some improvement again this year. The reliability of Mercedes-Benz vehicles has improved; most are now average or better, and the new GLK proved a strong new entry in its first year.

Results are more mixed for BMW AG, as the 535i sedan and X3 SUV fell and the new 135i scored below average. The only model Consumer Reports recommends is the BMW 328i.

The VW Rabbit/Golf and new CC were above average, and the Jetta TDI is the only diesel the magazine recommended. The Passat and Audi A3 have improved to average, along with the Tiguan SUV.

Porsche saw its Boxster fall below average and the magazine no longer recommends it.

The reliability report is in the December issue of Consumer Reports, which goes on sale Nov. 3.

Bryce Hoffman and Scott Burgess contributed.


UAW opposition mounts
to Ford concessions

By David Bailey and Bernie Woodall

DETROIT, Oct 28 (Reuters) - Ford Motor Co (F.N) workers represented by the United Auto Workers had rejected concessions at six plants as of Tuesday, threatening to vote down a deal to give the automaker cost parity with U.S. rivals General Motors Co [GM.UL] and Chrysler.

Despite pressure from UAW national leaders to ratify the agreement, rank-and-file workers have objected to giving Ford the same kind of "no-strike" pledge on wages and benefits the union gave GM and Chrysler in bankruptcy.

Workers at a plant in Flat Rock, Michigan, where they build Ford's iconic Mustang sports car, rejected the tentative deal by a margin of 1,265 against and 485 in favor in a tally released on Tuesday afternoon.

The Flat Rock vote followed a landslide 92 percent rejection of the deal at Ford's Kansas City, Missouri, assembly plant that builds the F-150 pickup and the Escape SUV.

Workers represented by UAW local units in Livonia, Sterling Heights, Canton and Ypsilanti also have rejected the agreement.

Workers at five other UAW plants supported the tentative pact last week, leaving passage of the concessionary deal down to a crucial series of votes later this week.

The UAW and Ford announced the tentative agreement on Oct. 13. It includes production commitments from Ford intended to protect jobs and a one-time $1,000 bonus for workers.

The voting so far has been a setback for Ford, which posted net losses of $30 billion over the past three years and expects a return to annual profits in 2011, and the UAW's national leaders who have recommended ratification of the deal.

Ultimately, if Ford workers reject the agreement, they also would be rejecting pattern bargaining that has ruled financial negotiations with the Detroit-based automakers.

Ford has said agreements GM and Chrysler made with the UAW around their government-supported reorganizations would put the company at a disadvantage over the long term.

Ratification is by a cumulative vote of the roughly 41,000 Ford UAW-represented workers at the various locals across the United States.


"For Ford, they view the contract as key to competing effectively," said Harley Shaiken, a labor law professor at the University of California at Berkeley. "For the UAW, they view the contract as critical to locking in future jobs.

"But you've got a lot of apprehensive and angry members out there because of a dismal economy and an industry that has been on a roller coaster. That combination is proving volatile in these votes."

Voting will not wrap up until Friday at UAW Local 600, which represents several thousand workers at multiple Ford facilities, including the Dearborn truck assembly plant where leaders have voiced opposition to the givebacks.

Kansas City workers raised concerns about the "no-strike" provision, a blurring of job classifications among skilled workers who make higher wages and a lack of limits on new entry-level hiring through 2015, local President Jeff Wright said.

UAW workers have made a series of givebacks to Ford since 2005, most recently approving changes negotiated in February that Ford said would save $500 million per year.

Several local union officials have said they expected a tougher sell this time after the string of recent concessions.

"I supported it," said UAW Local 182 President Steve Zimmerla, who represents workers at Ford's Livonia transmission plant. "I think it was the right thing to do for our future.

"But these are difficult times in the industry and the February concessions are still on everyone's mind."

Analysts see Ford as in a better competitive position than GM or Chrysler and some believe Ford could return to a full- year profit as soon as 2010.

Ford borrowed more than $23 billion in late 2006 to finance its turnaround and remains the only large U.S.-based automaker not to seek emergency U.S. government loans.

But the automaker has much more debt on its balance sheet than rivals GM and Chrysler, which shed billions of dollars of debt through the bankruptcy process.

Ford shares fell 14 cents, or 1.87 percent, to close at $7.33 on Tuesday on the New York Stock Exchange. (Reporting by David Bailey and Bernie Woodall; editing by Maureen Bavdek and Andre Grenon)

Disabled Nortel employees lose out

October 27, 2009

Robert Meynell Government Relations Associate for March of Dimes Canada

As Nortel divvies up its assets and former CEO Mike Zafirovski paws for $12.3 million (U.S.), employees on long-term disability are forgotten and abandoned, providing yet another example of how more than 40 per cent of Canadians with disabilities find themselves earning less than $10,000 per year.

Imagine that you have a good job at Canada's premiere telecommunications manufacturing company. You choose to make regular contributions to your company's long-term disability (LTD) benefit plan because, while you are unlikely to ever need it, you don't wish to risk finding yourself living in poverty or possibly institutionalized as a result of an accident or disease.

One day Fortune knocks, recruiting you into the world of the disabled. Though you've lost much, you are thankful that you're not also left penniless. Then you receive a letter from your employer informing you that, regrettably, your LTD plan was not really covered by an insurance company and when the business evaporates so will your paycheque.

This financial spiral is the reality faced today by the 409 people on LTD at Nortel, except that they have yet to receive the letter. Indeed, Nortel's lawyers are not disclosing much.

It turns out that while Sun Life administered the LTD payments, most of the money came from Nortel's operating revenue, which means that if Nortel stops operating, those on disability are on their own.

Unlike Nortel's 17,000 retirement pensioners, the law does not require Nortel – or other employers that do not insure liability benefits (the majority of them) – to keep the money in trust for those on disability. And unlike the tens of thousands of other Nortel employees who have lost their jobs, those on disability leave are unable to find new employment.

In the United States, France and Britain, there are statutes that protect LTD beneficiaries but Canada has no federal or provincial legislation that protects those who are most in need. Corporate directors get their bonuses. Lawyers and secured creditors walk away with full pockets. Pensioners are hurt (possibly losing more than 30 per cent of their pension) but still afloat. But the 409 people on disability may be left with nothing.

These are the most vulnerable. They are unable to work. Many are still trying to meet the cost of raising a family and they have not had the years in the workforce to build a substantial amount of savings. And their small number compounded with their disabilities render them ill-equipped to mobilize a strong defence of their rights in the face of what can only be called systemic discrimination.

Some may wonder why this amounts to discrimination when nearly everyone associated with Nortel is being hurt financially in one form or another. True, thousands have taken a financial hit, but only the 409 on disability are being driven into almost irreversible poverty.

The collapse of Nortel is neither the first nor the last time that corporate bankruptcy in Canada will throw the most vulnerable into poverty. We saw it with Eaton's and Massey Ferguson. In the unsteady economy we face, we are likely to see it again soon.

But we should stop it here – and we can. We owe it to ourselves as a country that cares for its most vulnerable to press Nortel to honour its promise to those on long-term disability and call upon the federal government to reform regulations governing LTD pensions.

This is not a question of charity, it is a question of rights. In the LTD pension plans, Nortel promised financial security in the event that the employee acquired a disability. As Nortel dissolves, it must do its utmost to compensate each of the 409 people now relying on that promise. It was a pension they paid into and it must be honoured as a pension.


UAW, Ford deal is in jeopardy

Two locals reject contract backed by union leaders

Bryce G. Hoffman and Louis Aguilar / The Detroit News
October 27, 2009

Sterling Heights --A tentative agreement on concessions between Ford Motor Co. and the United Auto Workers is facing unprecedented opposition, with many workers saying Ford's comparative success makes further givebacks unnecessary.

On Monday, 80 percent of workers voting at Ford's Sterling Axle Plant rejected the proposed contract changes -- a surprising upset, since the factory would gain about 100 jobs if the deal is ratified. That came a day after a stunning 92 percent of workers at Ford's Kansas City Assembly Plant rejected the agreement.

UAW President Ron Gettelfinger has said the concessions are necessary to maintain pattern bargaining, which has for decades essentially assured equality in wages and benefits for workers at Detroit's automakers. But union dissidents appear to be winning the debate on the factory floor.

As of Monday night, locals representing about 8,000 of Ford's 41,000 UAW members had voted against the contract changes.

It is the most serious challenge to Gettelfinger's leadership yet, and he and other union leaders have fanned out across the country in an eleventh-hour bid to save the agreement.

Even if they succeed, the outpouring of opposition has raised serious questions about Gettelfinger's ability to deliver on promises of parity for Ford after granting significant concessions to rivals General Motors Co. and Chrysler Group LLC during their government-mandated bankruptcies earlier this year.

"It's a vote of no confidence in Gettelfinger, and it's a vote of no confidence in Ford's ability to deal with labor issues," said Gary Chaison, professor of labor relations at Clark University in Worcester, Mass.

Gettelfinger sold previous concessions to workers by promising to fight for restoration once Ford returned to profitability, Chaison said. As the Dearborn automaker prepares to announce next week what is likely to be another quarter of better-than-expected earnings, it is struggling to convince workers to give any more.

"Ford's problem is that they have an embarrassment of riches," Chaison said. "They're not bankrupt. Ford has made the case that it's different than GM and Chrysler. That may have helped sales, but it's not helping now. There's been so much encouraging news from Ford that the workers who are still there feel they should be rewarded."

Instead, they are being asked to match at least some of the concessions the UAW granted to GM and Chrysler.

Ford spokesman Mark Truby said the automaker has "been consistent about communicating our plan and fairly presenting our progress against our plan."

Ford's tentative agreement with the UAW includes a freeze on wages and benefits for new hires and changes in work rules that would give Ford greater flexibility in how it deploys workers in factories. But the deal also include limits on the union's right to strike over wage and benefit increases -- the biggest point of contention for workers, and one that could jeopardize pattern bargaining.

"Pattern bargaining has been vital for the union for decades," said labor expert Harley Shaiken, a professor at the University of California-Berkeley. "It has ensured that the gains won by workers at one company are shared by all."

He said union leaders believe that giving Ford at least some of what the UAW gave GM and Chrysler is key to guaranteeing that tradition continues.

Pact maintains pattern

If the proposed agreement is ratified, Ford workers -- like their counterparts at GM and Chrysler -- would not be able to take to the picket lines if they are unable to reach an agreement on any increase to wages and benefits during the next round of national contract talks in 2011.

As The Detroit News first reported Saturday, this was demanded by the Obama administration as a condition of its bailout of GM and Chrysler. The White House did not want to invest billions in taxpayer dollars to make those companies competitive only to see the gains reversed in the next round of negotiations.

If Ford does not receive a similar commitment from the UAW, it will be at a clear disadvantage once bargaining begins.

Dissident leader Gary Walkowicz, a member of the bargaining committee at UAW Local 600 that represents workers at Ford's River Rouge complex, said the union's acceptance of this so-called "no strike" language is the chief reason he and others oppose the agreement. He said Gettelfinger and other UAW leaders sold workers on previous concessions on the grounds that they would fight to restore those givebacks once Detroit automakers were back in the black.

"This shows that never was their intention," Walkowicz said. "People are angry at the union leadership. They feel like they were betrayed and lied to."

Gettelfinger declined to comment for this story. But he and other UAW leaders have accused dissidents of deliberating spreading "misinformation."

At Sterling Axle on Monday, workers opposed to the deal passed out leaflets listing the salaries of top Ford executives for 2007 -- before they took substantial pay cuts.

At Kansas City and elsewhere, the dissidents have shouted down union leaders urging ratification.

Some workers support deal

Not all workers have been swayed.

Brian Pannebecker voted in favor of the agreement Monday at Sterling Axle. As painful as recent concessions have been, he said, they have made Ford competitive for the first time in years. He is worried about the automaker's long-term prospects if it loses the ground it has gained.

"We got into trouble because our labor costs were not competitive with Toyota and Honda," Pannebecker said. "It would be foolish to turn around now and put ourselves at a point where we're not competitive with GM and Chrysler."

Ford has made progress, but its success can only be viewed as such in comparison with its cross-town rivals.

The automaker lost more than $14.6 billion last year, and while Ford posted a surprise second quarter profit of more than $2.2 billion this year, it is not expected to be profitable on a full-year basis until 2011. Ford also remains saddled with tens of billions in debt, while GM and Chrysler were able to shed most of their liabilities in bankruptcy court.

This suggests that Ford and other automakers will face even more resistance from union members as the turnarounds at GM and Chrysler gain traction.

Kansas City and Sterling Axle are not the only factories that have voted against the agreement.

Though their facility received promises of additional work as part of the deal, workers at the Livonia Transmission Plant rejected the contract changes by a 52 percent to 48 percent margin on Friday, according UAW Local 182 President Steve Zimmerla.

Paul Vella, a 16-year-veteran Livonia veteran, voted no.

"We can't afford more concessions," he said.

Workers at a parts facility in Plymouth also voted against the contract modifications.

Union members at other plants -- including Wayne Assembly Plant, Michigan Assembly Plant and three engine plants in Cleveland -- voted narrowly in favor of ratification last week.

At many factories, local UAW leaders have remained neutral in the debate because they fear supporting the deal could cost them their seats in upcoming spring elections, according to sources.

In addition to Sterling Axle, workers at Ford's Auto Alliance Inc. plant in Flat Rock voted Monday, but results were not available.

All voting is expected to be done by Saturday.


Jim Flaherty unveils
pension reform

But measures don't include any relief for
pensioners whose company has collapsed

Steven Chase, Janet McFarland and Jacquie McNish

Ottawa, Toronto Globe and Mail Tuesday, Oct. 27, 2009 3:47PM EDT

Under pressure to act on retirement security, the Harper government has moved up the timetable for some long-awaited reforms to federally regulated pension plans, but the measures don't include any relief for pensioners whose company has collapsed.

Finance Minister Jim Flaherty on Tuesday unveiled his proposed changes, which include rewriting tax laws to encourage both federally and provincially regulated companies to run bigger pension fund surpluses. The Conservatives are looking to change tax law so that companies are allowed to run surpluses of as much as 25 per cent instead of the current 10 per cent level. This cap exists to limit federal tax revenue lost on the tax-deferred pension contributions.

However, much of the reforms only address the workplace pension plans of federally regulated industries – including telecommunication companies and airlines – that comprise about 12 per cent of overall private sector employee plans in Canada by assets.

Ottawa is also proposing to change the rules for federally regulated industries to require that they continue to contribute to workplace pension plans unless they are running a surplus of at least 5 per cent. Under current rules, federally regulated companies can take a “contribution holiday” as long as the plan has no deficit.

“The practice of taking contribution holidays was widespread in the past and has been a contributing factor towards the under-funding of pension plans during the past several years,” the Finance Department said in a release.

The government also wants to restrict companies' ability to sweeten benefits unless its workplace fund has a 5 per cent surplus.

Plus, it plans to require federally regulated companies that voluntarily wind up pension plans to pay out all the benefits they owe their workers, prohibiting plans from shutting down with large deficits.

Tuesday's announcement only deals with reforms to federally regulated pension plans and doesn't address the larger debate taking place about the retirement savings crisis. Ottawa still faces calls to introduce compulsory or voluntary schemes that would compel Canadians to save more for their retirement following revelations that many are ill equipped after life in the work force.

The Tories had originally planned to release these federal pension reforms by December, but Mr. Flaherty decided to release them Tuesday. In recent days, the opposition NDP and Liberals had begun to ramp up pressure for action on pensions.

“People want answers,” one federal official said, by way of explanation.

Pension experts warned Tuesday that many of the new reforms will have virtually no impact. They say most pension funds do not have a surplus that could now be enlarged under the new rules, and they argue the wind-up changes merely close a loophole that has rarely been used.

“These two changes are fundamentally irrelevant,” argued pension specialist Mitch Frazer, a lawyer at Toronto law firm Torys LLP.

Mr. Frazer said provincial pension rules already forbid financially healthy companies from voluntarily winding up a pension plan that is in a deficit position and walking away from the problem.

Federal laws have not had the same prohibition for the small minority of federally regulated plans, and the changes will fix the anomaly. But Mr. Frazer said he doesn't know of any healthy company that has taken advantage of the loophole in the past to abandon a plan with a deficit.

More critically, he said the reform will not address the far more common problem of under-funded plans being wound up in bankruptcy, leaving retirees facing sharply reduced pension payments.

“It doesn't have any meaningful impact on bankruptcies, which is where the problem is,” he said.

Pension lawyer David Vincent of Ogilvy Renault LLP said unless the federal government also plans to change the law to allow companies to extract excessively large surpluses from their pension plans – a move that is almost impossible under current rules –firms will continue to avoid building up any surpluses in their pensions.

As a result, he said, few, if any companies will take advantage of a change allowing surplus assets in pension plans to grow from 110 per cent of liabilities to as high as 125 per cent.

“If the government really seriously wanted to create an incentive for companies to, in effect, over-fund their pension plans ... increasing the tax limits will not allow them to do that,” Mr. Vincent said.

“Ever since the withdrawal of surplus became controversial, most companies have tried to carefully manage their funding of their plans.”

The government since January has been consulting companies and other players in the pension industry on proposed changes.

Ottawa and the provinces face increasing pressure to modernize a fragmented pension system that is seeing thousands of retirees stranded with shredded pensions as the downturn has pushed more companies into bankruptcy protection. The impact of the recession has exacerbated the straining pensions of many companies with aging work forces and growing numbers of retirees, and has left private-sector pensions under-funded by an estimated $50-billion.

Amending income tax laws is not expected to trigger any tax revenue losses in the near future because most of the country's pension funds are so under-funded that it could be years before employers are in a position to invest surpluses into their plans.

Other reforms being unveiled by Mr. Flaherty include changes to allow pension plan participants to negotiate changes to their pension arrangements.

The Tories have dismissed calls for Ottawa to step in and offer a backstop for pension plans, arguing this would create a “moral hazard” that could spur companies to take undue risks because of insufficient consequences for failure.

“We talk about protecting pensioners. But we've also got to protect taxpayers,” Mr. Menzies said recently.

The combined impact of the global financial crisis, poor fund management and the growing ranks of longer-living retirees has saddled most of Canada's pension plans with crushing deficits.

Watson Wyatt Worldwide, a pension consulting firm, estimates the average Canadian corporate pension plan is 20 per cent short of assets needed to fund long-term pension obligations. The firm estimates this solvency deficit has left a $50-billion hole in corporate pensions funds.

Critics of calls to allow companies to run up bigger surpluses argue that changing the rules would have little effect because shareholders, particularly of publicly traded companies, would likely resist allocating extra money to employee benefits.

As it stands today, the minority Harper government needs the support of 12 opposition MPs in order to obtain a majority to pass a pension reform bill through the Commons. By-elections on Nov. 9 could slightly change this calculation.

Federal political parties are scrambling to stake out turf in the debate over the retirement-savings crisis this week, with the opposition Liberals vowing they'd take a more activist role than the Harper government and Conservatives warning against costly new schemes.

Liberal Leader Michael Ignatieff, his party lagging in the polls behind the Tories, held a roundtable Monday on the country's crumbling private pension system. He suggested he'd expand the Canada Pension Plan, a vehicle that's financed from the pockets of employers and workers.

“That basic commitment that Canadians make to each other about a secure and dignified retirement is now in some question,” Mr. Ignatieff told the Ottawa forum.

“There is a widespread feeling ... of insecurity.”

Ottawa and the provinces also face calls to intervene far more broadly in Canadians' retirement-savings behaviour, such as enacting new compulsory or voluntary schemes that would steer people toward building bigger nest eggs.

The NDP, which is propping up the minority Harper government, last week proposed that Canadians be forced to buy pension insurance as part of a package of suggested reforms to tackle the problem.

The Tories are proceeding cautiously on the bigger question of inadequate savings, wary of committing Ottawa to any new programs. In May, Mr. Flaherty agreed to study retirement security with the provinces, and reports on this are due before mid-December, when he and his counterparts meet in Whitehorse.

Mr. Flaherty Monday accused the Liberals of jumping on the bandwagon late and offering what he called a “knee-jerk reaction to a serious issue.”

Mr. Menzies, Ottawa's point man on pensions, said Monday he doesn't want to prejudge whether the federal government sees a leadership role for itself on the security issue.

He warned against new programs that would saddle taxpayers with big obligations, saying some countries now find themselves unable to afford more elaborate schemes.

“They put in place a system of paying [for] all retirees, but they never put in a system that was adequately set up to pay for it. So they're in a huge deficiency right now.”

The Liberals are still drafting their pension platform, but Mr. Ignatieff floated the idea of supplementary savings schemes tied to the Canada Pension Plan, or giving the plan's managers additional responsibility for “retirement security.”

Mr. Menzies said a research working group assembled by Ottawa and the provinces in May is studying how the adequacy of retirement income in Canada compares to other countries, among other things.

A key question Mr. Flaherty and his provincial counterparts will face is whether efforts to boost savings will be compulsory or voluntary. Critics of voluntary incentives – such as registered retirements savings plans – say these have failed to generate sufficiently large nest eggs for Canadians.

Liberal finance critic John McCallum said his party will provide its own proposals within a month or so, and these could include expanding the Canada Pension Plan, more tax incentives for savings, and prioritizing pensions in the event of bankruptcy.

“We believe in a major role for the federal government in this area,” he said Monday.


Ford's stand: Accept cuts or we invest elsewhere

Ford, CAW contract talks resume here as U.S. workers vote

Tony Van Alphen Business Reporter
Oct 27, 2009

Ford and the Canadian Auto Workers resumed critical negotiations Monday, with the company stressing that it needed to cut labour costs here or it would have to invest elsewhere in the future.

Joe Hinrichs, Ford group vice-president of global manufacturing and labour affairs, told negotiators for the Canadian Auto Workers union that current labour costs are uncompetitive with their U.S. peers and employees at rival General Motors and Ford in Canada.

Hinrichs said a continuing disadvantage would make it difficult for Ford to invest here, according to CAW president Ken Lewenza.

"He reminded us of that again and that we have to deal with it now," Lewenza said in a brief break from talks at a downtown hotel.

Lewenza said Hinrichs underlined Ford has no plans for more production at the sputtering St. Thomas assembly plant beyond 2011. "He (Hinrichs) told us that was the reality and we have to deal with it. What we have to do now is find some balance and protect Ford investments in Canada."

Ford's current labour costs, including benefits and pension obligations in Canada, are about $16 (U.S.) an hour more than any of its plants south of the border and even higher elsewhere. Ford's labour costs in the United States are in the range of $50-$52 an hour.

Earlier this month Ford indicated its labour costs, which represent less than 10 per cent of the cost of making a car, are higher here than in any country where it operates.

The union represents more than 7,000 production and skilled trades people at operations in Oakville, St. Thomas, Windsor and Brampton. Ford wants concessions like those the union negotiated with General Motors of Canada and Chrysler Canada earlier this year. Those firms gained the concessions to qualify for billions of dollars in government aid to stay alive.

Talks between Ford, which did not seek government aid, and the union started in early September but quickly fizzled into information exchanges this month.

In exchange for concessions, the union is demanding commitments for future assembly or parts production so Ford of Canada would maintain 13 per cent of its North American production here.

Negotiations continued last night with CAW anticipating some company proposals to spur bargaining. Also Monday, Ford workers in Missouri overwhelmingly rejected a new contract – a sign the automaker and United Auto Workers union are having trouble convincing some locals to accept changes that lower Ford's U.S. labour costs to match those at GM and Chrysler.

Under the tentative deal, workers would get a $1,000 bonus but entry-level wages are frozen and trades people have more duties, in exchange for agreeing not to strike on wages or benefits. Other issues could lead to UAW walkouts.


Ford's Kansas City plant
workers vote down proposed contract changes

Bryce G. Hoffman / The Detroit News
October 26. 2009 5:57PM

Workers at Ford Motor Co.'s Kansas City Assembly Plant delivered a stunning defeat to the company and union leaders Sunday when 92 percent voted against proposed contract changes.

The vote came after a stormy meeting at nearby Winnetonka High School where UAW Vice President Bob King, head of the union's national Ford section, made an appeal to workers to support the agreement, which was negotiated by the UAW and Ford earlier this month.

"(He) spoke and was booed," said one worker, who asked not to be identified. "There were a lot of 'No's!' It was a very loud meeting."

Last week, several key plants in Michigan and Ohio approved the deal by narrow margins.

A Ford executive expressed "shock" at the magnitude of the rejection.


CAW and Ford Canada resume contract bargaining
Ken Lewenza, CAW national president, says Ford is at a cost disdavantage.

Union seeks contract after U.S. counterpart accepts strike-free deal

Monday Oct 26, 2009 - The Canadain Press

As talks with Ford Canada resume, the Canadian Auto Workers union wants its members to reflect on possible cost concessions in a new deal with the car maker, even if Ford's U.S. parent turns a profit when it reports third-quarter results this week.

Analysts from JP Morgan said last week the automaker – the only one of the so-called Detroit Three to avoid filing for bankruptcy protection earlier this year – could find itself in the black for the July to September quarter, thanks to a gain in North American market share.

But CAW president Ken Lewenza said this doesn't negate the need for a new labour contract in Canada that will cut costs for the company.

The two sides were to return to the bargaining table this morning after earlier rounds made no progress.

Ford says it needs workers to give it the same concessions they gave competitors General Motors and Chrysler earlier this year in order to stay competitive.

In exchange, the union is asking for a guarantee the company will maintain current production levels in Canada.

"When Ford Motor Co. looks like they're starting to turn a profit, then workers themselves ask, 'Why are sacrifices necessary?' " Lewenza said.

"But Ford, in terms of cost structure, is at a disadvantage today based on what we did at GM and Chrysler."

That said, Lewenza said he's "frustrated" at Ford's refusal to date to make any promises regarding production or jobs at its Canadian plants.

"We've had lots of bargaining sessions, lots of exchanging of information, and the job quite frankly should be done by now and it isn't," he said.

"It's really all about future investment and future security of Ford workers in Canada, but we haven't been able to get it done."

Since the CAW and Ford broke off official talks, the United Auto Workers in the U.S. reached agreement with the company which includes a six-year ban striking over wages or benefits and a wage freeze for new hires.

In exchange, the company has promised a $1,000 (U.S.) one-time bonus and has made some production commitments.

However, many UAW workers are angry about the no-strike clause and it is by no means assured that the contract will be ratified by the union's members, who will vote on it throughout the week.

The main issue on this side of the border is the future of an assembly plant in St. Thomas, Ont.

Currently, the 1,600-employee plant builds the Ford Crown Victoria, the Lincoln Town Car and the Mercury Grand Marquis – all full-sized cars, demand for which is limited to niche markets. The Crown Victoria is only included in sales of fleets, such as those run by police departments and taxi companies.

Ford has said repeatedly that it has no plans to manufacture vehicles in St. Thomas beyond 2011. Lewenza has suggested Ford could increase production at its other Canadian plants to offset the closing of St. Thomas, but Ford will not release details on its plans.

Ford spokeswoman Lauren More said the company does not discuss production or product plans for competitive reasons.

Ford employs about 7,000 hourly workers in Canada.


Ottawa to take action
on pension funds

Steven Chase and Jacquie McNish

Ottawa and Toronto — From Monday's Globe and Mail Monday, Oct. 26, 2009

The Harper government is looking at overhauling tax law to encourage bigger pension-fund surpluses, as part of a series of reforms to the country's crumbling pension regime to be introduced this fall.

Concerned over plan deficits, the government since January has been consulting companies and other players in the pension industry on proposed changes. A bill is expected to be introduced by December, said Ted Menzies, parliamentary secretary to Finance Minister Jim Flaherty and Ottawa's point man on pensions.

Ottawa and the provinces face increasing pressure to modernize a fragmented pension system that is seeing thousands of retirees stranded with shredded pensions as the downturn has pushed more companies into bankruptcy protection. The impact of the recession has exacerbated the straining pensions of many companies with aging work forces and growing numbers of retirees, and has left private-sector pensions underfunded by an estimated $50-billion.

"These people were promised a pension ... They thought they had a pension," Mr. Menzies said. "If there's a way we can - within our jurisdiction - make that more assured for those people, then we'd better do it."

Ottawa has direct oversight of federally regulated industries, a group that makes up just 10 per cent of the asset value of all private plans in Canada, while the remaining plans are regulated at the provincial level. But by changing tax policy around pension fund surpluses, Ottawa would have a much broader and more far-reaching impact on how companies plan for their employees' retirement.

Even if it's enacted, such a change would not have an immediate impact because so many pension plans are so badly under-funded right now. The thinking is that Canada needs to encourage plan sponsors to amass bigger cushions as a way of guarding against future threats to their solvency.

The Income Tax Act forces employers to halt contributions to a pension plan as soon as a surplus in the fund equals 10 per cent of its liabilities. This cap exists to limit federal tax revenue lost on the tax-deferred pension contributions.

But Mr. Flaherty, who's been studying the issue for nine months, has faced frequent calls from actuaries and many in the industry to raise the threshold to 20 or 30 per cent - or even scrap it altogether.

"I will tell you that we heard from many of the actuaries and many of the legal advisers that if a surplus was allowed to be carried forward, we may not have been facing the problems we are today," Mr. Menzies said.

Ottawa is considering this measure, he said, because bigger pension surpluses would allow companies to "plan for a rainy day. It's a simple method to protect people," he said.

Amending income tax laws is not expected to trigger any tax revenue losses in the near future because most of the country's pension funds are so under-funded that it could be years before employers are in a position to invest surpluses into their plans.

At the same time, the government is also weighing whether it should grant plan sponsors more time to fund pension shortfalls. Earlier this year, Ottawa granted companies a temporary reprieve from the requirement that they fund shortfalls within five years.

Mr. Menzies suggested Ottawa may also act to boost reporting requirements for pension plans.

"We saw pension funds drop in the multi, multimillions of dollars a day. Because they reported a surplus in the previous reporting time, they didn't need to report for three years. Obviously [that's] a weakness," he said.

But Mr. Menzies dismissed calls for Ottawa to step in and offer a backstop for pension plans, arguing this would create a "moral hazard" that could spur companies to take undue risks because of insufficient consequences for failure.

"We talk about protecting pensioners. But we've also got to protect taxpayers."

The combined impact of the global financial crisis, poor fund management and the growing ranks of longer-living retirees has saddled most of Canada's pension plan with crushing solvency deficits.

Watson Wyatt Worldwide, a pension consulting firm, estimates the average Canadian corporate pension plan is 20-per-cent short of assets needed to fund long-term pension obligations. The firm estimates this solvency deficit has left a $50-billion hole in corporate pensions funds.

Critics of calls to allow companies to run up bigger surpluses argue that changing the rules would have little effect because shareholders, particularly of publicly traded companies, would likely resist allocating extra money to employee benefits.

As it stands today, the minority Harper government needs the support of 12 opposition MPs in order to obtain a majority to pass a pension reform bill through the Commons. Nov. 9 by-elections could slightly change this calculation.

Opposition parties are also sounding the alarm. The NDP last week proposed Canadians be forced to buy pension insurance.



Parts shortage idles
Oakville Ford plant
A parts shortage linked to violent strikes and protests at a parts supplier in India are forcing a one-week shutdown of Ford Canada’s plant in Oakville, seen in this 2006 file image.

Oct 24, 2009


Violent strikes and protests at a parts supplier in India are forcing a one-week shutdown of Ford Canada's plant in Oakville, the automaker said Friday.

Ford spokeswoman Lauren More said the parts shortage is the result of labour unrest at the supplier, Rico Auto Industries, which produces transmission components.

Reports say auto workers in India's Haryana state have been engaging in increasingly violent strikes and protests after clashes between workers and police left one Rico employee dead last weekend.

"We are monitoring the situation and continue to work with Rico to reduce the impact on our operations," More said in an email.

A Canadian Auto Workers spokesman said the temporary lull in operations at the plant, which employs about 3,000 people is a concern, but everyone hopes to be back at work soon.

"We're getting closer to Christmas, and we don't want people laid off during this period of time," said Gary Beck, president of CAW Local 707.

Auto industry analyst Bill Pochiluk said all the major automakers are doing what they can to cut costs as the industry struggles with its worst sales slump in decades, including outsourcing parts production to lower-cost operations in India, China and Mexico.

This trend has been encouraged by the high Canadian dollar, which is nearing parity with the U.S. greenback and makes it even cheaper to buy parts from foreign producers.

"As a trend, you can say very definitively that there is an erosion of Canadian content on Canadian-assembled vehicles because of extreme cost pressure," said Pochiluk, president of industry adviser AutomotiveCompass.

"And this latest movement in the exchange rate, the higher value of the Canadian dollar, allows us to buy import parts for cheaper, and that's only going to make this trend worse."

In a recent commentary, industry analyst Dennis DesRosiers predicted that only 76 per cent of vehicles bought in Canada will be produced in Canada by the end of the next decade, which means further pain for Canadian suppliers.

"Adding to the woes of our materials and parts suppliers will be an expected increase in products sourced from offshore," DesRosiers wrote.

"Chinese, Indian and Italian products factor into this to a degree, but most of the increase will arrive courtesy of the countries from which we already buy vehicles: Japan, Korea and Germany."

Pochiluk said most automakers with operations in Canada are buying what he called "commodity-type parts" that are ordered in bulk, such as electronic components, from foreign countries.

Oftentimes, automakers will guarantee certain volumes to suppliers to get the best price possible, which can leave them without a backup supplier – a problem that likely resulted in the shutdown at Ford, Pochiluk said.

"I'm pretty certain that the Ford purchasing people won't let this problem happen again on this particular commodity," he said.

Ford builds the Ford Edge, the Ford Flex and the Lincoln MKX at its Oakville plant, just west of Toronto.

The temporary work suspension comes as the Canadian Auto Workers and Ford are preparing to resume formal contract negotiations on Monday.

Ford and the CAW have been negotiating a new labour contract since early September, but talks have stalled on the issue of how much manufacturing capacity the company will keep in Canada.

Ford has asked the union for the same concessions it gave General Motors and Chrysler in negotiations earlier this year so it can remain cost competitive, but the union says it wants production guarantees in return. However, Ford says it currently has no plans to manufacture vehicles at its St. Thomas, Ont., plant beyond 2011.

Currently, the 1,600-employee plant builds the Ford Crown Victoria, the Lincoln Town Car and the Mercury Grand Marquis – all full-sized cars, demand for which is limited to niche markets. In fact, the Crown Victoria is only sold as a part of fleets, such as police cars and taxis.



Reforming a broken system

Canada's gathering pension storm

Konrad Yakabuski

Oct. 24, 2009 7:42PM EDT

Poor Giulio Tremonti. Italy’s finance minister not only has the thankless job of playing bad cop to his populist boss, Prime Minister Silvio Berlusconi. He’s also got debt-strapped Europe’s worst public finances to manage.

With the world’s oldest population after Japan, a birth rate that makes Canadians look like prodigious procreators, and the cushiest public pensions anywhere, Italy is deep in the hole and sinking deeper by the day. Public pensions already account for about 30 per cent of government spending in Italy. Each passing year leaves fewer and fewer working Italians left to foot the pension bill for their elders. But the ballot-box clout of Italian seniors means any attempt to roll back benefits is a political suicide mission.

Italy may be one of the worst off, but all developed countries, along with China, will experience unprecedented economic and social pressure in coming decades as their populations grey. Few, if any, have prepared for the demographic tsunami that will hit them as the baby boom generation heads into its golden years.

By comparison, Canadians have some reason to feel fiscally smug, with a public pension system considered one of the world’s most financially sustainable.

There’s only one catch: That system pays among the least generous government-sponsored benefits in the developed world.

It’s a prudent approach, but it’s laying the groundwork for a host of other problems.

The proportion of seniors in Canada’s population will balloon to as much as a quarter of the population by 2030, from 14 per cent now. Middle-class Canadians without a workplace pension plan or personal savings to fall back on face a sharp and sudden decline in living standards when they leave the work force.

With millions more retirees living on subsistence-level public pensions, the economy will see a lot less of the discretionary income that has normally fuelled consumer spending.

“An aging population leads to a slower-growing work force and that leads to slower economic growth,” warns University of Toronto economics professor David Foot, who first outlined the impact of shifting demographics on the economy in the 1996 bestseller Boom, Bust & Echo.

“We’ve got to build these slower economic growth projections into our corporate strategic models and our government revenue projections. I don’t think that realization has taken hold yet.”

The tsunami on the horizon
It wasn’t supposed to turn out this way. When Canada’s public pension system was set up in the 1960s, the economy and personal income were both growing rapidly. Women were flooding into the work force, generous defined-benefit pension plans provided by employers were becoming the norm and Registered Retirement Savings Plans were taking flight. Policy makers anticipated that most baby boomers wouldn’t need government help in retirement.

Yet today three-quarters of Canadians in the private sector have no employer-sponsored retirement plan. Less than a third contribute to an RRSP and only a tiny fraction stash away the maximum allowed – 18 per cent of earnings up to $21,000 annually. A generation raised on immediate gratification has preferred to spend (usually on credit) rather than build up a nest egg.

Forget the promise of early retirement. Millions of currently middle-income workers will be forced to hold down a job well past 65 and, even then, will face straitened circumstances when they do retire.

The coming crisis is one that politicians here are being forced to face up to as the first wave of the baby boom generation prepares to enter senior citizenship in 2011. The dilemma has many experts pushing for massive reform that would include an entirely new public plan to complement or even replace the Canada Pension Plan (CPP), company pensions and RRSPs. If Canadians won’t voluntarily save enough, some experts contend, maybe it’s time the government forced them to.

Some provinces have taken tentative steps to address the so-called pensions gap. Ottawa, meanwhile, has set up its own “research working group” on pension reform, led by Conservative MP Ted Menzies.

The biggest obstacle to any overhaul, however, may not be federal-provincial squabbling. The insurance industry and big banks, which manage hundreds of billions of dollars held in corporate pension plans and RRSPs, are lobbying fiercely to protect their turf against any incursion by Ottawa or the provinces. Pension reform could be to Canada what health care reform has become south of the border – a lightning rod for critics of government intervention.

Mr. Menzies has appeared reluctant to endorse a compulsory government-sponsored retirement plan to supplant private-sector savings schemes, suggesting the idea smacks of “a bit of a nanny state situation.”

Yet, many experts believe stripping the private sector of a cash cow that has poorly served savers or, at the very least, creating a public-sector alternative to RRSPs and company pensions may be what’s needed if the country is to weather the demographic time bomb that is about to go off.

“The statistics speak for themselves. We’ve got 11 million working Canadians with zero company-sponsored retirement pension plans … [RRSPs are] very underused and skewed to higher-income earners,” says David Denison, chief executive officer of the CPP Investment Board, the arm’s-length body entrusted with managing the CPP’s $117-billion in assets. “I don’t think it’s a great leap to say, clearly, the [system] is not working.”

The way ahead
At the Rendez-Vous 50 Plus, a community centre for retired people in Montreal’s weather-beaten St-Michel district, Thérèse Fex and Bibiane Fontaine are toiling nearly as diligently as they did during their combined eight decades in the work force.

Ms. Fex, a petite 75-year-old widow with a ready smile, volunteers several days a week, preparing the meals the centre delivers to dozens of shut-ins around the neighbourhood. Ms. Fontaine, a lanky 72-year-old who loves driving, shuttles area seniors to their medical appointments.

Each woman held down a full-time job for decades. Ms. Fex worked at a pharmacy postal counter, Ms. Fontaine in a school cafeteria, but neither had much to show for it when she retired. Without a company pension plan to contribute to during their working lives, Ms. Fex and Ms. Fontaine now depend entirely on federal Old Age Security (OAS) benefits and the accompanying Guaranteed Income Supplement (GIS), a top-up program for the poorest seniors. Adding up those benefits and small sums from the Quebec equivalent of the CPP, Ms. Fex gets around $1,300 a month, Ms. Fontaine a bit more than $1,200.

“At least I can eat three times a day and I have an apartment,” Ms. Fex offers. “And I’m better off than a single mother with six children living on welfare.”

Perhaps. But if their expenses were to rise, they would be hard-pressed to cope. With a swelling proportion of Canadians set to enjoy this sort of threadbare existence, debate is intensifying about whether the payouts are generous enough.

OAS and GIS are the first pillar of Canada’s public pension system, providing a basic level of support to those with no other sources of retirement income. Together, the programs, which are paid directly out of federal coffers, provide benefits totalling $14,034 annually. The second pillar of the public system consists of the CPP and Quebec Pension Plan. Almost all Canadians with jobs must contribute to one or the other.

Currently, CPP and QPP premiums are set at 9.9 per cent of income (up to $46,300), with contributions split equally between employers and employees.

A retiree who qualifies for the maximum CPP/QPP benefit in 2009 of about $10,905 does not qualify for GIS, but receives $6,204 in OAS, for a total of $17,109.

In 2005, Canada had the fifth-lowest seniors’ poverty rate among the 30 nations belonging to the Organization for Economic Co-operation and Development. Only 4.4 per cent of Canadians over 65 were considered poor that year, compared with more than 30 per cent of Irish seniors and a quarter of American seniors.

But Susan Eng, vice-president of CARP, a group that advocates for public policy changes on behalf of Canadians over 50, counters that the official poverty statistics mask the increasingly severe financial hardship faced by urban seniors in this country.

“The [OAS, GIS and CPP] have lifted people out of abject poverty, but they haven’t taken them out of poverty altogether,” Ms. Eng says. “If they have one slip and fall, one problem with their mortgage, one fraud event, that’s it, they drop deep into poverty and they can’t get back out.”

This year, Ottawa will spend more than $35-billion, or 14.5 per cent of all program expenditures, on elderly benefits. Even without raising benefit levels in real terms, seniors’ pensions will cost $45.5-billion more by 2014 and account for 17.4 per cent of all program spending. No other federal program costs as much.

What’s more, any benefit increase now would raise questions of intergenerational equity. Some younger taxpayers might resent having to pay for their elders’ failure to prepare for retirement. Don’t blame the boomers, Ms. Eng retorts: “They didn’t have a good vehicle to save with.”

RRSPs have proved inadequate for most, and also illustrate the challenge individuals face in financial planning. No one knows how much they’ll need in retirement, principally because no one knows how long they’ll live. Hence, people either oversave or, more typically, undersave.

A public plan such as the CPP overcomes this dilemma, since it is possible to plan for average, rather than individual, life expectancy. As well, the cost of running a large fund like the CPP at 0.16 per cent of assets annually is a fraction of the 2 per cent or so charged by most mutual fund companies.

Exploring the options
The CPP has worked so well that a host of influential pension experts are recommending that Ottawa either expand the plan so that it pays higher benefits, or create an entirely new, more generous scheme based on the CPP model.

Among the ideas being floated are:

  • A Universal Pension Plan, proposed by CARP. A UPP would replace the CPP and, like the latter, enrolment would be mandatory for all working Canadians. Premiums would rise to about 19 per cent of earnings split equally between employers and employees from the CPP’s current 9.9 per cent. Maximum pensionable earnings would rise to $116,000 from $46,000. The upside is that the UPP would pay out benefits equal to 70 per cent of pre-retirement earnings, compared with 25 per cent for the CPP.
  • The Canada Supplementary Pension Plan proposed by Keith Ambachtsheer, director of the International Centre for Pension Management at the University of Toronto. The CSPP would complement, not replace, the CPP. Enrolment would be automatic for people earning more than $30,000 a year, though individuals could opt out. Premiums would be set to provide combined benefits (from all pensions) equivalent to 60 per cent of pre-retirement earnings.
  • The so-called ABC Plan, proposed by a joint Alberta-British Columbia commission on pension reform. Enrolment in this plan would be voluntary and open to any individual or company in the two provinces. This defined-contribution plan would supplement the CPP.

The ABC proposal has raised the prospect of a patchwork of regional pension plans, with varying levels of retirement protection across the country. The only way to avoid that, Ms. Eng says, is to create a national plan that’s mandatory for all working Canadians. But she’s worried Ottawa is reluctant to act, lest it anger the financial services industry.

“They’ve got the investment advisory industry whispering in their ear, saying [the UPP] would amount to a government takeover of private industry,” she says.

Mr. Ambachtsheer says the “opt-out” clause included in his plan would enable the CSPP to benefit from economies of scale without resorting to the coercion implicit in the UPP or preventing competition with the public plan.

“There are all sorts of good reasons why, in a collective sense, we’re better off having these arm’s-length plans that manage [money] on behalf of hundreds of thousands or even millions of Canadians at the same time,” he says. “But do we as a country want to put all our pension eggs in one basket? And shouldn’t we give people some choice?”

Mr. Menzies, the Conservative MP who’s heading Ottawa’s research group on pension reform and who initially appeared leery of a new compulsory plan, insists he hasn’t reached any conclusions. He is to report his findings at a first ministers’ conference in December.

“We may come up with a whole new set of ideas out of this research. That’s what research is for,” he says. “There may be better systems in the private sector that we can encourage.”

Though he has steered clear of endorsing any specific proposal, Mr. Denison of the CPP Investment Board suggests a “hybrid” model consisting of a supplemental CPP in which enrolment would be mandatory, combined with a set of voluntary schemes.

No reform, however broad, is likely to offer a failsafe parachute for the thousands of Canadians who are ill-prepared for imminent retirement.

“If someone is 60 years old now and has not saved for his or her retirement, whatever happens now is not going to offset the fact that he or she was not saving enough for 30 or 35 years,” Mr. Denison says. “What we can do is change course for the future.”


Download the flyer in favour of contract changes (PDF)

Download the flyer in opposition to contract changes (PDF)


Five Ford UAW plants
back contract; vote continues

DETROIT, Oct 23 (Reuters) - Workers at five Ford Motor Co U.S. plants represented by the United Auto Workers have backed a contract aimed at bringing the automaker's labor costs in line with rivals General Motors Co and Chrysler.

Workers at Ford's Michigan and Wayne assembly plants near Detroit voted to ratify the contract, said a source familiar with the process who was not authorized to speak because the ratification has not been completed.

At three Cleveland-area plants, workers backed the proposed contract changes 61 percent to 39 percent, UAW Local President Mike Gammella said. The local represents about 1,300 workers at two engine plants and a stamping plant.

The UAW and Ford announced a tentative agreement Oct. 13 on changes to its 2007 contract that covers about 41,000 workers. The changes include a no-strike clause, wage freeze for entry-level workers and some production commitments.

Other UAW locals have scheduled votes this weekend and next week. Approval of the changes requires a majority of the votes cast by workers.

For The Ford/UAW Contract Agreement Brochure Click Here


October 23. 2009

Ford union workers
protest contract changes

Bryce G. Hoffman / The Detroit News

Ford Motor Co.'s River Rouge complex has become a hotly contested battlefield as the United Auto Workers and union dissidents square off over proposed contract changes.

Late Wednesday, UAW Vice President Bob King, who heads the union's national Ford section was confronted by members chanting "No! No!" as he tried to address a group of about 600 workers at the factory to clear up what union leaders characterized as "misunderstandings" about a tentative agreement reached between Ford and the UAW last week. That deal still needs to be ratified by rank-and-file members, and voting was due to begin at the factory complex Thursday.

"People are very upset, and they let King know it," said Gary Walkowicz, a member of the bargaining committee at the Dearborn Truck Plant and a leader of dissidents at the Rouge. "We are urging everyone to vote down these concessions."

King stayed to talk to members individually and is expected to return today.

Jerry Sullivan, president of UAW Local 600 that represents workers at Dearborn Truck and the other factories in the Rouge complex, acknowledged that opposition to the new agreement is stronger than anticipated.

"It's become a tougher fight because there's a lot of misinformation out there," Sullivan said. "People really don't understand the agreement."

Many workers at the Rouge and other Ford facilities are upset over what they perceive as an agreement by the union to give up its right to strike.

It is true that Ford had hoped to negotiate a broad "no strike" agreement similar to ones reached with General Motors Co. and Chrysler Group LLC earlier this year. But the Dearborn automaker fell short of that goal. The tentative agreement only limits the union's right to strike in disputes over pay and benefit increases. If Ford tried to cut workers' pay or benefits, they would still be allowed to strike.

And while the agreement matches limits on entry-level wages and benefits that GM and Chrysler won from the union, it does not allow for cuts to retiree benefits that were part of those deals.

Ford would not comment on the union dispute, nor would national union leaders.

Walkowicz vowed to keep up the fight, but Sullivan predicted the majority of his members will support the deal once they understand the details. He will hold an informational meeting for workers today, and voting at the Rouge and other facilities will continue until next Friday.



Steps to financial freedom
Many Canadians will be forced to work past 65 and live in straitened circumstances, but by establishing simple rules and keeping to the plan, it’s possible to retire earlier than most and still live comfortably.

Freedom 55? Couple couldn’t wait that long for retirement

John Heinzl

Oct. 23, 2009

When people ask Ross Grant how he managed to semi-retire in his 40s, they’re usually surprised by his answer. No, he didn’t win the lottery or have a secret formula for discovering 10-baggers on the stock market. He just did a lot of little things right.

Mr. Grant paid off his mortgage as quickly as possible. He maximized his RRSP contributions. He stayed out of credit-card debt. “I paid MasterCard $10 in interest once and that was because I missed a payment when I was on my honeymoon,” he says.

When Mr. Grant needed a new car, he saved up the cash first. If he and his wife found a deal at a discount grocer like No Frills, they stocked up their freezer. They tracked their income and expenses meticulously, so they knew exactly how much money would be left over every month.

Then they plowed the savings into a portfolio of dividend-paying stocks that has grown to the point that the income can support them and their two daughters, despite the setbacks their investments have been dealt in the recession.

Two years ago, Mr. Grant took a buyout package and quit his engineering job in Toronto, following his wife, who had left the same company a year earlier. Although they could get by without the extra money, both choose to do part-time contract work – that is, when they aren’t skiing, mountain biking or travelling.

“People ask me, ‘How did I do it?’ I’d have to give you a list with 2,000 things on it, but every one of them are just basic things, a lot of which my parents taught me,” says Mr. Grant, 46. “It’s the boring stuff that really gets you ahead.”

With pension plans hitting the wall and workers delaying retirement because they can no longer afford it, people like Mr. Grant are in the minority. But his story, and others like it, illustrates that it’s possible to achieve financial freedom by living frugally, saving diligently and investing wisely. These are the very things many Canadians are not doing, which is one reason their retirements are in jeopardy.

In a society that encourages consumers to borrow and spend, in which the pressure to upgrade homes, cars and gadgets never stops, living within one’s means and staying out of debt is a challenge. But for people who make a middle-class salary, the “boring” approach may be the surest route to building wealth and achieving financial security, say those who have done it.

The early retirees – and aspiring retirees – interviewed for this article have several things in common: Most started saving early, usually in their 20s, and were inspired by a parent or friend who taught them about money management. They had a strong aversion to debt, which motivated them to pay off student loans and mortgages and avoid carrying a credit-card balance. They also took a keen interest in managing their own money, rather than turning it over to an adviser who charges for the service. This last step is crucial, they say.

“You can invest yourself. In fact, you must learn to invest yourself,” says Tom Connolly, a retired teacher who publishes an investment newsletter in Kingston. “It’s your money. You alone are motivated to manage it best.”

Consider an extreme – but illuminating – case like Andrew Hallam, a 39-year-old teacher who parlayed a frugal lifestyle and knack for investing into a portfolio that would make most people envious.

When he was in his 20s and teaching on Vancouver Island, he would cycle 55 kilometres to work towing a trailer filled with laundry, which he would load into the school’s washing machine. He could afford a car and a washing machine of his own, but was so focused on retiring by 45 that saving money took precedence.

Now an English teacher in Singapore, Mr. Hallam has amassed a portfolio worth “roughly” $1-million, split about 60-40 between equities and bonds. He doesn’t scrimp as religiously as he used to, but he and his wife still sock away about $125,000 annually, thanks in part to Singapore’s low taxes.

“I made some early sacrifices to pay off my student loans aggressively, and I continued to live like a student for years, even after I started teaching full-time,” he says. “It allowed me to invest more money and not get caught up materially, buying things I didn’t really need.”

Mr. Hallam read voraciously about personal finance and investing. He also learned to tune out the talking heads on television, which he realized were there to excite viewers and improve ratings rather than impart solid investment advice.

“Taking prudent control of my own money, and not blindly allowing someone else to do it was one of the best things I did,” he says.

“I’m really glad I did that because investing isn’t taught very well in most schools. I think that the average person can read just two or three great investment books, learn the material well, and then know more than 95 per cent of financial planners – whose primary job is to sell investment products that benefit themselves and their firms, first, with the investor a distant second.”

Even people who don’t get around to saving and investing until later in life needn’t feel deprived in their golden years, says Malcolm Hamilton, an actuary at Mercer Human Resource Consulting Ltd. and an expert on Canadian retirement saving.

“As I tell anybody under the age of 50, you shouldn’t be giving up hope. There’s almost always some combination of living frugally and saving and investing wisely that can give you a viable retirement income as long as you’ve got 15 years to work on it,” he says.

But even when people do everything right, they sometimes discover that early retirement isn’t necessarily a ticket to happiness. Indeed, all of the people interviewed for this article are still working in some fashion.

For Henry Dembicki  and his wife Diana Salomaa,  debt was always a four-letter word. They drove an old car and did without frills such as cable TV. Vacations meant camping, not hotels. They even wrote a book, Why Swim with the Sharks?, that outlined their early-retirement strategy.

Seven years ago, Ms. Salomaa retired from a career as a policy analyst and city planner. A few years later, Mr. Dembicki quit his job as a privacy adviser with the Alberta government. The couple moved to the rugged Kootenay region of British Columbia, where they planned to indulge their passions for kayaking, hiking and mountain biking.

They lasted two years before the isolation got to them.

They’ve moved to Victoria, where Ms. Salomaa, now 57, works part-time as a medical transcriptionist and Mr. Dembicki, 60, puts in a few days a month as a consultant to his old employer. They enjoy the shopping, libraries and other amenities a city has to offer, and both volunteer at local festivals.

“You have to find something that is going to give you some purpose,” Ms. Salomaa says.

Retiring early and absolutely may not be for everyone, agrees Mr. Grant. But almost anyone can achieve financial freedom if they’re prepared to stick to a plan, he says.

“As long as you basically live below your means, and don’t get caught up in the ‘I need to spend more, I need a fancier car, I need a bigger house, I need a cottage, I need a deluxe vacation’ … it’s really obtainable for the average person making an average amount of money,” he says. “We all have the ability to do quite well.”


NDP proposes pension
insurance program
NDP Leader Jack Layton holds a news conference on reforming the national pension system in Ottawa on Thursday, October 22, 2009. The Canadian Press

Ottawa — The Canadian Press, Oct. 22, 2009

NDP Leader Jack Layton is proposing a national pension insurance program to protect workers whose companies go bankrupt and leave retired employees in the lurch.

The self-sustaining program would be funded by employer contributions and guarantee pensioners $2,500 per month in the event their plan is wound up.

Mr. Layton says other countries, including the United States and the Netherlands, have similar programs that adopt so-called orphaned pension plans.

The NDP is also proposing an increase to the Guaranteed Income Supplement for low-income seniors – a measure that would cost the federal treasury about $700-million a year.

Mr. Layton called for the Conservative government to double the Canada Pension Plan benefit to $1817 a month from $908, which several seniors' groups have been lobbying for in recent years.

The proposals come one day after retired employees of the bankrupt telecom giant Nortel held a demonstration on Parliament Hill.

When companies go under they are allowed to wind up their pension plans. There is an estimated $1.8-billion shortfall in the Nortel plan.

That could mean a drastic cut for the company's pensioners if the pension plan is dissolved.

Employees are currently last in line as Nortel sells its assets.

They are calling for the government to intervene and reform the Bankruptcy Act, allowing them to become secured creditors. That would make them eligible for payment ahead of others who are owed money.

The federal government has so far rejected the plea, saying that Nortel's pension plan is provincially-regulated and it's up to the Ontario government to take action.

Industry Minister Tony Clement pointed to Quebec, which has offered to manage the Nortel pension plan for members there until asset values rebound.

Liberal Leader Michael Ignatieff told demonstrators he supports amending the Bankruptcy Act so the pensioners can get what is owing to them.



Ex-Nortel workers
sound pension alarm
Leonard Sutton, 61, with wife Anna, is among Nortel pensioners who stand to lose retirement benefits in the wake of the company’s bankruptcy. (Oct. 21, 2009)

Former workers at insolvent
company march on Parliament Hill

Oct 22, 2009

OTTAWA–Canadians are being urged to pay close attention to the plight of workers from bankrupt Nortel Networks Corp. because it could some day be their own story.

With many company pension plans across the country underfunded, workers could easily see their pensions and other benefits reduced dramatically or disappear if their employer closes the doors for good.

"Nobody is safe, unless you are working in there, I guess," Bob Dowson, 68, who retired from Nortel's Brampton office after 32 years, told the Toronto Star while pointing to the Parliament buildings behind him.

"We worked all our lives for this and it's just been pulled out from underneath us," said Dowson, whose current $32,000 annual pension could be reduced by some 30 per cent or more because the plan was underfunded.

Dowson and his wife Marilyn joined thousands of other former employees of the bankrupt telecom equipment maker and workers from other financially troubled companies on Parliament Hill Wednesday.

They demanded the federal government amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act, or bankruptcy protection law, to make workers priority creditors instead of falling to the bottom of the pile as they do now.

"If they don't do it for Nortel, do it for the next poor suckers who are going to come along and have their pensions taken away," Don Sproule, president of the Nortel Retirees and Former Employees Protection Canada, told the rally, adding that employees of bankrupt companies deserve as much standing as "vulture bond funds."

Ken Georgetti, president of the Canadian Labour Congress, predicted that pension and benefit protections will be front and centre in the next federal election.

"Those pensions and retirement benefits and deferred earnings don't belong to the companies, they belong to workers, and what's happening in this country ... greed is winning over need," Georgetti told the crowd.

The CLC has organized a campaign to put in place pension protection insurance such as there is in the United Kingdom and the United States.

"Next time an election is called, let me tell you, pensions is going to be the No. 1 issue."

Liberal Leader Michael Ignatieff said a Grit government would bring in a law to protect pensions "so that you are not left at the back of the queue in insolvency and bankruptcy." NDP Leader Jack Layton said he would release the NDP's pension policies Thursday.

An estimated 83 per cent of federally regulated pension plans, such as Air Canada's, are underfunded while the Financial Services Commission of Ontario reported that, of 1,500 pensions it studied, 91 per cent were underfunded.

Protecting pension plans has turned into a political football, with the Conservative government saying it's a provincial matter while Ontario says bankruptcy laws are federal domain.

"The fact of that matter is that pension was registered at the Province of Ontario, and the Province of Ontario is the only body that has the right and responsibility to cover that pension," Industry Minister Tony Clement told Parliament.

Under terms of the CCAA, Nortel does not have to give notice of termination or severance pay and people laid off in the current restructuring climate receive only 69 per cent of their earned pension.

Leonard Sutton, 61, who worked 13 years for Nortel, said his once-rosy future has become very uncertain.

"We feel that our future is totally up in the air," Sutton said, recalling that one of Nortel's draws was its total compensation package.

"So that was a big enticement to stay with Nortel. We now realize we were mugs," he said, standing next to his wife Anna, who said, "Maybe if (Prime Minster Stephen) Harper and (Finance Minister Jim) Flaherty had their pensions on the line they would have some sympathy."

Elizabeth Osborne, 70, worked at the Nortel Belleville plant for 20 years before taking early retirement 10 years ago.

"I'm getting my pension now and health benefits and life insurance, but we don't know how much longer that is going to last. We may end up with no pension at all if the government doesn't do something about it," said Osborne, who lives alone.

If Ottawa doesn't help out "there will be a lot more people like us out here," she said


Key UAW leader opposes Ford deal


Oct 22, 2009

A key union leader said today he is opposed to a tentative agreement reached between UAW leaders and Ford Motor Co., providing fresh evidence that opposition to a proposal first announced last week persists.

“I decided for the first time in my 17-year career as a union official to go against the international leadership” of the UAW, said Nick Kottalis, president and chairman of the Dearborn Truck Plant unit of UAW Local 600.

The tentative agreement between Ford and the UAW would freeze entry-level wages, establish a requirement for binding arbitration for wage and benefit disagreements at the end of the current contract and a consolidation of skilled-trades classifications.

Ford, in return, is promising several new products for its U.S. plants, to create new jobs and a one-time $1,000 bonus for workers.

To become official the agreement must be ratified by the union’s membership and as reported earlier this week by the Free Press there is substantial opposition to the deal.

Some UAW members remain opposed because they agreed to an earlier round of concessions in March that saved Ford more than $500 million annually. Since then, Ford’s finances have improved.

“We believe this is a concessionary request,” Kottalis said. “We also don’t like the strike clause they put in there.”

Kottalis said about 2,300 people work at the truck plant. In the UAW’s structure, the workers at that plant are in a unit that is part of the larger UAW Local 600, whose leaders are reportedly in favor of the agreement. UAW spokesman Roger Kerson could not be reached for comment late tonight.



Underfunded dreams

No pension safety net for the self-employed

While many workers face uncertain retirements with inadequate pensions, a growing number of the next generation share a worse fate: no pension at all.

Andrew Willis

Thursday, Oct. 22, 2009

Rachel Mielke’s pension plan worked the red carpet at last year’s Oscars.

When it comes to how she will fund her golden years, the 29-year-old jewellery designer is under no illusions. Ms. Mielke knows that she is on her own in building a nest egg, and the Regina resident has a simple take on her financial future: “My business is my retirement plan. I know that government programs aren’t adequate, and won’t take care of me.”

Right now, her retirement looks rosy. Five years after quitting a secure job to start a handcrafted jewellery company named Hillberg & Berk, she’s finding customers have a thing for her bling. It doesn’t hurt that her business got some red-carpet exposure from an NBC interviewer who wore Ms. Mielke’s earnings and necklace while working the Academy Awards, or that Katie Couric’s stylist recently picked up a few baubles.

All of which translates into a rapidly-expanding Saskatchewan venture that employs seven people and, when it comes to issues such as pensions, one somewhat anxious boss.

“Like any small-business owner, my life is my company. Retirement really depends on my success, and on succession planning. Can I sell the business to someone else, or to my employees?” Ms. Mielke wonders. The Freedom 55 dream is not for her; she sheepishly admits she fails to take advantage of her RRSP allowances. “I can’t imagine that I’ll ever stop working,” she says.

Meet the next generation of retirees: middle-class workers without pensions who are left to their own devices and facing an uncertain financial future. Ms. Mielke has a plan, vague though it may be. But as formal pension plans become increasingly less common, many Canadians face a savings burden that many are unwilling – or unable – to shoulder.

‘Young people simply will not save for retirement on their own, due to lifestyle and attitude, so mandatory plans helped to solve that social problem,” says Idan Shlesinger, managing partner at consulting firm Morneau Sobeco.

“The move away from mandatory pension plans means young people are now far less likely to eventually enjoy well-funded retirement.”

For an enormous chunk of the population – for the self-employed, such as Ms. Mielke, for those who work at small businesses, for professionals, for many immigrants – a secure, comfortable lifestyle after their working years is now in question. The middle class faces a retirement nightmare. And no one in power wants to talk about the problem.

“The great irony is there is no sympathy for these people, this huge section of the public that won’t have adequate retirement income,” says Malcolm Hamilton, a principal in benefits consultant Mercer.

“There is no sympathy for the middle class.”

Take, for example, a small business owner who makes $200,000 a year, by any yardstick, an upper-middle-class earner one might expect to enjoy a cushy retirement. This person might own a franchise, or be a consultant, a lawyer, a dentist or a farmer.

On retirement, they have the good fortune of selling that business for $2-million. By any conventional standard, that individual struck it rich.

What happens next? To be safe, the retiree socks the windfall into bonds. The portfolio earns 4-per-cent interest, or $80,000 a year. Taxes take half that amount. Inflation eats up the other half.

A supposedly affluent individual is suddenly left scrambling – forced to spend their capital to make ends meet. It’s this kind of scenario that’s been pushing retirees into the stock market.

“The tax regime forces individuals to take risks that they simply should not take with their retirement savings,” Mr. Hamilton says.

For a sense of just what that extra risk actually means to those without a formal pension plan, look no further than retired dairy farmer Dick Steenstra in Goderich, Ont.

Going into the downturn, the 62-year-old had done everything right and accumulated a $1.2-million nest egg. That portfolio cracked when the market tanked; in the worst days in March, the farmer’s savings were down to just $160,000.

Mr. Steenstra stayed calm, stayed invested, and rode the market back up, but is still down by 50 per cent: The family farm goes up for sale next spring to help refill the coffers, and vacation and renovation plans are very much on hold.

“My folly was thinking I could run it myself, better than the experts,” says Mr. Steenstra, who is more than a little peeved with the Bank of Montreal teller who advised margin loans as a way to augment a self-directed portfolio.

The university-educated farmer says: “If you plan to invest a lot of your savings, I really think you need an education in investments. In retrospect, I wish I had thought of my portfolio as more of a pension than as stocks that I should trade.”

Funding retirement of Canada’s vast middle class can only become a larger social issue, as a pension paid by a benevolent employer is becoming increasingly rare.

At a time when the population is aging, more than six out of 10 Canadians have no formal pension plan, according to the most recent data from Statistics Canada. The federal agency found the percentage of the population with some sort of pension has been dropping steadily for three decades, to 38 per cent of Canadian workers in 2007 from 46 per cent in 1977.

That trend is expected to continue, as companies continue to steer away from plans now seen as expensive industrial anachronisms. The problem is most acute at smaller businesses, and there are 5.1 million Canadians – or 48 per cent of the private-sector work force – at small companies, with fewer than 100 employees.

“There are no good retirement options for the self-employed, or owners of small businesses,” says Mr. Shlesinger, of Morneau Sobeco.

He sees annuities, mutual funds and other mass market financial products as expensive and inefficient.

Mr. Shlesinger says with these savings schemes, workers “tend to either budget too conservatively, and save too much at the expense of their lifestyle, or roll the dice by underfunding their retirement savings, and hoping market performance skates them on side.”

And left to their devices, most Canadians can’t or won’t set aside enough to pay for their golden years: Statistics Canada shows that last year, just 31 per cent of eligible taxpayers made use of the RRSP program, the single biggest tax break available to individuals.

“The current market chaos should be a wakeup call to everyone – companies, governments and citizens – that our current pension system needs to be overhauled,” said Ontario Teachers’ Pension Plan chief executive officer Jim Leech in a recent call-to-action speech.

He added: “Average RRSP balances are woefully short of the levels they need to be in order to fund retirement.”

Yet as savings decline and pension plans are wound down, a large segment of the population is ramping up their expectations for life after work.

Credit, or blame, a baby boom generation that’s grown up wanting for nothing, while being bombarded with concepts such as Freedom 55, which promise fun-filled retirement.

“People aspire to more from retirement today than they did a generation back,” Mr. Hamilton says.

“That goal presents a real problem to those who are reasonably affluent … who aspire to a better life in retirement than what they may have enjoyed while working.”

The rule of thumb is that retirees need 50 per cent of the income they earned while working.

That figure assumes debts such as mortgages are all paid off and dependents have left the house. For upper-middle-class Canadians, RRSPs and government programs such as the Canada Pension Plan are unlikely to provide that kind of income. Yet there are few tax-effective ways to set aside additional savings.

And much of the middle class aspires to a more expensive retirement, filled with sun-drenched adventure travel and fine living.

Despite the middle-class retirement shortfalls that are obvious to pension experts, politicians and business leaders seem fixated on patching up existing systems.

Attention and resources get focused on underfunded corporate plans, and on a tired debate over the merits of defined-benefit schemes, where the employer makes good on shortfalls, versus defined-contribution plans, which shift market risk to employees.

There is very little talk about enhancing pensions for the majority of the population that lacks any retirement safety net. University of Toronto pension guru Keith Ambachtsheer says: “Rather than defending old faulty designs, why haven’t pension industry leaders been searching hard for designs better suited to delivering 21-century retirement living standards that are adequate, universal and sustainable?”

Fixing the pension problem will fall to the generation that comes of age struggling to fund retirement.

For jewellery designer Ms. Mielke, the goal is straightforward: “If I could change one thing in the tax code, I would make sure that if you do well in business, you do well after retiring.”



Ford not celebrating yet

Oct 21, 2009 G&M

Jeremy Cato

Ford of Canada's market share is up almost three per cent on the year, as are sales in a market down by 15.5 per cent through the end of September. You would think Ford Canada president and CEO Dave Mondragon would be celebrating.

He's not. Sure, Ford may have paid down $10-billion (U.S.) in debt recently – cutting operating expenses by some $500-million (U.S.) – and Ford has avoided taking taxpayer bailout money, too. But as he pointed out yesterday at Ford Canada headquarters, no one is celebrating victory – not in this tough market.

There are new models to launch, new technologies to develop, launch and explain, financial results to report, and labour deals to negotiate and ratify.

In fact, with Ford's U.S. operations having agreed to a new labour pact with the United Auto Workers – one that faces a tough ratification vote among UAW members – Ford's attention is turning to Canada and the Canadian Auto Workers.

Ford's top labour boss, Joe Hinrichs, also a former head of Ford Canada, will be here next Monday to work on negotiations with the CAW. The goal is to get Ford Canada the same labour deal Chrysler and General Motors enjoy as a result of the taxpayer bailout of those two companies – both of which recently came out of bankruptcy in the U.S.

Negotiations will be tough and, ironically, they will not likely be helped by what may turn out to be a surprise third quarter profit for Ford. Mondragon was careful not to discuss financial results specifically, though he appeared to suggest the third quarter would be worth watching.

JP Morgan analysts are not so shy. According to the Detroit Free Press, they have told investors that Ford Motor Co. could report a surprise third quarter profit at the end of the month. Himanshu Patel is reported to have said Ford will report a profit of 16 cents per share (figures in U.S. currency) for the three-month period ending Sept. 30.

Sales are up not just in Canada for Ford and Ford is doing less discounting. Ford's residual values have improved, profits in Europe (along with market share) are on the rise and in North America the profitable F-150 pickup is doing well.

Even if Ford manages to get into the black, there remains no shortage of demands on its cash. One place Ford plans to spend heavily is in a campaign to explain its new EcoBoost engine technology.

According to reports, Ford will spend a sum equal to an entire new-vehicle launch to tell customers about its new direct injection, turbocharged engines. Ford says EcoBoost offers up to a 20 per cent increase in fuel economy over older, bigger engines – without a loss of performance.

"EcoBoost is a big deal for our customers, and it will be one of the fundamental technologies that differentiates Ford," said Jim Farley, Mondragon's boss as Ford Motor group vice president, global marketing and Canada, Mexico and South America operations, in Automotive News.

While at Ford Canada headquarters yesterday, I drove the newly introduced Lincoln MKT crossover with its EcoBoost 3.5-litre V-6 engine (355 hp). Lots of power there, power like a V-8. The EcoBoost V-6 is also in the 2010 MKS sedan, Taurus SHO and is an option for the 2010 Ford Flex crossover.

Next year a 1.6-litre, inline four-cylinder EcoBoost will be available in Europe. Eventually, Ford expects to produce 1.3 million EcoBoost engines annually by 2013.

Mondragon said EcoBoost is real technology that is available right now for consumers. The constant buzz about electric cars and plug-in hybrids and hydrogen fuel cell cars is interesting, but for now and the foreseeable future, buyers need real technology answers today. That's EcoBoost, he said.

Still, Ford does have an active electric and hybrid program in place. The company is poised, in fact, to pass Honda as the No. 2 hybrid seller in North America. And yesterday Ford announced that current hybrid director Nancy Gioia is moving into a new job as Ford's director of global electrification.

Gioia believes that hybrids, plug-in hybrids and battery-electric cars will account for 10-25 per cent of new car sales by 2010, reports the New York Times. Battery technology and the question of electric-vehicle charging remain huge hurdles to the wholesale adoption of electric cars, however.

But again, Mondragon has a more pressing concern than the challenges of 2020. Next year Ford is scheduled to launch an electric version of the Transit Connect work van and Ford Canada is expected to offer it here. A Ford Focus-based battery car is in the works for 2011, too.

The celebrating is obviously on hold.



Financial planning: Whom should you trust?


LeRoy Pickett, a retiree of Slater Steel in Hamilton, Ontario, Canada. Deborah Baic/The Globe and Mail

Rob Carrick

Oct. 21, 2009

When Paul Darquin left the job he held for 35 years, he and his wife, Elaine, decided to get some expert advice about pensions and retirement.

The Darquins wondered whether it was better to keep Paul’s retirement savings in the pension plan offered by his employer, the University of British Columbia, or to pull the money out and invest it. For an answer, they consulted a financial adviser at the financial institution they had dealt with regularly.

The result was a debacle that has cut deeply into their retirement savings and massively increased their debt. “We’re financially devastated from this experience and we have to dig our way out of it now,” Elaine Darquin says.

The Darquins’ experience stands as a warning to Canadians who are weighing their retirement prospects as reliable pensions become an endangered species.

At the same time, the pension crisis presents a huge opportunity for the financial sector to sell advice and products, and the industry knows it. “There’s a greater need for us with less of a pension system – by far,” says Clay Gillespie, a financial planner at Rogers Group Financial in Vancouver.

But as the Darquins’ travails show, the financial industry may not be ready to provide the kind of advice that people need as opposed to the kind that sells products.

It was in January, 2005, that Mr. Darquin left his job as an audiovisual technician at UBC. While his salary topped out around $45,000, his long years of service helped him amass a sizable pension, valued at $465,394.13.

Mr. Darquin, 62, was prompted to seek advice about his pension after being informed that he had two options upon leaving his job: One was to keep his money in the UBC plan, the other to take it out and invest it elsewhere.

The Darquins’ adviser recommended they invest the pension money as part of a complex plan that included investing borrowed money.

“I didn’t say to him, ‘The UBC pension isn’t enough, what can you do for me that’s better? “ Mr. Darquin recalls. “Probably the way it worked out was that he asked, if he could do better [than the pension], would that be good? I probably said yes.”

Today, the Darquins have total debts, including a mortgage, of about $150,000, up from about $50,000, and their retirement investments were recently valued at just over $267,000 – a dramatic difference from the value of the UBC pension. To recoup their losses, they’re pursuing legal action against their adviser.

“Part of the problem is that he got us into this complex financial arrangement which was really above and beyond,” says Ms. Darquin, 58. “We’re used to having a credit card and a mortgage.”

The Darquins’ story highlights what investor advocates believe is the central weakness of much of the investment advice offered in Canada. Most financial advisers make their living through commissions on the sale of investments, which means they face a conflict: Whether to recommend what offers the highest compensation or what’s best for the client.

“Most financial advisers have the best interests of their clients at heart,” says Steve Garmaise, associate director at the Canadian Foundation for Advancement of Investor Rights (FAIR). “But despite the best intentions of most advisers, they still face a fundamental conflict of interest in offering true, dispassionate advice to their clients.”

There other concerns about whether the financial industry has its clients’ best interests at heart. Many advisers are too busy to give all their clients proper attention. High mutual fund fees undermine the gains of investors who already face low returns because they’re investing conservatively for retirement.

But conflict of interest is the core issue. One of the few people addressing the quality of investment advice is Cary List, president of the Financial Planners Standards Council, which oversees the Certified Financial Planner (CFP) designation.

Mr. List wants his members to focus more on providing financial planning than on selling investments. Thus they’d be in a better position to deal with questions like the whether a client should stay in a company pension plan.

“That’s the biggest ethical dilemma,” Mr. List says. “It’s a huge challenge for any professional adviser when there’s a whole lot of money sitting on the table.”

What happens when an adviser not fixated on commissions looks at the pension question? Mr. Gillespie, of Rogers Financial, has done a lot of pension analysis for employees of UBC, where Mr. Darquin worked. “Probably, 99 times out of 100, it made no sense to pull the pension out,” he says.

Mr. Gillespie gets a variety of fees for his work, including some tied to the sale of products. But when he prepares a plan for a new client – say to tackle the “what should I do with my pension” question – there’s always a flat fee involved, instead of commissions.

If fee-only financial planning is the solution to conflicts of interest in the industry, there are other problems that need to be tackled too.

Ken Kivenko, an investor advocate, worries that many advisers are inadequately trained. But he also places some blame on individuals who won’t get involved in their own financial future.

“You’ve got what I call a triple storm,” Mr. Kivenko says. “You’ve got incompetent, conflicted people talking to a basically financially-illiterate population in general. This is very dangerous.”

Mr. List insists that CFPs have ample training to tackle pension issues – “Absolutely, and then some.” A bigger concern to him is that there won’t be enough advisers to meet the expected need for advice as the population ages and wrestles with the pension crisis.

Demand for investment products is expected to rise. Mutual fund companies would seem to be an obvious winner if people are investing more on their own for retirement, but those in the industry are cautious about the future.

Bill Holland, chief executive officer of mutual fund giant CI Financial Corp., says new money flowing into funds will be offset by aging baby boomers drawing out savings. Barbara Amsden, director of strategy and research at the Investment Funds Institute of Canada, predicts rising health costs will constrain aging Canadians from making new investments in mutual funds. Other factors weighing on fund sales include potentially slower economic growth and competition from products like exchange-traded funds, or ETFs.

One thing the fund industry has going for it, at least for the time being, is a lack of competition. Interest rates for the guaranteed investment certificates and bonds that appeal to conservative retirement investors don’t yield much more than a puny 3.5 per cent these days, and returns for a one-year term can be lower than 1 per cent.

“People cannot afford to just use deposit-type products – that will not get them what they need in retirement,” Ms. Amsden says.

The biggest rap on mutual funds is high fees. A study by a trio of global finance professors indicated that Canadians pay the highest fees in the world. The mutual fund industry here in Canada refutes the findings, but it has never produced its own contradictory study.

Mr. Holland says the pressure to cut fees is being felt most acutely for bond funds, which he expects to be very popular with people who are assembling retirement portfolios. He notes that a five-year Government of Canada bond has a yield of 2.5 per cent for much of the year, while the average cost of owning a Canadian bond mutual fund is 1.7 per cent.

“You’re taking 70 per cent of the returns, and that won’t work,” Mr. Holland says. “If you’re hitting a period of time where more people are investing in fixed income, then that has to change the fee structure.”

There’s wide agreement that Canadians will need help to make the right financial decisions about retirement, but no common front on how to provide that help. Investor advocates like FAIR’s Mr. Garmaise put the onus on government to protect investors. Industry people believe financial literacy is a key, and they point approvingly to the task force that Finance Minister Jim Flaherty announced in the summer to develop a national strategy for improving financial education.

Looking back on his own experience, Paul Darquin might agree. A lack of knowledge was why he and his wife sought the help of an adviser in the first place. “We were such novices,” he says. “We thought going to him was the answer.”

FORD/UAW October 2009 Agreement
(Modifications to 2007 Agreement)

Ford/UAW October 2009 Modification Letters



Hybrid pension plans: a hard sell
 "When we look back at what we’ve done, it’s been very beneficial to the employers and the plan members," says Dave Schaub, chairman of The Pulp and Paper Industry Pension Plan (PPIP). John Lehmann/The Globe and Mail

Janet McFarland

Oct. 20, 2009

When Dave Schaub scans the business headlines, the news about a corporate pension crisis is strikingly familiar.

“Where most plans are today is where we were in 1992,” says Mr. Schaub, chairman of the Pulp and Paper Industry Pension Plan (PPIP), which invests the pension money of 18,400 forestry workers and retirees.

Back then, the plan was facing a dire funding crisis. Its assets were worth just 50 per cent of liabilities, a chasm that was the result of generous improvements to benefits and weak investment returns that made those commitments impossible to fulfill. Without major changes, thousands of workers who relied on the plan faced the risk of having their future pensions slashed.

The solution was tough medicine: A new lower-risk structure, a change in the way benefits are paid, and a requirement that employees begin contributing to the plan. It still took years of improved investment returns to make up millions of dollars of shortfalls. But today, the plan is in a healthy surplus, its assets “virtually unaffected” by last fall’s stock market meltdown.

When we look back at what we’ve done, it’s been very beneficial to the employers and the plan members,” Mr. Schaub says.

If the fix at the PPIP was both long and arduous, it also holds out hope that creaky pension plans can be put right. Indeed, the debate in Canada’s executive suites is now over just what sort of fix holds out the best hope of providing for adequate retirements without crippling employers.

The proposed solutions range from the simple to the radical. One school of thought is that the answer lies in Ottawa, with less onerous federal rules on funding traditional pension plans. At the other extreme is a movement to get rid of those plans entirely, end the era of defined-benefit pensions, and transfer the responsibility for funding retirement to the shoulders of employees by giving them defined-contribution plans.

In the middle are a variety of alternatives that, not surprisingly, are dubbed hybrid plans.

No matter which route is taken, hard choices lie ahead – for companies, their employees and for government policy makers.

The great debate

Many Canadian companies with pension plans have been hit by a double whammy of low interest rates over the long term and a dramatic drop in stock markets in the short term. The combination has knocked the daylights out of returns, typically leaving plans currently with assets equal to about 80 per cent of liabilities. Traditional pension funds in Canada’s private sector currently have a solvency deficit of about $50-billion, according to pension consulting firm Watson Wyatt.

As companies weigh alternatives for the future, a crucial choice comes down to a pair of innocuously simple-looking bits of shorthand: Will the future be DB or DC? Those four letters house a world of difference.

Traditional pension plans are DB, defined benefit. A retiree covered by the plan is guaranteed a given level of income. If the plan falls short, the employer is on the hook.

The new model, increasingly favoured by employers, is DC, defined contribution. In this approach, the employer’s responsibility is limited to making a certain (“defined”) contribution to the employees’ pension plan. Contributions made by both the employer and employee go into an individual account for the employee, who makes his or her own investment choices. If the plan falls short, the employee is on the hook.

The crisis notwithstanding, not every employer is ready to give up on DB.

“Maybe I’m being a bit paternalistic, but I’m not sure DC is the right solution if the end result of that is just to expose the entire population to market fluctuations for their retirement savings,” says David Bryson, chief executive officer of mining giant HudBay Minerals Inc., whose unionized work force has a traditional DB plan.

“I think that defined-benefit pension plans are a very, very good vehicle to address the need for pension security,” says Canadian National Railway Co. executive vice-president Claude Mongeau. “From the standpoint of employees, it is a great vehicle.” The CN plan, with $14-billion in assets, is one of Canada’s largest private-sector plans.

Even for employers, Mr. Mongeau says DB pension plans are beneficial, because they help them to retain workers. But he argues pension plans are being strangled by the federal government’s excessively tough funding rules, which have made their financing far too volatile.

For that reason, CN and six other major companies – Air Canada, Bell Canada, Canada Post, Canadian Pacific Railway Ltd., MTS Allstream and Nav Canada – have banded together to quietly lobby Ottawa for reforms to the rules.

In a submission to the Department of Finance, the companies warned that their ability to maintain defined-benefit plans “will be seriously challenged” without permanent changes to the rules.

The group’s biggest complaint centres on the volatility of the contributions they’re required to make to keep assets aligned with liabilities. Under current “unnecessarily onerous” funding rules, they say they collectively would have to contribute $3.5-billion annually from 2009 to 2013, a huge increase from $1-billion in 2008 and $800-million in 2007.

The seven companies want more time to make up their pension shortfalls. And they want the government to adopt a less-conservative formula when calculating how well-funded a plan is.

Mr. Mongeau says the current system already requires pension plans to be funded on the “hypothetical” assumption the companies are going to go out of business immediately and become insolvent, and the additional restrictions make funding requirements unsustainable.

“We cannot put our heads in the sand,” he says. “There is a big problem.”

Consultant Keith Ambachtsheer, one of Canada’s most prominent pension reformers, argues that funding requirements actually should be toughened.

Mr. Ambachtsheer, who consults to many pension funds and is director of the Rotman International Centre for Pension Management at the University of Toronto, says the private-sector pension system is “fundamentally unsound” because most plan sponsors do not allocate enough money to fund their promises, and instead hope for large returns from higher-risk investments like stocks.

“What we’ve been calling defined-benefit plans aren’t really defined-benefit plans,” he says. “They’re sort of ‘wing and a prayer’ plans, at least in the private sector.”

He has no time for the argument that tougher rules would be a death blow to the DB system. A system that operates on a significant probability that funding promises can’t be kept is not worth indulging, he says.

“Is it not more honest and functional to either put up enough capital to secure the promise, or tell plan participants up front that they are risk-bearers in this pension deal?”

Paul Gauthier, however, fears the debate about how to improve regulation for traditional pension plans is moot.

The recently retired CEO of one of Canada’s largest corporate pension fund managers – Bimcor Inc., which manages pension money for Bell Canada – says better rules may help a few plans for a while, but the traditional plan is probably destined to die out. In a move typical of many companies these days, Bell has been closing its DB pension plans to new hires and is transitioning employees to a DC model.

“Saving the DB plan is like wanting to save the horse and buggy,” Mr. Gauthier says. “We need a serious transformation of the system.”

A middle ground?

Experts, including Mr. Gauthier, are increasingly arguing that the way ahead is not simply tinkering with the rules of the game, but instituting new hybrid models that could provide better benefits than personal DC plans, while reducing the funding volatility and risk of DB plans.

Keith Elliott believes the Pulp and Paper Industry Pension Plan, which covers workers at companies such as Catalyst, West Fraser Timber, Canfor and Tembec, is already accomplishing both goals.

Mr. Elliott, director of human resources at West Fraser Timber Co. Ltd., says that since the PPIP plan was remodelled in the 1990s, it has taken an extremely low-risk approach to investing that is uncommon in Canada. The fund invests almost exclusively in long-term bonds.

“It was a hard sell in the early 1990s because the finance people said, ‘You’re giving up return.’ But to do otherwise, you had a big problem.”

That problem has been evident in recent years as many other pension plans have seen their equity assets decline sharply in bad markets. The PPIP posted a loss of just 1.6 per cent last year despite the devastating market crash, compared with an average 18-per-cent loss for a large pension plan in Canada.

Another key feature of the plan is that the member companies make a flat contribution on behalf of workers, set as a percentage of their wages. That is their only funding requirement: If the plan is short of money, employers don’t have to cough up more to repay shortfalls. Instead, the plan has to cut benefits for workers or retirees.

“There’s a significant contribution, but from an employer’s perspective, the amount is limited,” Mr. Elliott says. “There’s no other obligation.”

Benefits have been improved repeatedly over the past decade.

“Under the structure we have, we can’t have a shortfall,” Mr. Schaub says. “Unless we can fund plan improvements and guarantee them forever, we don’t grant them.”

The PPIP illustrates why many pension experts are keen on the type of hybrid dubbed a “target benefit” plan, which is already used in the public sector.

In this model, plans target a certain level of benefit payout that appears safely achievable. But if long-term investment performance makes that target unreachable, funding is not increased. Rather, the benefit level is lowered. Conversely, if investment returns exceed the target, the benefits can be increased.

Pension consultant Paul Forestell, leader of the retirement professional group at consulting firm Mercer (Canada) Ltd., says such plans are good for employees, despite that risk of reduced benefits.

Unlike individual DC retirement accounts, target plans allow large pools of assets to be combined and professionally managed, maintaining a strength of traditional DB plans. And for employers, the target benefit plans are more sustainable than the traditional DB plan in the long run.

“I think the change you need is something that makes DB less risky for employers,” Mr. Forestell says. “And target benefit plans do that.”

But the model is not going to be adopted overnight. Tax and pension rules in most provinces only allow a target benefit plan to be set up for plans sponsored by multiple employers, but not by a single employer. And the only plans that are allowed to unilaterally reduce benefit payments are those where workers get a say in their operations. That generally means the plan’s board of trustees must have union representatives.

Another complication is that DB pensions cannot simply be shifted into a target benefit plan, says pension consultant Ian Markham, director of pension innovation at Watson Wyatt. Instead, a company would stop contributions to one plan, but continue to administer it, and then also start a new target benefit plan. “It gets cumbersome,” he says.

Such practical complications are the main reason new models of pension plans are not evolving. Even hybrid models that are permitted under current regulations are not popular.

A hybrid may be better in theory, says pension lawyer Mitch Fraser. But once companies have opened up the highly charged issue of pensions, they figure they might as well go all the way and adopt defined-contribution plans, because they are the easiest model to administer. Companies don’t adopt hybrids, he says, because they simply don’t have to.

“I really hate to say it, but if a client called me and said, ‘What kind of plan should I do,’ I’d say, ‘Establish a DC plan, of course. There’s much more certainty.’”

Mr. Gauthier, who is now working with Montreal-based research centre CIRANO to develop reform proposals for the Quebec government, believes new pension models are most likely to be embraced by companies with no existing pension plans at all, especially if they can be crafted to allow smaller companies to band together.

“You create some big co-op type organization that can manage the pension plans of 3,500 smaller companies and their employees, and you set up a system that offers a lot more flexibility,” he says.

“At some point people will say, ‘Why don’t I put all my employees into this?’ And then everybody would have a pension plan that makes some sense.”



Ford commits to new
vehicles at U.S. plants
A worker checks on a 2010 Ford Taurus on the assembly line at the Ford plant in Chicago. The plant has been retooled to build the vehicle. Frank Polich/REUTERS

Greg Keenan

Globe and Mail Tuesday, Oct. 20, 2009

Ford Motor Co.has promised the United Auto Workers that its U.S. plants will receive a flurry of new vehicles, transmissions and other work during the next few years, while refusing so far to allocate new products to two Canadian plants.

Three Ford assembly plants – in Chicago, Louisville, Ky., and Wayne, Mich. – will begin building new vehicles in the next two years, and a commercial van called the Transit Connect that is now imported from Europe will be built at a UAW plant if North American assembly becomes necessary, according to investment commitments contained in a new contract between Ford and the union.

“The company reaffirmed its commitment to the UAW and its manufacturing presence in the U.S.,” Joe Hinrichs, Ford's group vice-president of global manufacturing, said in a letter to UAW officials that is part of the new contract.

The Canadian Auto Workers will seek similar investment promises when contract talks between the union and Ford resume next week, CAW president Ken Lewenza said on Monday.

“We'll ask for the same ratio of support in Canada,” Mr. Lewenza said, although he added that the CAW's analysis of the UAW deal is that promises of new products simply repeat commitments Ford has already made to the U.S. union.

The key demand from the CAW is that Ford maintain 13 per cent of its North American manufacturing footprint in Canada.

Ford refused to do that in talks that broke off last month and has said it has no new products for an assembly plant in St. Thomas, Ont., and an engine plant in Windsor, Ont.

The CAW and industry analysts and sources believe Ford will close the St. Thomas plant when it stops building the full-sized Crown Victoria, Mercury Grand Marquis and Lincoln Town Car in 2011.

In Windsor, Ford has reopened the Essex Engine Plant, but at the nearby Windsor Engine Plant, “all of the component allocations have been made and there isn't any more in the cupboard,” Mr. Lewenza said.

Ford Motor Co. of Canada Ltd. would not comment.

The UAW tactic of securing new investments in return for concessions on wages, cuts in benefits and surrendering the right to strike over wages in the next round of negotiations, mirrors one adopted by Mr. Lewenza's predecessor Buzz Hargrove during the 1990s.

Mr. Hargrove managed to lever promises of new products or large capital investments out of each of the Detroit Three during several rounds of bargaining in the 1990s and this decade. Some of those commitments were broken as markets changed.

The CAW approach of bargaining to win new investments “now makes perfect business and political sense,” given that the UAW has endured more than 100 plant shutdowns in recent years, said Sean McAlinden, executive vice-president of research and chief economist of the Center for Automotive Studies, an industry think tank based in Ann Arbor, Mich.

The UAW contract says that assembling a new Focus compact beginning next year at Michigan Assembly Plant will add 200 jobs, a new vehicle in Chicago will add 300 jobs there, and a new vehicle in Louisville in 2011 will add more jobs.

Among Ford's engine, transmission and components plants, one in Ypsilanti, Mich., will assembly battery packs for hybrid-electric vehicles.

Sources said the Michigan Assembly Plant will also begin assembling the C-Max minivan now imported from Europe, while the vehicle earmarked for Louisville is the Ford Kuga, a compact crossover utility vehicle.



Frank Stronach sought CAW bailout, Hargrove says

'Laying It on the Line': newly published memoir says the auto tycoon, made a peace overture out of the blue when Magna was teetering on the brink

Oct 19, 2009

Tony Van Alphen

Business Reporter

Auto tycoon Frank Stronach, who resisted unions for years, turned to the Canadian Auto Workers for a financial lifeline to save teetering Magna International in late 1990, retired CAW leader Buzz Hargrove reveals in a new book.

In a startling disclosure, Hargrove writes Stronach desperately sought millions of dollars in loans through the CAW's strike fund or wanted the union to buy stock in his struggling auto parts manufacturer.

"Incredibly, Frank turned to the same group of people he had scorned for years – our union, the CAW," Hargrove says.

But Hargrove, who was a top CAW official at the time, says in Laying It on the Line that the union had only about $22 million in the fund, which would not have put much of a dent in Magna's huge debt load.

"That's all?" a pale Stronach asked, according to Hargrove.

Hargrove, who served as CAW president from 1992 until his retirement in 2008, says Stronach may have confused the CAW with the much larger United Auto Workers in the United States, or thought the Canadian union could easily access the $500-million strike fund of its American cousins. The CAW broke away from the UAW in 1985.

"With no strikes looming on the horizon, (Stronach) figured he could tap the union strike fund, deliver a better return to the union than the banks could offer and climb out of his financial hole," Hargrove says in his 313-page book, which arrives in stores this week.

At that time, Aurora-based Magna faced the possibility of bankruptcy after overexpansion drove its total debt to about $1.2 billion while revenues were stalled in a recession.

In exchange for the loans or stock investment, Stronach told Hargrove and Hemi Mitic, another top union official, at a Markham restaurant that he would advise Magna workers to sign up for CAW representation.

"If you will loan me the money I need to keep Magna afloat or buy enough of my Magna shares to provide the cash I need, you'll have my assurance that we will encourage our employees to join the CAW," Hargrove quotes Stronach as saying. "It's a good deal. It'll benefit you and us."

(Union records show Hargrove was conservative in his estimates of the size of the strike funds. The UAW had actually accumulated $777.4 million and the CAW held $31.3 million. The latter amount was still far short of what Magna needed.)

Stronach, now 77 and still Magna's chairman, could not be reached in Europe for comment on Hargrove's version of events.

In hindsight, Stronach was right about the benefits to the union in organizing and financial returns.

Magna quickly restructured its debt in other ways and embarked on a long period of phenomenal growth that elevated the company into one of the world's biggest auto parts makers. Stronach even put up some of his family's own money to satisfy bankers.

If the CAW had taken its entire strike fund and bought Magna stock at $1.80 a share during the company's dark days of restructuring in 1990, and sold at the peak price of about $115 in 2004, the move would have generated an eye-popping $1.9 billion for the union. Even at today's stock price of about $45, the union's stake would be worth more than $780 million.

Furthermore, Stronach's offer to encourage unionization would have significantly boosted the CAW's bargaining power in the auto industry.

Magna was already the country's biggest independent auto parts maker and its non-union environment adversely affected the CAW's ability to make contract improvements at rival firms.

In his book, Hargrove also discloses he did not reject the unusual idea of using CAW strike funds to help a traditional non-union company because of the strategic gain in organizing and bargaining.

Hargrove, who was the top assistant to Bob White, then the CAW president, mentioned Stronach's idea to him but got a cold reception.

"He told us we were nuts," Hargrove said in an interview this week.

Although Stronach's enthusiasm for the idea disappeared after he heard how much the union could invest, it underlined the seriousness of his problems, Hargrove writes.

"His (Stronach's) quick reversal from an anti-union capitalist to the working man's friend was impressive and proved that many business principles go out the window when enough money is involved," Hargrove continues.

The union still only has small union representation at the company's operations in Canada. But that could change as a result of another Stronach initiative to boost his company in recent years.

Stronach's company and Hargrove's union reached a controversial agreement called "A Framework of Fairness" in 2007 to improve labour relations, productivity and innovation. Under the deal, Magna agreed not to oppose organizing drives at its plants and the union gave up the right to strike.

In the book, which follows a 1998 autobiography, Hargrove reflects on his experiences as a worker, union activist, negotiator and leader over more than four decades.

He grew up in poverty in New Brunswick, dropped out of high school and ended up on the assembly line at a Chrysler plant in Windsor before embarking on a career in the labour movement.

Hargrove says he was far from a "union boss" and recalls incidents when distillery workers spat on him or flicked lit cigarettes in his direction, and hostile Air Canada employees gave him a rough ride.

As in his earlier book, he offers numerous prescriptions for fixing the economy and the auto industry, including implementing tougher trade policies and ousting the federal Conservatives from power in Ottawa.

He writes warmly about the inspiration of individual workers on the shop floor and his positive dealings with some senior executives, such as Stronach and Gerry Schwartz of Onex Corp.

Hargrove adds he doesn't begrudge Stronach for his multi-million dollar annual pay packages because the Magna chairman built the company from nothing, created thousands of jobs and "didn't walk out of an MBA class into a corner office suite."

But the 65-year-old Hargrove, now a media commentator, university lecturer and ombudsman for the National Hockey League Players' Association, does not pull any punches.

He aims withering criticism at other executives such as Robert Milton of Air Canada, Darren Entwistle of Telus and Lee Iacocca of Chrysler, as well as politicians including Stephen Harper, Mike Harris, Bob Rae and Jack Layton.



Federal Finance Minister Jim Flaherty
I found him stubborn and short-sighted [as Ontario finance minister] and he has proven just as incompetent since.

NDP Leader Jack Layton
To my mind, Jack Layton invests more energy in promoting Jack Layton and the NDP logo than in promoting progressive issues.

Magna chairman Frank Stronach
Have we had our differences? Sure we have. But Frank Stronach's decisions have been good enough, long enough to provide well-paying jobs for tens of thousands of people for more than 40 years. Whatever you think of his methods, you have to admire him for that.

Onex chief executive officer Gerry Schwartz
He is tough as nails when it comes to negotiations, but he is as good as his word when the deal is done.

Telus head Darren Entwistle
I found him to be the most arrogant and aggressive executive I dealt with ... He used his powerful voice, with its slightly upper-class English accent to intimidate anyone who disagreed with his goals or management style, a style he himself described as "FIFO: Fit in or f--- off."


Prime Minister Steven Harper didn't become one of the boys when he met union leader Buzz Hargrove over auto industry concerns, according to a new book.

Hargrove, president of the Canadian Auto Workers at the time, says in his book Laying it on the Line that he joined union economist Jim Stanford in talking to Harper for about half an hour in November 2007.

But Hargrove says the Prime Minister's behaviour "bordered on bizarre."

"In an effort, I assume, to suggest he was just one of the boys, a guy who could relate to blue-collar workers despite his political record, Harper managed to say `f---' two or three `times, none of them in what might be called a normal context," Hargrove writes.

Hargrove, no slouch at swearing during years of contract bargaining with automakers, adds that as he and Stanford left the meeting, they looked at each other and asked: "What the heck was that all about?"

Dimitri Soudas, associate communications director for the Prime Minister's Office, said he wouldn't comment on the Prime Minister's private meetings and Hargrove's recollection of what the PM had said.

– Tony Van Alphen



Bankrupt companies, pension promises destroyed
Keith Carruthers works in the kitchen of his London, Ontario, home. In 1998 he retired as the president of aluminum processing company Indalex. Recently the company has gone into CCAA protection and eliminated a supplemental retirement plan for him and 12 other former senior executives, eliminating about one-third to one-half of their retirement income. Geoff Robins for The Globe and Mail

When companies are put into bankruptcy protection, pensioners go to the end of the queue behind most other creditors. Quite often that can
mean they receive only a fraction of their promised pension.

By Greg Keenan
Oct 19, 2009

Keith Carruthers never saw it coming.

More than a decade after he retired from Indalex Ltd., the aluminum processing company was granted protection from its creditors. Within weeks of the filing this past April, a substantial portion of his retirement income evaporated – along with the retirement incomes of several other senior executives.

“It was kind of like a lightning bolt,” says Mr. Carruthers, who retired at age 56 after 13 years as president of Indalex. “All of us are going to lose half to two-thirds of our pension. All of us are long-term employees who worked for the company for many, many years. That just leaves a real sour taste in your mouth.”

They are among the hidden victims of the Great Recession. In the year-long economic slump that is the most severe Canada has experienced since the early 1990s, 357,000 people have lost their jobs – in every sector of the economy, and at every level of the work force.

But the meltdown has also had a devastating impact on a group that does not show up in the monthly unemployment statistics: the retired. Already hobbled by an aging work force and companies’ gradual move away from guarantees for retired workers, Canada’s pension system has been pushed to the breaking point by the downturn. Now, millions of blue-collared workers, salaried employees and professionals – both the retired and those still working – are facing starkly scaled-down retirement dreams.

If there is a sector of the economy that shows the pension crisis at its worst, it is manufacturing. Once well over 20 per cent of Canada’s GDP, it has shrunk relentlessly – and so has its capacity to pay for the pension promises made in brighter days.

Within the factory sector, the unravelling of Canada’s pension system has become such a massive and broad-based problem that it is has reached the people at the very top of the corporate hierarchy: executives like Mr. Carruthers.

Many company pension plans have been left badly underfunded by market volatility and more pressing demands on their cash resources, leaving retirees with smaller plans. But the most dramatic impact on employees and pensioners has been at failed companies where pensions have evaporated in bankruptcy proceedings.

Bankruptcies, liquidations and filings for protection under the Companies’ Creditors Arrangement Act (CCAA) have surged, including such legendary Canadian titans as AbitibiBowater Inc. and Nortel Networks Corp., to name just two. And if manufacturing companies such as Indalex have been among the hardest-hit, they may also be the least likely to recover. “As soon as [a] company goes into CCAA, it’s basically like they just won the lottery and they can do whatever they want,” says Mr. Carruthers, who lives in London, Ont. “I lose the lottery.”

Hundreds of other former Indalex Ltd. employees and executives – many of whom left the company years ago – are now facing up to the same lottery loss as Mr. Carruthers. Their story, and the story of the company they helped to build and then watched flounder, shows how the recession reached deep inside the North American manufacturing sector to redefine retirement.

An acquisition too far

Indalex, which is based in Lincolnshire, Ill., is far from a household name. It began life in North America in 1964, when an ex-Alcan Inc. engineer and a colleague at a British-based company called Pillar Holdings Ltd., bought a small Canadian aluminum extrusion company.

In the unglamorous business of aluminum extrusion, which involves melting the metal and stretching it into strips for use in windows, doors, boats and other products, Indalex grew along with the Canadian and U.S. economies to become a North American leader. In Canada, the company expanded to Calgary, Montreal and Port Coquitlam, B.C.

Indalex saw its fortunes rise in an era when the burgeoning North American manufacturing sector held out the promise of well-paying jobs that provided a stable, middle-class living. Those jobs also carried the promise of a decent pension at retirement after a working life.

Indalex made that promise to its employees. For its growing ranks of unionized workers in Canada, the company participated in a multi-employer pension plan, which spread the pension costs and risks over a number of companies in the manufacturing sector. Mr. Carruthers and other executives were entitled to an enhanced package, with a supplemental retirement plan in addition to a regular executive pension plan.

Mr. Carruthers rose up the ladder at Indalex as the company expanded. Appointed president of the company’s Canadian operations in 1986, by the early 1990s, he was running its entire North American business out of Toronto. By then, Indalex was owned by Britain-based Caradon PLC and had moved into the U.S. market and was operating a handful of plants there.

The company took a step that would later contribute to its eventual collapse when its parent company purchased Easco Inc., an Ohio-based aluminum company, in 1999. That boosted Indalex’s U.S. presence to 15 plants and three casting facilities, and made the company much more reliant on the U.S. housing market just as it was taking off.

The deal led to almost a decade of restructuring.

By 2005, Caradon was bought by Honeywell International Inc., which flipped it a few months later to private equity firm Sun Capital Partners Inc.

That year, Indalex’s unfunded pension liability jumped to $42.5-million (U.S.). Rising pension liabilities increasingly were becoming a problem for manufacturers as work forces aged and downsizing reduced the number of employees paying into the plans.

By the end of 2007, in the final annual report the company would submit to U.S. securities regulators, Indalex had managed to shrink its pension deficits down to $10.3-million. But it was also beginning to wrestle with a bigger problem: the collapse of the U.S. housing market. Residential construction made up more than one-quarter of its $1-billion in revenue, but it was slowing.

Then, last year, the price of aluminum crashed, forcing Indalex to meet margin calls on hedging contracts for the metal. Meanwhile, interest on its debt had risen to $35-million a year by 2007, partly because of high-interest debt Sun Capital had taken on to finance the purchase of the company. The credit crisis made it difficult to refinance, court filings show.

With revenue sliding, the company struggled to make its payments. Then aluminum giant Alcoa Inc. drove in the final stake by seeking repayment of $6-million it was owed. Indalex’s U.S. operations were forced into Chapter 11 bankruptcy protection. The Canadian unit, running out of cash, soon followed.

The goalposts are moved

None of those problems should have been a worry for Mr. Carruthers and 12 former executives of the Canadian operations. Within days of the CCAA filing, however, Mr. Carruthers received a letter saying the supplemental executive retirement plan that was paying him $3,700 (Canadian) a month was being eliminated.

He is also concerned that his regular pension plan will be cut from its $4,000-a-month level. Are there going to be lifestyle changes?” he asks. “Yes, there are going to be lifestyle changes. We just have to cut back on everything we’re doing.”

Such issues are painful to discuss publicly, adds Bob Leckie, who was Indalex’s general counsel, but has left the company and is now a consultant in San Antonio, Tex.

“In our generation, we defined ourselves by our work,” Mr. Leckie says. “We’re the generation that when they first started losing their jobs, instead of telling their wives and families, they put their suit and tie on every morning and went out of the house because they were too ashamed to tell their families.”

Mr. Leckie points out that annual registered retirement savings plan contributions were strictly limited for the executives because of the size of the pensions they were supposed to receive.

That’s fair and reasonable, he acknowledges. “But it’s based on the fact that you’re going to collect the pension. The linkage broke down in the oversight of these pensions … The government had the power and the ability to ensure that it wasn’t underfunded.”

The group of retired executives has asked the Ontario Superior Court to restore the supplemental retirement plan, including arguing that the $3.2-million that represents the windup liability is a relatively small amount of money.

Mr. Justice Geoffrey Morawetz, who is overseeing the case, has dismissed that argument. “While this submission may be attractive on the surface, to give effect to this argument would violate a fundamental tenet of insolvency law, namely, that all unsecured creditors receive equal treatment,” Judge Morawetz wrote.

It’s that same legal principle that has stymied pensioners in other insolvent companies as they try to keep their retirement plans intact. Nortel retirees – who find themselves among unsecured creditors fighting over scraps from the sale of the company’s assets – are lobbying for changes to insolvency and bankruptcy laws.

They plan to take their case to Parliament Hill on Wednesday, when they will hold a rally. The approximately 17,500 pensioners should rank higher in the pecking order than other unsecured creditors and especially bondholders, who are protected by credit default swaps and claims against Nortel assets in the United States and Britain, argues Don Sproule, who heads the Nortel retirees committee.

The Canadian pension plans have assets that cover about 69 per cent of their liabilities, he says, so Nortel retirees stand to lose about one-third of their pensions if they don’t move up in the pecking order.

“We all sink to the bottom. We don’t know what we’re going to get,” adds the 59-year-old engineer, who retired from Nortel in 2003 after 27 years.

Although Mr. Sproule believes his argument is gaining some traction in Ottawa, he’s up against financial institutions and corporations that hold a lot of sway. Claude Mongeau, the incoming chief executive officer of Canadian National Railway, argues that changing legislation to give pensioners a higher claim than bondholders in a bankruptcy proceeding could make it harder for companies to raise money in the capital markets.

Typically, Mr. Mongeau argues, bondholders will recover 30 cents on the dollar in a bankruptcy. If a pension has a 10-per-cent shortfall “is it fair to give that 10 per cent priority over the guy who is going to lose 70 per cent? I think there is an issue of that nature.”

With files from reporter Janet McFarland


Ottawa's relief leaves
pension funds flat

Experts say relief really hasn't solved the problems;
employers may run out of time to do it themselves

October 18, 2009
Toronto Star

The crisis in Canada's private sector pension plans is easing as stock market values soar and economic conditions improve.

But a typical pension plan still faces a 28 per cent shortfall and many employers face a Jan. 1 deadline to make up at least some of the deficit, according to benefits firm Mercer.

Employers say it's unclear how well temporary relief programs the government introduced this summer have worked, and they're looking for more permanent solutions.

"We really haven't solved the problems. The economic mess over the last year has simply highlighted a lot of the funding concerns that plan sponsors have been talking about for years," said Scott Perkin, president of the Association of Canadian Pension Management, the leading advocacy organization.

In the past year, several companies have taken advantage of pension relief programs.

In July, Air Canada negotiated its own pension relief package with the federal government. The airline's pension deficit that had ballooned to $2.9 billion.

In September, Ford of Canada began seeking employees' approval to take 10 years, instead of five, to pay off a $1.8 billion pension deficit.

Ottawa remains committed to introducing legislation by the end of the year that would help employer-sponsored plans, said MP Ted Menzies, the finance minister's point man on the pension file. A growing list of private sector employers from General Motors to Chrysler, Nortel Networks and now CanWest Communications Corp., with underfunded pension plans, has fallen on hard times and put retirees' benefits in question.

About 20,000 Nortel employees are at risk of losing up to 30 per cent of their pension benefits if the plan is terminated while the company is in bankruptcy protection, said Michael Campbell, co-chair of the Nortel Retirees Protection Committee.

"I'm still relatively young. I figure I can work another 10 years to make up the losses on my pension and severance and other monies they owe me," said Campbell. Older and disabled retirees don't have that luxury, he said.

"I heard some sad stories out there. `I was promised a pension when I retired and now I don't know what I have,'" said Menzies, referring to consultations he held across Canada over the summer.

"Is there a way we can provide better tax incentives to people to save as well as employers to continue contributing?" Menzies asked.

A typical private sector plan had a pension fund ratio of 72 per cent at the end of September, according to Mercer, which tracks pension plans. While that's up from a low of 60 per cent last March, it means that the typical plan is not fully funded.

The ratio measures a pension fund's ability to meet its current liabilities out of current assets. In other words, if the plan were terminated tomorrow, employees would get just 72 per cent of the promised benefits.

The federal government and most provinces require employers to top up any deficits gradually, usually over a five-year period, said Paul Forestell, a pension fund expert with Mercer.

Last fall, employers were facing a perfect storm of declining asset values and tight credit markets, making it difficult to borrow to meet their obligations, Forestell explained.

Some governments provided temporary relief by extending the top-up period to 10 years, he said.

Ontario's plan, however, came with strings attached, Perkin said. Employers had to get employees to agree to the delay. Few plans even bothered to canvas their members, knowing it would be hard to explain and even harder to sell, Perkin said.

"We're not sure if it's really helping or working," Perkin said of the temporary relief.

Perkin said most employers are more concerned with long-term solutions to the problems of rising benefit costs and declining coverage. Only one in four working Canadians is covered by an employer-sponsored plan and the number that offer guaranteed benefits is declining, he said.


CAW won't agree to strike
ban in new Ford agreement,
unlike UAW: Lewenza

October 17, 2009
By Kristine Owram (CP)

TORONTO — Canadian Auto Workers president Ken Lewenza says Ford Canada shouldn't expect the same concessions that Ford Motor Co. (NYSE:F) won in recent talks with its union in the United States including a ban on strikes over wages or benefits.

"Obviously we watched the U.S. negotiations closely with the UAW because of the competitive challenges we have from one country to the other," Lewenza said in an interview Friday.

"But we're a Canadian sovereign union and we didn't do that at General Motors, we didn't do it at Chrysler in terms of no strike provisions and we're certainly not going to do it at Ford."

The agreement between Ford and the United Auto Workers runs until 2011, gives workers a US$1,000 bonus if they ratify the agreement and guarantees new vehicles for five assembly plants. It also bans strikes over wages or benefits, freezes entry-level wages and changes work rules to require some skilled-trade employees to do more than one job.

Ford and the CAW have been negotiating a new labour contract since early September, but talks have stalled on the issue of how much manufacturing capacity the company will keep in Canada.

The CAW says Ford Canada intends to slash its Canadian manufacturing presence from 13 per cent to eight per cent of total North American production. Ford currently has no plans to build vehicles at its St. Thomas, Ont., plant beyond 2011.

The union has accused Ford of asking for the same concessions the it gave General Motors and Chrysler in negotiations earlier this year, without being willing to make the same promises in return.

Chrysler committed to maintaining 20 per cent of its assembly operations in Canada, while GM promised to keep 18 per cent of its operations here.

Official talks are scheduled to re-start Oct. 26.

Lewenza also said he met recently with new Chrysler CEO Sergio Marchionne, who described the structural changes he has been undertaking with the goal of improving collaboration between all parts of the company.

Lewenza said he was "apprehensive" going into the meeting, but came out in "a great mood of optimism."

"We left there absolutely confident that if there's anybody that can turn Chrysler around it's Marchionne, because the guy's a workaholic. It's as simple as that," he said.

2010 Ford Mustang GT:
The 2010 Mustang gets an upgraded interior, tweaked styling, improved suspension and more power.

May not be as radical a remake as competing muscle cars, but it offers a refined ride, a fine interior and added power

Oct 17, 2009

John LeBlanc

Special to the Star

It seems the only car that fans of American muscle can talk about this year is Chevrolet's resurrected Camaro.

Last year, it was the reborn Dodge Challenger.

After absences of seven and 34 years each, it's understandable the subsequent returns of this pair of retro coupes – hearkening back to the "glory days" of the late-1960s and early-1970s muscle-car era – have hogged media headlines and enthusiasts' attention.

For 2010, however, Ford has quietly upgraded its 40-something Mustang coupe and convertible – a car that's been sold continuously since the Beatles crossed the Atlantic.

But are an upgraded interior, tweaked sheet metal, revised suspension and a bump in horsepower enough to make you choose a 2010 Mustang over its born-again rivals?

If you want the "show," but don't need the "go," you can get into a '10 Mustang coupe for $24,499. A convertible is $5,700 more. But both come with a wheezy V6 and not-very-sporting suspension.

Thankfully our tester was the more appropriately kitted-out '10 Mustang GT coupe. With a V8 engine and five-speed transmission, its $36,999 base price was in line with V8 models of the new Camaro and Challenger.

Where the new Mustang GT does stray from its American muscle competition is on its inside.

The new 'Stang's cockpit finally looks and feels like what a $40,000-plus car should compared to the economy-car plastics and design in the Camaro and Challenger.

The tan "saddle" leather in our GT model certainly upped the car's image. And instead of brittle plastics and gaping fit lines that made the last Mustang rattle when cold, interior pieces feel soft, look rich and fit tight.

If not as roomy in the back seat as the full-size, five-seat Dodge, those in the 2+2 Ford's front seats have plenty of room. And we were able to wear a toque in the Mustang without rubbing its headliner – unlike the Chevy with its chopped roof.

Yadda, yadda. Interior, shminterior. How does the new Mustang GT stack up at the stoplight grand prix? Considering the Ford's V8 is down 111 and 57 hp to the Chevy and Dodge respectively, actually, not that bad at all.

For 2010, Ford took all the good bits from perhaps the best iteration of the last model – the special edition Bullitt Mustang – and then shaved a couple of grand off the price.

That means the Mustang GT's venerable 4.6-litre power is up from 300 to 315 horsepower, and torque grows a modest five lb.-ft. to 325.

Combined with the fact that the Ford weighs (208 and 290 kg) less than the Chevy and Dodge, it scoots from zero to 100 km/h in just 5.1 seconds; a couple of 10ths faster than the Challenger R/T and only 0.1 of a second slower than the Camaro SS.

Drivers will appreciate the Mustang GT's overall tidier dimensions away from the drag strip. It feels much more nimble and easier to toss around compared to the full-size Camaro and Challenger.

The GT comes standard with 18-inch wheels (up from last year's 17s), with Mustang-specific 235/50ZR Pirelli P Zero Nero all-season rubber. Our tester had a $500 package that upgrades to 245/45ZR-19s (that improve road grip) bundled with (of all things) heated seats.

And for the first time (hallelujah!) the rear-drive Mustang offers stability control. Ford makes it standard kit. The system lets you hang the GT's tail out substantially before the electronic nannies kick in. A second sport setting is even more lenient for all you Steve McQueen wannabes.

Okay, there's still that truck suspension out back in the Ford coupe, while the Chevy and Dodge sport 20th-century independent rear set-ups.

But the GT now rolls much less when cornering hard than the less buttoned-down 2004-09 version by adding the Bullitt's rear springs and recalibrated shocks (more compression damping and stiffer rebound damping). But maybe the best part of the GT is its refined ride.

It's a huge improvement over last year's Mustang GT but you still can't really feel what's going on at road level through the Ford's steering rack. It's no Genesis Coupe, in that regard. At least it has good weighting, is fast, and is largely accurate.

If only the Ford had upgraded the Mustang's front buckets as well. They're particularly flat, offering little lateral support.

I'd pass on the $2,300 navigation system and $2,200 glass roof. Instead, go for the $2,100 GT Track Package II (stiffer springs, shocks and anti-roll bars; summer tires; quicker limited-slip rear end; stability control system "off" button) and make the car ready for the occasional day at the track (see accompanying story).

Feel free to take Ford to task for not doing a more thorough upgrade to a car whose last big redo was more than five years ago – especially as it knew what the competition was up to.

But it has carefully addressed most of the flaws that the 2004-2009 Mustang was born with.

And by keeping the car tight and light, it's competitive with its newer rivals not only in a straight line, but also when the road gets curvy.

In a suddenly crowded American muscle-car segment, the 2010 Mustang GT is arguably the choice for those who love to drive.

Toronto Star


Saturday, October 17, 2009

CAW optimistic on Chrysler

Canadian union leaders encouraged by five-year plan

Alisa Priddle / The Detroit News

Leaders of the Canadian Auto Workers union left a six-hour meeting with Chrysler Group LLC executives with substantially more optimism about the future of the automaker than they had going in.

"I left feeling pretty good, and, frankly, I went there pretty down," said CAW President Ken Lewenza, describing Thursday's meeting with Chrysler Chief Executive Officer Sergio Marchionne, which stretched from a scheduled three hours into six and included an impromptu dinner.

Lewenza said the five union leaders who met with Marchionne and members of his management team went into the Auburn Hills briefing believing analyst projections that Chrysler has only a 50-50 chance of survival given the dearth of new products in its first year of an alliance with Fiat SpA and with projections of a continued market share slide.

Chrysler officials would not comment on the meeting with the CAW.

But Lewenza said Marchionne's five-year business plan, the details of which are to be unveiled publicly Nov. 4, is refreshingly grounded in reality. The union was given some details of the plan but could not disclose all the specifics.

Market share projections are conservative and anticipate an initial loss, Lewenza said. Chrysler had 8.3 percent of the market at the end of September, down from 11.1 percent a year ago.

The business plan also is designed to succeed at low annual sales volumes in the United States, Lewenza said.

The CAW was given assurances that the automaker is pleased with the efforts of its two Canadian plants and has long-term plans for minivan production in Windsor and the Chrysler 300 and Dodge Charger and Challenger made in Brampton, Ontario.

The CAW leaders got a sneak peek of the new 300 that will be introduced next year as a 2011 model. The all-new sedan has undergone additional changes since Marchionne's team took over.

Lewenza was not at liberty to elaborate, but a source said the car is lower and sleeker with a new grille and LED headlights.

The CAW president said he is encouraged by plans to upgrade the interiors of a number of vehicles, addressing a widely held area of criticism.

The first vehicles to receive makeovers are the minivans and the Jeep Compass and Patriot, which will be relaunched a year from now with new interiors.

The minivans also will get new front grilles to better differentiate the Dodge Grand Caravan from the Chrysler Town & Country. Redesigned rear ends will have taller taillights. Down the road, a compact minivan similar in size to the Mazda5 will be added to the lineup, sources say.

The Jeeps will reportedly adopt design cues from the new Grand Cherokee that goes into production in the spring.

Lewenza said he asked Marchionne if Alfa brand vehicles will be built in Brampton, but Marchionne said those plans are too far in the future to discuss. The CEO told Lewenza only that Fiat vehicles will be built in North America and Chrysler vehicles will be better distributed globally.

Union leaders said they left struck by the focus, intensity, work ethic and confidence of Marchionne and the ferocity with which the CEO holds managers accountable with no excuses. An overview of the management structure revealed a streamlined approach and the speed with which change is being directed from the top, Lewenza said.

"We got a lot off our chest," Lewenza said of the meeting, adding that he was also surprised by the fact that "there was nothing negative in the meeting."


Retirement dreams under siege

John Mlacak, a former Nortel manager, stands to lose as much as 30 per cent of his monthly $3,000 pension.

It is very, very agonizing to see these people who have worked all their life to try and get a pension – and, all of a sudden, it falls apart.

Jacquie McNish

Saturday, Oct. 17, 2009 Globe & Mail

Charles Walker spent his summer overseeing the death of 1,167 retirement dreams.

After 22 years as vice-president of finance at a perennially struggling aluminum mill in Cap-de-la-Madeleine, northeast of Montreal, Mr. Walker was accustomed to tough assignments. But nothing prepared the retiree for his comeback task: assessing the health of the mill’s three pension plans after the company was forced into liquidation proceedings in March by its bankrupt Ohio parent, Aleris International Inc.

For three sweltering months, Mr. Walker, 65, toiled in the mill’s abandoned, airless offices, making calculation after calculation. His final tally: $46.2-million of pension deficits.

That tab, he estimates, will erase between 30 and 40 per cent of the pensions owed to him and his fellow retirees and employees. “I felt like I was in a morgue,” Mr. Walker says.

“You look at this and you say, ‘Jesus, this is painful’ … I know people in the plant, I know their families. So it is very, very agonizing to see these people who have worked all their life to try and get a pension – and, all of a sudden, it falls apart.”

Canadians are facing a national pension meltdown. Decades in the making, it has worsened dramatically during the recession. Businesses are shredding pension promises, retirement savings are shrinking, employees are working longer and the elderly are selling homes and returning to the workforce. As the retirement dream fades, policymakers seem unwilling to tell Canadians they have not saved enough to retire.

“We have overestimated our capacity to protect the needs of retirees,” says Harry Arthurs, former head of an Ontario commission that identified numerous flaws in the province’s pension regime.

“We now know there is no such thing as a pension or retirement promise,” Mr. Arthurs says. “There is no certainty.”

A slow retreat by companies from their pension obligations turned into a gallop this year after a severe global recession laid bare the frailties of the promises made to employees. The withdrawal is major factor behind a startling statistic: Eleven million Canadian workers, about 60 per cent of the work force, do not have a pension plan.

Those corporate pension plans left standing also face unprecedented stresses. Market turmoil has punched an estimated $50-billion deficit hole into Canada’s corporate pension funds, according to experts who have crunched what little current data is available.

The cost of replenishing the deficit is squeezing businesses when they can least afford it. Pension costs are spiralling as retirees live longer and the baby boom generation heads for the exits: More than 40 per cent of workers will reach retirement age over the next two decades.

A crisis this large isn’t just financial. It’s also tearing the fabric of Canadian society. Retirement anxiety is changing our notion of personal wealth. Where once a house and two cars were symbols of success, today the measure is more likely to be the size of your nest egg. And as with any wealth metric, there is a class system. At the top of the system is a shrinking royalty. The majority of them are public servants: About 84 per cent of public-sector workers are pension plan members, most of whom have gold-plated pensions designed to guarantee retirees fixed incomes.

At the bottom are the pension paupers, the millions of workers who never had an employee retirement plan – and whose taxes contribute to public-sector pensions that they can only dream about.

Apart from fraying Canada’s social fabric, the growing ranks of pension wounded pose long-term challenges for an economy that depends on consumer spending. Aleris’s Mr. Walker, who stands to lose 40 per cent of his pension income, plans to survive by simply spending less.

While the casualties mount, businesses are stepping up their lobbying of federal and provincial governments for more latitude to ease pension burdens. “Existing deficit funding rules may threaten the sustainability of many Canadian companies and ultimately the pensions of their retirees and employees,” Calin Rovinescu, chief executive officer of Air Canada, told The Globe and Mail.

In July of this year, the airline won a special 21-month reprieve from its employees and the federal government to delay repairing its $2.9-billion pension deficit. It is one of seven companies lobbying Ottawa to allow businesses more time and discretion to replenish pension deficits.

Federal and provincial governments, which divide responsibility for pension regulation, have responded to the pension crisis by granting businesses like Air Canada extra breathing room to replenish underfunded pensions. But these measures are little more than Band-Aids applied to a critically injured system. No policy maker seems willing to admit that the corporate pension promise is broken and Canadians need to save more to survive retirement.

While governments watch from the sidelines, bankruptcy courts have become the de facto policy maker. The fate of thousands of elderly workers and retirees is being decided in court-supervised restructurings.

The narrow lens of the commercial court judges has produced some recent decisions that have weakened employees’ pension rights.

No one is doing anything for us,” says LeRoy Pickett, a 67-year-old retiree. When his employer of 39 years, Slater Steel Inc., declared bankruptcy in 2003, he lost nearly 30 per cent of his pension. His wife had to return to work and the couple were forced to sell their house in Hamilton. “It makes you feel like a horse being sent to the glue factory after a long time of work,” Mr. Pickett says.

Disaster long in the making

The surprising thing about Canada’s pension crisis is that it has caught anyone by surprise. Like a volcano that has been spewing ominous clouds for years, the crisis was foretold for years by countless academics, consultants and government panels. Four provinces – British Columbia, Alberta, Ontario and Nova Scotia – have recently had commissions report on pension woes. To the same end, Ottawa has created a joint federal-provincial task force that will report in December.

For all this seeming attention, however, there has been little meaningful change in the country’s fragmented pension regime for nearly two decades.

“Our politicians don’t want to talk about this. They always hope that someone else will deal with it,” says Claude Lamoureux, former head of Ontario Teachers’ Pension Fund, one of the country’s largest public-sector pension pools.

The crisis is making for some unlikely rebels. Next week Oct. 21 Nortel Networks Corp.’s highly organized fraternity of 11,000 retirees is demonstrating on Parliament Hill, two weeks after similar rally at Queens Park. Among the leaders is Robert Ferchat, a former president of Nortel Canada, who retired in 1991 and saw his pension cheques frozen after Nortel’s collapse. He never imagined he would one day march arm-in-arm with union leaders.

“When I worked at Northern Telecom, it was king of the world,” he says. “Today its pensioners are victims of years of mistakes and bad luck. It is outrageous to me that during this time executive compensation rose dramatically, while pensioners became more vulnerable.”

Some workers have been able to ease the sting of lost pension income with savings invested in registered retirement savings plans (RRSPs). But workers with company pensions can only take limited advantage of the tax break on RRSP contributions. Stock market volatility and high management fees on many popular retirement funds also point to the drawbacks of these investments.

“It turns out the private savings in RRSPs were not as good as we thought it would be, because those that did save have been hurt,” says Bob Brooks, recently retired vice-chairman with Bank of Nova Scotia.

Historians believe that Hudson’s Bay Co. pioneered Canada’s first pension plan in the 1840s as an incentive to lure managers to desolate trading posts. Soon, rapidly growing railroads, banks and department stores were dangling pensions to cement the loyalty of the skilled workers they badly needed for expanding empires.

The genius of these early plans was that costs were minimal. Only a lucky few employees would live long enough to collect benefits – up until 1950, the average Canadian life expectancy was under 65. Ottawa joined the pension movement in 1927 with a plan that helped provinces ensure every Canadian over 70 would receive $20 a month.

As the economy grew and prospered after the Second World War, pensions came to be seen as a worker’s birthright. The federal government’s Old Age Security program and Canada Pension Plan, as well as the Quebec Pension Plan, were created to ensure that no retired employee fell below the poverty line.

Supplementing these Spartan plans were increasingly rich company pensions that promised a comfortable retirement

By 1977, 46 per cent of the work force was enrolled in employment pension plans. The public/private split was already clear: 75 per cent of public-sector workers were registered in plans, compared with 35 per cent in the private sector, according to Statistics Canada.

Since then, the pension blanket has slowly unravelled. Core manufacturing sponsors transferred operations to lower-wage countries or switched to cheaper defined-contribution plans. By 2007 this shift was so pronounced that the percentage of companies offering defined benefits had dropped by half, to 15.7 per cent. And by that year, 84 per cent of public-sector workers had rock-solid defined benefit plans.

By 1977, 46 per cent of the work force was enrolled in employment pension plans. The public/private split was already clear: 75 per cent of public-sector workers were registered in plans, compared with 35 per cent in the private sector, according to Statistics Canada.

Since then, the pension blanket has slowly unravelled. Core manufacturing sponsors transferred operations to lower-wage countries or switched to cheaper defined-contribution plans. By 2007 this shift was so pronounced that the percentage of companies offering defined benefits had dropped by half, to 15.7 per cent. And by that year, 84 per cent of public-sector workers had rock-solid defined benefit plans.

The heady returns led to a complacency that blinded workers, employers and governments to the fault lines. During these good times, some businesses siphoned off a portion of pension surpluses while others took pension contribution holidays – in part because Canada’s tax laws penalize companies that plow extra savings into plans. Adding to the environment of complacency was the unchecked optimism of actuaries, the gatekeepers who are required by law to test the solvency of pension funds. As markets inflated, actuaries continued to assume that abnormal investment gains would deliver sufficient returns over the long term to cover rising pension costs.

“We tended to think this was tomorrow’s problem, but tomorrow’s problem is here today,” says Mr. Lamoureux.

The breaking point

The crisis erupted with a bang last fall when the global financial meltdown knocked the stuffing out of pension portfolios and retirement savings. Almost overnight, the rosy investment forecasts of actuaries and pension managers began to look delusional.

Taking the pulse of corporate pension plans is no easy matter in Canada. Pension oversight is divided among federal and provincial regulators that rely on outdated data to monitor pension fund health.

Typically, pension funds are subject to actuarial assessments of their solvency only every three years. Thus the full impact of the market collapse will not be known at many funds for several months.

Still, a number of pension experts have made some educated guesses about the hit that funds have taken. RBC Dexia, a pension services company, estimates major Canadian pension plans – those with more than $1-billion of assets – saw assets swoon by an average of more than 18 per cent last year.

The carnage was particularly gruesome in the private sector, where pension managers are significantly less experienced than their public-sector counterparts. “The pension burden has proven to be too great,” says Ian Markham, a director with pension consultant Watson Wyatt Worldwide, who estimates the average Canadian corporate plan is 20 per cent short of the assets it needs to fund its long-term pension obligations. That deficit adds up to about $50-billion, a staggering IOU that is crippling a number of companies.

The overall impact of the recession has forced a record number of Canadian companies to liquidate or restructure their operations. Hidden behind these bankruptcy statistics are a growing number of crippled companies with pension deficits.

Again, there is no precise current data, but pension professionals say they have never seen so many companies land in bankruptcy proceedings with broken pensions.

“We are witnessing an unprecedented pension crisis,” says Brett Ledger, a corporate pension litigator with Osler Hoskin & Harcourt LLP. “It’s going to get a whole lot worse,” he predicts, because another wave of struggling companies is drawing closer to bankruptcy.

It is in these proceedings that the worst of Canada’s pension flaws are revealed. Many retirees and employees have no idea that their pension funds have deficits until their companies land in court. Several former workers at Slater Steel only learned the company was in bankruptcy proceedings in 2003 when their pharmacists informed them that their benefits had been cut off.

There are so few warning signs because actuarial check-ups are so infrequent. But even these infrequent analyses, experts warn, can be subjective and sometimes very wrong.

In early 2002, only a few months before Slater Steel filed for bankruptcy protection, two pension funds at subsidiary Slater Stainless Corp. received a stamp of approval from Melvin Norton, a veteran actuary with Aon Consulting Inc. The Ontario Superintendent of Financial Services, the province’s pension regulator, later concluded the funds were in fact 40-per-cent underfunded. It sued Mr. Norton for allegedly filing a false actuarial report.

The charges against Mr. Norton were dismissed by an Ontario judge. In 2008, the Canadian Institute of Actuaries fined Mr. Norton $15,000 and placed him under supervision for six months after it found that he had failed to perform professional services with “skill and care.”

Mr. Norton says he was not responsible for the pensioners’ losses. “It was the fact that the company didn’t put enough money in the plan.”

“We need an early-warning system,” says Mr. Arthurs, who headed the Ontario commission. “There is a wide zone of discretion left to actuaries who are making judgments about the health of pensions.”

Justice can seem selective for pensioners whose funds become entangled in bankruptcy proceedings.

In court, however, workers, unions and even pension regulators have been locked in losing battles against creditors. In two recent cases, creditors offering new financing have successfully demanded that the courts suspend payments owed to repair pension deficits.

By trumping pension laws, the judges in these cases are seeking to strike a reasonable commercial solution that can help the companies survive and possibly one day prosper sufficiently to repair ailing pensions. But these decisions come with risks. If restructuring efforts fail and company assets are liquidated, pensioners have little hope of recouping owed pensions, because they are outranked by most other creditors.

“Everyone feels like a victim here,” says Carol Kirton, 52, who has worked for 32 years at one of the companies – the Port Hope, Ont.-based branch plant of U.S. auto parts maker Collins & Aikman Corp.

Ms. Kirton says company officials have disclosed that the pension has a 30-per-cent shortfall. After two years of bankruptcy protection, she says hope is fading that the company will survive.

Concerns are rising among labour groups and their legal advisers that bankruptcy proceedings are becoming a place were companies can too easily amputate their infected pensions.

“Bankruptcy, or the threat of bankruptcy, is being used to eviscerate pension funding,” says Murray Gold, an adviser to Ontario’s Arthurs commission and a Koskie Minsky LLP lawyer who specializes in representing labour groups. “Bankruptcy court … is not the right place to make social policy.”

Attention must be paid

There are other places besides bankruptcy court to reform a damaged pension regime. But these court room tug-of-wars will likely continue until governments, businesses and workers adopt what former Ontario pension commissioner Mr. Arthurs calls “a new mindset.” That new approach would recognize that battles over shrinking corporate pension plans have, at best, only fixed the system at the margins and, at worst, delayed momentum for change.

Turning the Band-Aid solutions into a blanket fix for Canadian retirees would require Ottawa and the provinces to take a difficult and politically unattractive first step: Recognizing that the century-old business promise of a comfortable retirement is vanishing like the trading companies, retailers and railroads that first introduced them. Until that happens courts will continue to be the graveyards of broken retirement dreams.

Just ask Mr. Walker, the former Aleris executive. “This is a dream buster …. People have really been caught short."

With files from reporter Greg Keenan

Vital statistics

  • 84% of public service workers have pensions.
  • 78% of these plans are gold plated defined benefit pensions
  • 25% of private sector workers have a pension plan
  • 16% of these plans are gold plated defined benefit pensions
  • 11 million workers, or 60 per cent, of Canada’s workers have no pension at all
  • 8 million or 45 per cent, have no pensions or registered retirement savings plans (RRSPs)


Ford employee arrested for
stealing trade secrets for China

October 16, 2009
Bryce G. Hoffman / The Detroit News

A Ford Motor Co. employee has been charged with stealing its trade secrets for the Chinese, according to the U.S. Attorney for the Eastern District of Michigan.

Xiang Dong Yu, also known as Mike Yu, 47, of Beijing, China, was arrested on Wednesday at Chicago O'Hare International Airport when he tried to re-enter the country from China. He has been charged with theft of trade secrets, attempted theft of trade secrets and unauthorized access to a protected computer, according to U.S. Attorney Terrence Berg.

According to the indictment, Yu was a product engineer for Ford from 1997 to 2007 and had access to Ford trade secrets. Law enforcement officials say that just prior to leaving Ford, Yu copied approximately 4,000 Ford documents, including what they described as "sensitive Ford design documents" onto a portable hard drive.

"Included in those documents were system design specifications for the engine/transmission mounting subsystem, electrical distribution system, electric power supply, electrical subsystem and generic body module, among others," the Justice Department said in a statement released this afternoon. "The indictment also alleges that Yu took Ford design documents to China in July 2005 in conjunction with his efforts to obtain employment with a Chinese automotive company. Lastly, the indictment alleges that Yu used stolen Ford documents in an effort to secure employment with a Chinese automotive company in 2008."

The theft and attempted theft of trade secrets counts each carry a maximum penalty of 10 years in prison and a $250,000 fine. The computer-related charge carries a maximum penalty of five years and a $250,000 fine.

"Protecting the competitive edge technology of our companies through vigorous enforcement of our federal trade secret laws is a top priority of this office," Berg said in a statement. "Both employees and employers should be aware that stealing proprietary trade secrets to gain an economic advantage is a serious federal offense that will be prosecuted aggressively."

The FBI was in charge of the investigation that led to Yu's arrest.

"Michigan, as well as the rest of the United States, is significantly impacted by the auto industry. Theft of trade secrets is a threat to national security, and investigating allegations involving theft of trade secrets is a priority for the FBI," said FBI chief Andrew Arena. "The FBI will continue to aggressively pursue these cases."

Ford said it was aware of the situation.

"We're fully cooperating with authorities as they pursue the case," said Ford spokeswoman Marcey Evans.

Yu remains in federal custody and is scheduled to have a detention hearing in Chicago on Tuesday.


Volume 39, No. 35 – October 16, 2009

CONTACT is the CAW's national newsletter, one of the longest running and widely circulated union newsletters in the country.

Nortel Pensioners and Employees Demand Government Action

Pensioners, long-term disabled and former Nortel employees gathered at Queen’s Park in Toronto recently to demand justice and action from the Government of Ontario and the federal government to overhaul the country's unfair bankruptcy system. 

They crowded the lawn outside the Ontario legislature on October 7 waving banners and signs as speaker after speaker blasted the McGuinty government and the Harper Conservatives in Ottawa for not protecting the pensions and benefits of Nortel retirees and others who are suffering the fallout of an employer bankruptcy.

CAW President Ken Lewenza said seniors and pensioners helped build the wealth and success of Canada and must be treated with respect.

“All Canadians deserve pension income protection,” Lewenza said. “This is a national crisis we have here today.”

He called for increased funding for the province’s Pension Benefits Guarantee Fund so that it provides $2,500 per month instead of the current maximum of just $1,000. He also called for improvements to the public pension system, including a doubling of the replacement earnings under the CPP.

"This travesty is being ignored by the Government of Ontario and the federal government," said Lewenza. "Governments in other countries where Nortel operated are taking action to secure pensions and not punish retirees for their years of service."

Ontario NDP leader Andrea Horwath said the government of Ontario has a responsibility to ensure pensions are in place when people need them. 

Former CAW national secretary-treasurer Bob Nickerson thanked Nortel retirees and employees for attending the rally and received a huge cheer after demanding that “Premier McGuinty must listen to us.”

Among the other speakers were former Nortel President Bob Ferchat; President of Nortel Retirees and former employees Protection Canada (NRPC) Don Sproule; former Nortel worker in Belleville and former president of CAW Local 1530 Mary Jane MacKinnon.

The CAW once represented several thousand Nortel workers in Ontario. In its prime Nortel had manufacturing plants in Belleville, Kingston, London, and the Toronto area. Today CAW represents only about 40 members in Belleville and Brampton, Ontario.  

CAW Urges Federal and Provincial Support for Navistar

The CAW is calling on the Ontario and federal governments to ensure U.S. based Navistar trucks, which was given more than $60 million in taxpayer support six years ago, maintains its manufacturing site in Chatham, Ontario.

“Federal and provincial governments must play a role in defending workers and the community,” CAW President Ken Lewenza said. “Despite this funding, the company continues with its plan to eliminate products from the plant, which will mean the loss of hundreds of jobs. This will have serious consequences not only for workers and their families, but also the entire community of Chatham.”

Negotiations between the CAW and the company broke off in June with no further talks planned. The plant has been idled and more than 1,000 CAW members remain on layoff from the plant which has operated in Chatham for more than 60 years.

CAW representatives have met with Ontario Economic Development and Trade Minister Sandra Pupatello and Federal Industry Minister Tony Clement to discuss Navistar, but no progress has resulted so far. Lewenza sent Clement a written message on October 8 asking for a response on the future of Navistar in Chatham and whether the government required guaranteed job levels.

Cathy Wiebenga, chairperson of CAW Local 127 representing production workers at Navistar, said “as taxpayers we must wonder how our governments could provide $60 million in loans to Navistar without any guarantees that secure work for Canadians.”

Sonny Galea, chairperson of the CAW Local 35 Navistar office workers unit, said members are increasingly concerned about their future at the plant and that the government must do more to protect their jobs.

“Our federal government has shown no continuing interest in securing a future for the Navistar facility,” Galea said. “Now is the time for leadership. We need laws that ensure if a corporation wants to sell their goods in Canada then they have to build in Canada too.”

Minister Clement has not responded to the CAW’s letter, which according to Galea is further proof of his lack of interest in supporting Navistar workers.

CAW Resumes Formal Negotiations with Ford

The CAW will resume formal contract talks with Ford Motor Company on October 26. The union will bring in its entire CAW-Ford master bargaining committee for the discussions.

The two sides are attempting to reach a cost-cutting agreement which would well position the company’s Canadian facilities for future investment.

“We’re hopeful that we will be able to reach a new agreement with Ford that will suit our members’ need for better job security,” said CAW President Ken Lewenza.

Talks have been ongoing since early September on economic issues, with little success. 

CAW Highlights Rising Tide of Precarious Jobs

A growing number of Canadians are finding work in jobs that are considered precarious and that provide less than a decent standard of living as employers continue to eliminate or outsource hundreds of thousands of full-time jobs, said CAW President Ken Lewenza.

Precarious work is a term widely used to characterize jobs in the labour market filled on a temporary, contract, part-time or an impermanent basis. These jobs generally offer workers below average wages, few (if any benefits), and limited protections under labour laws.

Lewenza’s comments were echoed by labour union leaders around the world on October 7 as the international labour movement celebrated the World Day for Decent Work (WDDW), a day devoted to highlighting the need for good jobs that enable individuals to meet their basic needs and that promote freedom, equity, security and human dignity.

Precarious jobs in Canada have grown since the 1970s and have accelerated over the last decade. In 2008, more than one-third (36 per cent) of Canadian workers were considered employed in precarious jobs.

Since the start of the economic crisis, Canada has shed 485,000 full time jobs while gaining nearly 100,000 part time jobs over the same time period.  

“Precarious jobs are steadily becoming the norm rather than the exception in Canada,” Lewenza said. “This is a dangerous trend that will continue to have severe impacts on workers, their families, communities as well as Canada’s social services.”

“So many of our country’s social support mechanisms are tied to our jobs and the number of hours we work. Workers’ access to pensions, unemployment insurance, child care, health benefits, parental benefits and others are all impacted by our work arrangement.”

As part of the International Metalworkers’ Federation (IMF) week of action against precarious work, and the World Day for Decent Work, the CAW held a round table discussion in downtown Toronto with labour activists, researchers, community advocates and others dealing with the issue of precariousness. The round table was an opportunity to develop a set of common demands and objectives for an ongoing campaign.

Newfoundland Employment Support Program Falls Short

The CAW/FFAW says a temporary employment support plan announced by the Newfoundland government October 5 for hard-hit harvesters and plant workers is of little or no value to those struggling under the weight of a disastrous 2009 fishing season.

“This plan announced today just shows a complete lack of understanding and a blatant disregard for the impact this year has had on people in the province’s fishing industry,” said CAW/FFAW Secretary-Treasurer David Decker in a news release.

He said under this plan even best case employment support scenarios would amount to little for plant workers and fish harvesters.

“I cannot imagine many harvesters or plant workers in this province who will see any tangible benefit from this plan this year,” Decker said. “It’s like throwing a glass of water on a five-alarm fire.”

Price declines in several fisheries, reduced landings in others and the overall increase in expenses have created widespread hardship this year.

After meeting with provincial officials in early August to discuss the need for emergency help for people struggling because of depressed seafood markets, Decker said it took far too long for the government to announce any plan at all.

“The premier said his government would be there to help people in this industry who have been pushed to the brink of ruin this year – if this plan is the result of that promise then government has failed to realize the depth of the problems being faced in coastal communities this year,” Decker said.

CAW Local 2000 Opens Talks with MTS/Allstream

The CAW and MTS/Allstream are currently in bargaining for a new collective agreement to cover 600 CAW members who work for the company, a provider of telecommunications and converged IP services.

Bargaining between CAW Local 2000 and MTS/Allstream, Canada’s third largest telecommunications company, got underway the week of October 6.

"Although the company paints a bleak picture of today's economy, everyone clearly understands that there is a tremendous opportunity for growth in this industry and we're bargaining for the future,” said Dylan Gadwa, CAW Local 2000 president.

“There are serious issues that need to be resolved around the company's continued desire to contract out and see our hard-earned benefits eroded,” said Gadwa, who stressed the solidarity of the membership and the continued support of the national union as keys to winning a fair agreement. 

“The bargaining committee is determined to protect bargaining unit work which is under constant pressure because of the speed at which technology evolves in the high tech telecommunications sector,” said CAW national representative Joel Fournier.

United Way Campaigns Underway

Annual United Way campaigns are underway and the need for support of local campaigns has never been greater, CAW President Ken Lewenza says.

“In each of our communities the United Way has a proven ability to make a real difference in people’s lives,” Lewenza said.

The negative impact of job loss right across the economy will hurt all of our communities. Lewenza said in many cases it will mean that CAW members, who in the past have been strong supporters of United Way, will now be looking for support from United Way agencies.

“Increasing poverty, particularly among the youngest and oldest in society, is but one manifestation of this need,” Lewenza said. “The lack of affordable housing and the ensuing crisis of homelessness is another. What is not so obvious perhaps are the other symptoms: violence, alienation, substance abuse, neglect, etc,” Lewenza states in an October 5 letter to CAW local union presidents.
Revitalizing Canada’s Manufacturing Sector

How can the Canadian manufacturing sector adapt and thrive in the 21st century? This, along with a number of other pressing questions, will be explored at the upcoming conference “Revitalizing Canadian Manufacturing” hosted by Ryerson University, in Toronto on November 10.

The conference will feature speeches by leader of the Green Party of Canada Elizabeth May, RBC CEO and President Gordon M. Nixon, Ontario Premier Dalton McGuinty, CAW Economist Jim Stanford, Canadian Manufacturers & Exporters President and CEO Jason Myers as well as others and will be moderated by former CAW National President Buzz Hargrove.

For more information on the conference, please visit: www.ryerson.ca/manufacturing.

Canadian Content Rules at Work
Pictured above is a new, $1.5 million (U.S.) milling machine, which can handle very large metal parts with a high degree of accuracy at Bombardier’s Thunder Bay, Ontario plant. This machine, along with a laser cutting machine, a new robot welding machine, and new measuring machinery, have all been installed since the TTC subway and streetcar contracts worth a combined $1.9 billion were secured.

“This new machinery will enhance the plant's capability for producing primary parts, and is an indication that Bombardier intends to increase production at its Thunder Bay site,” said CAW Local 1075 President Paul Pugh. “Based on these upgrades and subway production soon to commence,it’s expected that CAW membership will increase substantially from the current 500. This is proof that Canadian content provisions work,” Pugh said.

Challenges and Renewal

The CAW Aboriginal/Workers of Colour Conference will be held November 13-15 at the CAW Family Education Centre in Port Elgin, Ontario.

The theme for this year’s conference is “Challenges and Renewal.” The deadline for registration is October 23, 2009. Our union’s commitment to human rights and equality can only be met with the total involvement of our leadership and activists. In order to fulfill that commitment the CAW is urging every local union to send their full complement of delegates to the conference.

For more information contact CAW Human Rights Department Director Vinay Sharma at 1-800-268-5763 extension 8469.

Bud Jimmerfield Award 2009

The CAW Council meeting in December of 1997 included a moving address by CAW Local 89 President Bud Jimmerfield, who at the time had only a couple of months to live.

Bud had contracted cancer of the esophagus from exposure to metalworking fluids during 30 years of work at an automotive parts plant.

Bud was a tireless health, safety and environment and workers’ compensation activist and it’s for this reason CAW Council established the annual Bud Jimmerfield Award to recognize the contribution of an outstanding CAW Health, Safety, Environment or Workers’ Compensation activist. The award is made each year at the CAW Council meeting in December.

Eligible health, safety, environment or workers compensation activists must be CAW members and be nominated by their local union leadership or local workplace leadership. Activists must have shown leadership in helping their fellow workers as well as participated in activities beyond the workplace.

Nominations for the Bud Jimmerfield Award must be received by the CAW Health and Safety Department no later than Friday, November 13, 2009 at 205 Placer Court, Toronto, Ontario, M2H 3H9, fax 416-495-3785 or email cawhse@caw.ca

CAW Communications Conference

The CAW Communications Conference will be held November 13 to 15 at the CAW Family Education Centre in Port Elgin, Ontario.

The conference will explore the world of social media (Web 2.0) and will feature plenary and smaller group workshops for both new and experienced local union communicators. The CAW Local Union Media Association awards will also be held.

The registration deadline and the deadline for entering the awards presentation is Friday, October 16. For more information contact CAW Communications at cawcomm@caw.ca or call 1-800-268-5763 ext. 3771.


Ford dealers host evening events
for Lincoln MKT debut
The 2010 Lincoln MKT luxury crossover shares no body panels with the Ford Flex, upon which it is based. The Lincoln is much curvier. (Ford / Lincoln)

Thursday, October 15, 2009

Bryce G. Hoffman / The Detroit News

Ann Arbor -- If you want to see the new shape of Lincoln, look at the MKT.

Ford Motor Co.'s new luxury crossover is the first vehicle to incorporate all of the major design elements, technological innovations and product strategy that the Dearborn automaker hopes will define the brand.

Lincoln has languished as a lackluster marque that struggled to sell rebadged Ford products at a premium. Sales are down 44 percent over 2000, according to Bloomberg News.

For the past four years, Ford has been working to give the brand a distinctive look and feel that justifies a higher price tag on Lincoln models. The MKT, for example, starts at $44,200.

That evolution did not happen overnight. The first attempts to take Lincoln in a new direction -- vehicles like the MKZ and MKX -- still bore a strong family resemblance to the Ford models they were based on: the Fusion and Edge.

But the MKT, which is arriving in dealer showrooms, does not share a single interior or exterior body panel with the Flex, upon which it is based.

Where the Flex exults in its boxiness, the MKT is all about curves, from its bow-wave grille to its bustle-back tail. These are design cues that hearken back to Lincoln's glory days, as are other features like the high belt line and strong rear pillar, but they are put together in a thoroughly modern way.

"MKT is the first full embodiment of that design language," said chief nameplate engineer Ron Heiser, who said the MKT also is the first Ford product to incorporate cutting-edge technologies like automatic parking. "MKT has literally been a test lab for Ford."

And Ford is holding a coming-out party for the MKT at dealers across the country tonight.

These invitation-only events are designed to showcase the new MKT. As an added draw, Ford is donating $20 for each person who test-drives a new Lincoln to Susan G. Komen for the Cure in honor of Breast Cancer Awareness Month.

"It's a great opportunity to build some excitement at our dealerships, launch the newest vehicle in our lineup and support a great charity," said marketing manager Kate Pearce.

But analysts say Lincoln's rebirth still has a ways to go.

"They're not quite there yet," said Jim Hall of 2953 Analytics LLP in Birmingham, who said the MKT and the MKS sedan that preceded it represent a good start. "You won't know if they've got their mojo back though until you see the second generation of each of these vehicles."


Ford deal still fizzling
St Thomas Fizzle

Toronto Star Oct 14, 2009

Pressure is increasing on Ford of Canada and its main union to cut labour costs after the parent company reached a tentative deal for more concessions in the U.S.

Ken Lewenza, president of the Canadian Auto Workers, said Tuesday the U.S. deal represents the second time that union negotiators at Ford have reopened their contract and accepted concessions south of the border this year while his members have not absorbed any cuts.

Local United Auto Workers leaders in the U.S. are recommending that workers accept the deal, which would freeze entry-level wages; pay a $1,000 (U.S.) bonus; change work rules; guarantee new vehicles for five plants and contain a no-strike provision in 2011 with any dispute moving to arbitration.

The concessions are similar to what workers at General Motors and Chrysler have already accepted in the U.S.

Negotiators for Ford of Canada and the CAW started concession talks last month but discussions fizzled into exchanges of information and exploration of ideas with no significant progress.

Talks stalled because the union is insisting that in exchange for concessions, Ford of Canada's plants continue to represent 13 per cent of the company's North American output.

The union has concerns Ford will close its assembly plant in St. Thomas and shrink engine operations in Windsor. However, the two sides have agreed to reopen talks on Oct. 26 after the company warned the union about pending international investment decisions.

UAW leaders back
concessions at Ford


No Strike

Wage, strike give-backs bring promise of work; union reps OK contract

Bryce G. Hoffman / The Detroit News - October 14, 2009

Detroit --Top UAW leaders called on rank-and-file members Tuesday to approve a tentative agreement reached with Ford Motor Co., saying concessions are necessary to keep the automaker competitive.

If approved, the deal would freeze wages for entry level workers and limit the union's right to strike. In exchange, Ford would make new sourcing and production commitments and give workers a $1,000 bonus in March.

That was enough to quell the opposition of many local UAW leaders from across the country who had opposed reopening the contract, which expires in 2011.

At a meeting here Tuesday, the local leaders voted overwhelmingly to recommend ratification.

"Failure to act in this situation will undermine our efforts to continue to win new work, to protect U.S. jobs long-term and to ensure that Ford can continue to make contributions to our pension funds," United Auto Workers President Ron Gettelfinger and Vice President Bob King, head of the UAW Ford section, said in a statement to members, a copy of which was obtained by The Detroit News.

"Although the company reported a small profit last quarter, this does not change the underlying dynamics of the business."

Ford is the only U.S. automaker that did not take a government bailout and avoided bankruptcy.

General Motors Co. and Chrysler Group LLC won significant concessions from the UAW during their Chapter 11 reorganizations. Ford had hoped to match those givebacks, and the tentative deal comes close.

Labor expert Harley Shaiken of the University of California Berkeley, said UAW members feel like they have already given a lot, but remain concerned about their future and are likely to endorse the deal.

"It's a volatile mix, but what I think is key is that the leadership has strong support and sought to gain something for what they had to give," Shaiken said.

Most significantly, Ford failed to win the restrictions on skilled trade job classifications that the UAW granted to GM and Chrysler.

Instead, the union agreed to expand the use of mechanical skilled trades teams, which would give the company more flexibility in how it deploys workers to all of its U.S. facilities. Ford is satisfied with the terms.

"(This) would help Ford improve its current and long-term competitiveness in the United States," said Joe Hinrichs, Ford's head of labor relations.

Just as significant is the fact that Ford avoided making the sort of new product commitments that GM and Chrysler made in exchange for concessions.

However, Ford agreed to in-source some components. Some of these commitments were targeted at plants where opposition to additional concessions had been strongest.

Now, union members will vote.

If Tuesday's meeting of local UAW leaders was any indication, approval is likely. The mood inside the UAW-Ford National Programs Center was more positive than in August. Then, the sentiment against further concessions was so strong that Gettelfinger and King postponed a planned vote to reopen the contract, according to sources. "It's been a delicate balance throughout this process," Gettelfinger told reporters after the local leaders voted. "We want Ford to do well, and we knew as they continue to improve that it would make ratification a little more difficult. But at the same time, this is not really a concessionary agreement. It's got more positives for our members than it has negatives."

Few spoke against the deal on Tuesday but one who did was Gary Walkowicz, a member of the bargaining committee at UAW Local 600, which represents workers at Ford's River Rouge complex. He was opposed to the limits on the union's right to strike and will urge his co-workers to vote no.

"To give up any part of that is like destroying the union," Walkowicz said after the meeting, adding that he also opposes the limits on entry level wages. "I don't like the idea of taking things away from the new guys. That's going to divide the union -- and they are the ones who are going to be voting on our retirement benefits when we're gone."

But other workers said they are more concerned about protecting what they already have.

"We're likely to support it if it doesn't affect us now," said John Kotronis, who works at Ford's Wayne Assembly Plant. "I'm glad they're not taking anything more away from our wages and benefits."

UAW Ford locals are scheduling informational meetings and voting could start as early as this week.


The following are highlights from the proposed agreement, which would amend the four-year contract reached in 2007 between the union and Ford.

* UAW-represented workers at Ford would get a $1,000 bonus paid in March 2010.

* Entry-level workers, who would start at $14 per hour, would have their wages frozen for the duration of the agreement.

* There would be no cap on the number of such entry level workers Ford could hire until 2015, when entry-level workers would be capped at 20 percent of the factory work force. That would force Ford to grant traditional employee wages by seniority to new hires after that date.

* UAW would submit wage and benefit provisions of the 2007 contract to binding arbitration when the contract expires in 2011. The union would reserve the right to call a strike at Ford over other issues.

* Skilled trade job classifications would be simplified and workers would be placed in "mechanical teams" handling a range of assignments in the plants. That plan would be implemented in all Ford's U.S. factories by June 2011.

* Ford made a number of production commitments to the UAW intended to preserve union jobs. These included a renewed commitment by Ford to bring new products to assembly plants in Ohio, Kansas, Michigan, Kentucky and Illinois.

* New production commitments by Ford include bringing a new vehicle to Ford's Michigan Assembly Plant, building hybrid battery packs at a plant in in Rawsonville, Michigan and bringing a new vehicle to the Louisville Assembly plant that Ford could also export for sale to other markets.

* Ford agreed to build its Transit Connect commercial van at a UAW-represented U.S. factory if it decides to build the vehicle in North America and factory capacity is available. The van is currently exported from a Ford factory in Turkey.

* Ford agreed to study the cost of producing dies in China in conjunction with the UAW and to consider whether to bring that work to the United States. Dies are tools used in auto manufacturing.


Record Ford recall widened

October 14, 2009

Toronto Star

Ford, whose fortunes have improved significantly in Canada during the past year, is recalling more than half a million older vehicles here to repair defective cruise control switches which could cause fires.

As part of the biggest recall in its history, Ford Motor Co. of Canada Ltd. disclosed yesterday the company will soon send notices to owners of 522,900 pickup trucks, minivans and commercial vehicles for repairs on their control deactivation switches.

Ford said the notice expands the number of 1992-2003 vehicles that it has recalled for the repair to about one million.

Ford spokesperson Kerri Stoakley noted Ford has identified two reports that "appear to allege" a fire related to the switches.

The company is recalling the 1993 — 1997 and 1999 - 2003 F-Series SuperDuty diesel trucks; 1995 — 1997 and 2001 — 2003 Ranger trucks; 2000 — 2003 Excursion diesel sport utility vehicles; 1992 — 2003 Econoline commercial vans; 1995 — 2002 Explorer sport utes; 1995 — 2003 Windstar minivans.

Meanwhile in Detroit, parent Ford Motor Co. said it would recall 4.5 million more vehicles in the U.S. for the same repair. That lifts recalls to seven and affected vehicles to a record 14.3 million.


Dollar soars, retailers hold breath

Loonie's near-parity with greenback stirs fear of consumer revolt and recovery slowdown

October 14, 2009 - Toronto star

As the Canadian dollar soars toward parity with the U.S. greenback, Canadian retailers are bracing for a possible consumer backlash against the widening price gap between Canadian and U.S. goods.

Prime Minister Stephen Harper echoed the Bank of Canada's concerns a rising dollar "poses a risk" to Canada's economic recovery.

And Canadian exporters, who ship more than three-quarters of their goods south of the border, are worried less competitive prices will mean lost sales and jobs.

Cross-border travellers will welcome the news. Canadians took 18.9 million overnight trips to the U.S. in 2008, spending $12 billion. An estimated 7,000 Canadian "snowbirds" who spend up to half the year there will find their dollars go further.

The Canadian dollar closed up nearly three-quarters of a cent at 96.48 cents U.S. Tuesday on rising prices for oil and other commodities, a strong employment report for September, and worries about the U.S. deficit.

The loonie's rapid rise in recent days, up 5 per cent in the past week and 26 per cent since early March, has forecasters predicting it could reach parity sooner than expected.

"We could easily reach parity by the end of the week," said John Curran, a Toronto-based senior vice-president at Canadian Forex Ltd., an online foreign-exchange dealer.

Derek Holt, Scotia Capital's vice-president of economics, said it "could happen (by the) middle of next week."

While that's good news for consumers if it helps drive down retail prices, it can be bad for Canada's manufacturers and exporters.

For every one per cent rise in the value of the dollar, Canada's economy can lose up to $2 billion in exports and 25,000 jobs, according to the Canadian Manufacturers and Exporters. "We're telling members coming out of the recession, business as usual is no longer an option. You'd better be willing and capable of competing at par going forward," said spokesman Jeff Brownlee.

Canadian retailers say they're watching closely for any signs of a consumer revolt like the one that took place two years ago when the loonie soared above the greenback. At the time, angry consumers demanded Canadian stores lower their prices to more closely match those in the U.S., especially on books and magazines, which published both prices on the covers.

"Retailers in Canada understand they are serving customers without borders," said Mark Beazley, spokesman for the Retail Council of Canada. "With fierce competition in Canada, across the border and online, retailers know that they will have to work harder than ever to remain competitive as the loonie rises against the U.S. dollar."

Consumers are unlikely to see price cuts any time soon, as cost savings can take three to nine months to flow through to the retail level, he said. "That being said, Canadian retailers are sensitive to the needs of their customers and will ultimately make pricing changes based on their demands."

Goods in Canadian stores are now 13 per cent more expensive on average than in the U.S., up from 7 per cent last summer, says Doug Porter, deputy chief economist with BMO Capital Markets.

"This big run-up is coming at a very sensitive time as we head into the key shopping season of the year. Unfortunately, this is going to put renewed pressure on domestic retailers," Porter said.

"We could start to see cross-border shopping start to pick up again. It had almost whittled away to nothing by last summer, partly because of the hassles of crossing the border, needing a passport and so on."

So far, there are few signs cross-border shopping is picking up.

Despite reports of long lineups at some Canada-U.S. bridges over the Thanksgiving weekend, traffic remained down by about 10 per cent compared to last year, bridge operators at Niagara and Windsor said Tuesday. That's roughly where it has been all year.

But consumers can comparison shop on the Internet, Porter noted.

In Vancouver Tuesday, Harper said the Bank of Canada governor has expressed concern about the rapidly rising dollar and he deferred to his judgment on the effects of the loonie's rise.

"We note that Canada's economy is relatively stronger than virtually any of the G7 economies and stronger than most in the world. Obviously, some of these factors will have something to do with the rise of the Canadian dollar," he said. "The value of the Canadian dollar is a risk to recovery. It's not a risk to choking off the recovery but if it rises too rapidly it does have an effect."

With files from Petti Fong


Ford, UAW reach tentative
deal on contract changes

* Deal to be presented to National Ford delegates Tuesday
* Tentative agreement subject to ratification of members
* Ford, UAW discussions began on Aug. 25

DETROIT, Oct 13 (Reuters) - The United Auto Workers has finalized a tentative agreement with Ford Motor Co on contract changes the automaker has sought to bring its labor costs in line with those of U.S. rivals, the union said on Tuesday.

The UAW will present the tentative pact to its National Ford Council delegates on Tuesday afternoon in Detroit and then put it to a member vote should the group agree, it said.

Ford, the only large U.S. automaker not to undergo a government-supported bankruptcy in 2009, has aimed at bringing its contract in line with those of General Motors Co and Chrysler Group LLC, which received deeper union concessions earlier in 2009.

Ford opened talks with the UAW on the latest concession requests on Aug. 25 for changes to a historic four-year contract from 2007 that covers about 42,000 workers.

The UAW reached four-year contracts with all three Detroit automakers in 2007 but has agreed to make unprecedented mid-contract concessions to the companies amid the severe recession and deep downturn in auto industry sales.


Tuesday, October 13, 2009

UAW vote on Ford
talks expected today

Union seeks leaders' approval of concessions to give automaker more parity with rivals

Bryce G. Hoffman / The Detroit News

In an unorthodox move, the national leadership of the United Auto Workers is expected to ask local union leaders to authorize formal negotiations with Ford Motor Co. and vote to recommend approval of the results of those negotiations today, according to people familiar with the situation.

That is possible because Ford and the UAW have been holding informal talks for weeks and have agreed in principle to a package of concessions that go a long way toward meeting the company's demand for parity with its cross-town rivals. However, since UAW rules require local union leaders to authorize such negotiations, the results cannot be presented to them until that vote takes place.

UAW President Ron Gettelfinger and Vice President Bob King, who heads the national Ford section, had intended to ask local representatives to approve the negotiations during their last meeting in August. However, they delayed the vote until they could provide more concrete information about what Ford was willing to offer in exchange for the concessions.

Sources briefed on the provisional deal told The Detroit News that the UAW has agreed in principle to freeze entry level wages, limit the union's right to strike and extend the production team model -- which allows workers to perform a wider variety of tasks -- companywide.
In exchange, Ford will pay a $1,000 "quality bonus" to workers in March as a reward for recent quality gains and will make additional product commitments to some U.S. factories that could add jobs at some facilities.

General Motors Co. and the Chrysler Group LLC won broader "no-strike" agreements from the UAW and additional limits on skilled trade job classifications during their bankruptcy reorganizations, but both were also required to commit to building small cars in the United States.

If local union leaders vote to recommend ratification of the changes, they will still need to be approved by rank-and-file members. Some locals already have scheduled informational meetings for this weekend, and voting could begin as early as next week.

Ford would not comment. The UAW could not be reached.



October 13, 2009

  • Ford increased market share to 10.1 percent in September in its 19 European main markets – the best share for any month for Ford of Europe since September 2001
  • Ford sold 51,400 new Ford Fiesta cars in September – the best September for Fiesta since 1994
  • September was the ninth consecutive month of year-over-year monthly share improvement and the fourth successive month of year-over-year monthly volume increase

COLOGNE, Oct. 12, 2009 – Ford today reported that strong sales in September drove market share for its 19 European main markets to 10.1 percent – the highest share for any month since September 2001, and a 0.8 percentage point increase over the same month a year ago.

Ford of Europe sold 152,600 new vehicles in its 19 main markets in September, a gain of 12.3 percent over the same month a year ago, and better than the industry increase of 2.9 percent. Ford has now reported year-over-year sales gains for four months in a row, and market share increases for nine consecutive months. 

“Traditionally we expect Ford to have a good month in September given the surge of new car sales in the U.K. due to the registration plate change. But September 2009 has surpassed expectations,” said Ingvar Sviggum, Ford of Europe’s vice president for marketing, sales and service. 

Ford’s September share increased in 14 of its 19 European markets versus the same month 2008.   The new Fiesta contributed to the strong results, with sales of 51,400 units registered in Europe last month – the best September for Fiesta since 1994. 

“Market share and volume success are only valuable if they are achieved through high quality sales that generate good revenue, and we certainly saw that in September with retail sales accounting for 60 percent of Ford passenger car sales,” said Sviggum. 

Sviggum said Ford remains concerned about the fragility of the underlying market. “With the sudden ending of some scrappage schemes and the more-controlled phasing out of others, the industry faces an uncertain future in terms of market demand as 2010 approaches.  It is clear that there is still a need for government intervention in Europe to help bolster the market until demand reaches a more sustainable level,” he said. 

September year-to-date
Ford succeeded in increasing its share by 0.5 percentage points to 9.2 percent, the best year-to-date September share for Ford in its main 19 European markets since 1999.  Share was up in 17 out of the 19 main markets. 

In the first nine months of 2009, Ford of Europe registered 1,097,100 vehicles in these 19 European markets, a reduction of 51,100 units or 4.5 percent, than in the same period in 2008.  This compares with a total industry decline of 9.7 percent in the period.  Year-to-date across its 51 markets, Ford of Europe sold 1,243,700 vehicles, a decrease of 172,000 units, or 12.2 percent fewer than in the same period in 2008.


Widow of Ohio officer
sues Ford over crash

Associated Press

Oct 12, 2009

Cleveland -- The widow of an Ohio patrolman is suing Ford Motor Co., blaming the officer's death on engineering problems with the cruiser he was driving when it crashed into a pole and caught fire on Interstate 90 near Cleveland.

Linda Brentar says in a lawsuit filed this week that the fuel tank on the Ford Crown Victoria Police Interceptor is so vulnerable to puncture that it exploded in the 2007 accident that killed her husband, 49-year-old George Brentar.

Ford spokeswoman Marcey Evans says the Ford Crown Victoria is designed to the highest rear-crash safety standards in the industry and that no vehicle can be expected to prevent all injuries in that type of collision.

After Brentar's death, the Euclid Police Department, where he worked, installed fire suppression systems in its fleet of Crown Victorias.


CARP wants Dhalla to
reel in pension bill

October 11, 2009


A national seniors organization issued an open letter to Brampton MP Ruby Dhalla asking her to drop proposals for changes to the Canadian pension act.

The letter, released by the Canadian Association of Retired Persons (CARP) Thursday, held back no punches in telling the Brampton-Springdale MP her Private Member's Bill has very little chance of surviving the parliamentary approval process. Susan Eng, the organization's vice-president of advocacy, also said her proposal is doing more harm than good.

Last June, Dhalla introduced a Private Member's Bill to amend the Old Age Security Act so immigrant seniors can qualify to receive monthly benefit payments after three years Canadian residency instead of 10 years.

Last June, Dhalla introduced a Private Member's Bill to amend the Old Age Security Act so immigrant seniors can qualify to receive monthly benefit payments after three years Canadian residency instead of 10 years.

While there has been support from various communities and organizations, there has also been a hue and cry from many Canadians. Emotional opposition and criticism from Canadians, who believe recent immigrants have not earned the right to access a government-funded pension program, have drowned out any cheers of support for the bill.

Many feel the proposal could leave a much smaller pie for Canadians who have toiled decades and now rely on the program in retirement. Opposition in some circles has been tinged with anti-immigrant sentiment.

Even Liberal Leader Michael Ignatieff and other members of her party have told Dhalla they would not be supporting the bill. It is estimated the proposal will cost $300 million to $700 million to implement.

According to Eng, response from members of CARP and comments to the organization have been uniformly negative.

"CARP requests that you withdraw Bill C-428 in order to prevent the further corrosion of the public discourse on immigration and stem the tide of anti-immigrant sentiments that Bill C-428 has provoked," Eng said in the open letter.

The organization supports efforts to address poverty amongst all seniors, but believes this particular bill and legislative approach is the wrong way to go about helping that segment of Canadian society.

Private Member's Bills are rarely approved in the House of Commons. The process is much more difficult when the MP does not have government backing, let alone their own party's support.

Dhalla has conceded parliament would have to sit for at least a couple of years for her bill to even have a chance. However, she is hopeful it will trigger productive debate and action on the issue of poverty amongst the elderly.


October 10, 2009

UAW, Ford to start formal
talks on contract concessions

Bryce G. Hoffman / The Detroit News

The United Auto Workers has summoned local union leaders to Detroit on Tuesday to discuss calls by Ford Motor Co. to match recent concessions the UAW gave to its cross-town rivals.

A UAW source said the union's national leadership is expected to ask for permission to begin formal negotiations with the Dearborn automaker on the proposed contract changes, which include a freeze on entry level wages, fewer job classifications for skilled trades workers and a "no strike" pledge.

The two sides have been talking informally for several weeks.

"We continue to work with the union on ways to make the company more competitive," said Ford spokeswoman Marcey Evans. "We continue to make progress, but we have no announcement to make right now."

The UAW made concessions to General Motors Co. and the Chrysler Group LLC as part of their bankruptcy reorganizations earlier this year. Union leaders have said publicly that Ford will not be left at a competitive disadvantage, but selling that to union members has been a challenge. Many rank-and-file UAW members say they oppose further concessions to the company, which is seen as being in better shape.

"I'm certainly opposed myself," said Gary Walkowicz, a member of the bargaining committee at UAW Local 600 in Dearborn. "Any agreement to take away our bargaining power in 2011 would be a terrible decision."


Government wants us to
believe suffering is inevitable

Oct 10, 2009
MLA Norm Macdonald

As I write this report, I am clearing off my desk at the Legislature before the Thanksgiving long weekend.  I am looking forward to spending next week back in my communities where I will have the opportunity to talk with you and hear what is on your mind.

I know that I will meet with parents who care about their children, with seniors and the family members who love them, and with volunteers who are working to make their community a better place to live.  I will meet with people who have clearly established priorities; they put children, seniors and their community first.

The last two months in the Legislature have made it absolutely clear to me that our government does not share our priorities.  This is a government that is willing to put children at risk, reduce services to seniors and gut community programs with no regard to the impacts.

This government wants us to believe that we all must suffer because economic times are tough, but you don’t have to dig very far to find that some sectors are doing better than others in British Columbia.

Who are the winners and who are the losers in these examples?

The Harmonized Sales Tax (HST) will transfer a $1.9 billion tax burden away from corporations onto individual tax payers.  For instance, a senior couple on a fixed-income will spend more than $1000 a year extra just on HST.

When former Finance Minister Carole Taylor eliminated the Corporate Capital Tax on financial institutions she eliminated $100 million a year in tax revenue that previously funded healthcare and education.

Health Minister Kevin Falcon has just announced that the cost to seniors for residential care is going up as much 29% starting January 2010.  Seniors with yearly incomes as low as $22,000 will pay a further $2000 a year for residential care.  That’s a whopping $53.7 million that is being taken out of the pockets of vulnerable seniors.

Here is a shocking fact: post-secondary students will contribute more to general revenue through taxes by 2011 than corporations will contribute through corporate income tax.  Think about that one for a minute.

In my communities, we believe that we all need to work together to build our communities.  We believe that our tax dollars should be spent building a healthcare system that works for us when we need it.  We believe that our tax dollars should provide high-quality education for all our children.  And we believe that our seniors deserve quality affordable care.

Each day, in my work as your MLA, I remember the message that you sent the government on Election Day.  In Columbia River-Revelstoke we believe that every sector has to make a contribution.  And we  want a government that places the highest priority on protecting the public good.

Norm Macdonald is the NDP MLA for Columbia River-Revelstoke


Saturday, October 10, 2009

Ford Flex is for those needing a bigger people-hauler

Ford Flex

Scott Burgess / The Detroit News

There's something about the 2010 Ford Flex.

Entering its second model year, the Flex is Ford's answer to people who need a big people hauler. It stretches more than 200 inches and can carry up to seven people, depending upon how it's configured. (Though I would suggest selecting the captain's chairs for the second row because they are so comfortable.)

For the vehicles it replaces -- the minivan and Taurus X (the crossover formerly known as the Freestyle) -- the Flex offers a much more stylish solution.

But sometimes it looks goofy. Take those big slab sides and pseudo wood panel grooves on its sides. It could almost pass for a giant Mini with dual chrome exhaust tips. Then at other times, the Flex looks intriguing. It's the John C. Reilly of vehicles -- you give it a pass on its looks because it can perform with the best of them.

For 2010, Ford has added its soon-to-be legendary EcoBoost engine. The 355-horsepower direct injection twin-turbocharged V-6 may have better fuel economy through technology, but it's also a beautifully powerful engine.

There is no turbo lag, that lull between hitting the accelerator and the car launching forward. It just takes off and keeps going. The idea behind the EcoBoost engine is to provide V-8 power with a V-6. And this engine surpasses many V-8 engine when it comes to power.

Additionally, while pushing a 4,400-pound seven-passenger vehicle down the road, it still manages to get 16 miles per gallon in the city and 22 mpg on the highway. Both respectable, though not overwhelming mileage figures.

During my week of testing, I averaged 19 mpg in a good mix of highway and city driving. And that was while using regular unleaded gasoline, which the engine has been designed to handle. To get the maximum power out of the Flex, you need to use premium fuel.

Nice driving features

The all-wheel drive system, which is standard on the EcoBoost model, also is excellent, helping you through corners and ideal for bad weather traction.

By dropping two cylinders, the Flex is also very quiet on the road. On the highway, no road noise leaks into the cabin and the engine makes hardly a peep. Around town, you don't hear anything unless you roll your window down.

The ride and handling are deceiving. The body doesn't roll much through corners and you often feel as if you're driving much slower than you really are. On the highway, it can easily hit 80 mph without a strain.

The upright seating position makes you feel like you're much higher than you really are. The electric power steering feels exact and provides nice feedback at any speed. This is another gas-saving technology that we will, no doubt, start seeing on more vehicles.

The electric power steering also makes it possible to use the Flex's active park assist. This is the self-parking system made famous by the Lexus LS460. But the Flex can park a bigger vehicle in a smaller space and it actually works great. As you cruise along the road looking for a parking space, the Flex will help with the search, and determine if you can fit easily into a spot. Then, once you're ready, it will take over and walk you through the parking procedure. It's easy to use, and while it's unnerving the first few times to watch your car do something you used to do, it quickly becomes a friendly feature.

And when you open the door and step out, you almost expect a big step down, like you would from an SUV. Instead, it's an easy jump out of the vehicle.

A luxurious interior

Much like its performance, the Flex rewards you with lots of little surprises inside the cabin.

The big seats are very comfortable and the thick stitching makes the interior feel a little more rugged. There's something trucky about the interior in a very good way. Tough and luxurious is the perfect combination for someone looking for a vehicle that is fun to drive but can withstand the stampeded of children.

The second row offers more legroom than the front (43 inches compared with 41 inches) and it's here that the Flex really stands out. If you choose the optional captain chairs over the standard bench seat, you may loose space for one passenger but did you really need it? You feel like Capt. Kirk in the second row of the Flex.

The second row seats also fold up quickly at the touch of a button. Because of the low step into the Flex, it's also easy to jump into the third row. While I wouldn't want to spend a day in the third row, it was comfortable enough for short trips and small children would be very comfortable.

Loaded with options

The Flex comes loaded with comfort and features. There are driving enhancements such as the blind spot detection system that is simple and direct. If someone is in your blind spot, a little yellow light appears on your outside mirror.

The Flex also comes with Sync, an infotainment system that I have probably raved too much over. But it's just that good. Sync, when incorporated with the navigation system, has the best touch screen set up in the automotive world. It's easy to use manually and just as easy through voice commands. Of course, Sync doesn't punish you if you don't get the navigation system, because it will still work easily without it. It's nice to have those choices.

There are a few silly options that feel more like kitsch than anything else. Flex offers a small refrigerator in the second row, which can hold a few cans of soda for those long trips. An Igloo cooler can do the same thing and costs hundreds of dollars less.

Finally, the Flex can even carry more than just people. The second and third rows can fold nearly flat and create more than 83 cubic feet of space. You also have the option of folding only one seat in the second row. The variety of options makes this space so useful.

The Flex may not be every person's cup of tea and that seems to be just what Ford wants. Some people may find the exterior downright ugly, other people may love it. At least it makes you think about it and in a day when so many crossovers look the same, the Flex stands out. Now, with the addition of the Ford's EcoBoost engine, it will stay in front of the competition.

That's not a bad place to be.


Canadian Auto Workers,
Ford to resume formal talks

* Full-scale talks to resume on Oct. 26
* Union looks for production guarantees
* Ford looking to reduce Canada labor costs

DETROIT, Oct 8 (Reuters) - The Canadian Auto Workers expect to return to full scale formal contract negotiations with U.S. automaker Ford Motor Co on Oct. 26, the union said on Thursday.

The CAW and Ford opened negotiations in early September toward a contract agreement that could preserve jobs in Canada by allowing for future investment, while addressing a wage gap compared with workers at Ford plants in the United States.

The two sides had working level teams gathering information and the union said it would bring its entire committee to the talks when they resume.

"We're hopeful that we will be able to reach a new agreement with Ford that will suit our members' need for better job security," CAW President Ken Lewenza said in a statement.

Labor costs are about $16 an hour higher for Ford in Canada than they are in the United States, but the CAW wants production guarantees before it agrees to level the field.

The talks with the Canadian union in part are expected to address concessions that the CAW gave to Ford rivals General Motors Co and Chrysler during their bankruptcies and whether those deals leave Ford at a disadvantage in Canada.

Ford and the United Auto Workers union also are in talks about their labor agreement in the United States following the bankruptcies of Chrysler, which is now under management control of Italy's Fiat SpA , and GM.

Ford executives have said they do not believe their UAW agreement leaves them at a cost disadvantage with GM and Chrysler in the short term, but could leave them with a disparity over the longer term.

Planned meeting signals
progress for Ford-UAW talks

The UAW has scheduled a Ford National Council meeting for Tuesday — a sign of progress for talks between Ford Motor Co. and the union.

Gary Walkowicz, bargaining committeeman at Ford Motor Co.’s Dearborn Truck Plant, said UAW leaders from plants across the country received an e-mail about the meeting today.

When asked about the meeting at a charity appearance tonight in Washington, D.C., UAW President Ron Gettelfinger declined to discuss specifics, and said, “What happens at Ford stays at Ford.”

Ford met with top UAW negotiators on Aug. 25 in an attempt to obtain cost cuts that more closely match those obtained by General Motors Co. and Chrysler last spring and has been in informal talks since then.

“We continue to work together, and we are making progress,” Ford spokeswoman Marcey Evans said today.

Many UAW members and some UAW leaders have said they would oppose any further modifications to their labor contract with Ford because of the company’s recent successes and an agreement approved in March that cut workers’ benefits.

Ford also has been seeking additional cost cuts from the CAW. Today, the CAW issued a statement saying it has agreed to resume formal contract talks with Ford on Oct. 26.


Canwest employees deserve better


October 2009


OTTAWA – “Media workers at Canwest stations should not be forced to pay the price with their pension and severance payments for financial problems that are of the company’s own making.” That reaction to the announcement that Canwest has filed for Companies’ Creditors Arrangement Act (CCAA) protection for some of its operations, from Peter Murdoch, Vice-President, Media for the Communications, Energy and Paperworkers Union of Canada.

“Employees have done everything they can to sustain this company,” says Murdoch. “Thousands have already lost their jobs, and there has been no wage increase for years. Though management salaries have been excessive -- $49 million to eight people from 2001 to 2008, while during that same period over 1,000 Canwest employees lost their jobs.

“Those who are left are on pins and needles,” he says, “including pensioners.” Murdoch adds that governments, banks, and media conglomerates have all ignored the warnings about the dangers of massive media convergence and unsustainable debt.

“CEP will be front and center to ensure that employees are first in line for company obligations.” Murdoch also says the federal government should step up to the plate. “The federal government has been irresponsible in monitoring and policing pension plans, and where is it now to backstop this? “Yet another major company has filed for bankruptcy protection under Prime Minister Stephen Harper’s watch,” adds CEP President Dave Coles. “It’s time for this government to stop congratulating itself and to take action to prevent more working people from falling victim to this recession,” says Coles.

“CEP represents more than 25,000 newspaper and broadcast employees across Canada, including workers at Global TV who are affected by this announcement.


CAW CONTACT Newsletter
OCT 9, 2009

New Agreement at Zellers Warehouse: Strike Over

CAW Local 1000 members at the Zellers warehouse in Scarborough, Ontario have voted 83 per cent in favour of a new three-year agreement that brings to an end a lengthy strike by 310 workers.

Bob Orr, assistant to the CAW president, said it was a tough and at times frustrating dispute that required great solidarity from the membership. The new agreement provides wage increases in the second and third years as well as a $1,000 signing bonus.

“We were able to move the employer away from several of their harshest proposals,” Orr said.  

“The time and effort that our members spent in fighting the employer’s agenda was nothing short of courageous,” Orr said. “The involvement of other CAW Locals and area offices from coast to coast was extremely helpful in sending a message of solidarity to our Zellers Local 1000 members and the employer.”

CAW plant chairperson Stephen Moses said the settlement underscores not only the importance of solidarity among the workers, but also the importance of belonging to a strong national union. “Without the backing and support of a strong national union like the CAW we would not have been able to fight back effectively,” Moses said.

Moses thanked CAW National President Ken Lewenza, Bob Orr and other staff as well as the membership for working hard to raise awareness of the struggle of this group of workers and for keeping the dispute in the public eye.

In support of these striking warehouse workers, many of who are new Canadians, CAW members and locals held protests, demonstrations, information pickets and other events from British Columbia to Pointe-Claire, Quebec.

The strike, which began July 16, was a direct result of the employer’s demands for far reaching concessions. 

Women can Change Political Direction, says Horwath

The presence of more women in politics could have a real impact on how our governments are run and the decisions they make, said Ontario NDP leader Andrea Horwath to a crowd of nearly 200 women and men. Horwath’s speech was part of an evening dedicated to encouraging more women to enter politics, held on October 5 at the CAW Local 1285 Hall in Brampton, Ontario.

“It is still very difficult to be a woman in elected office because of the perceptions of what you should be doing with your life,” said Horwath. She recounted a story of how her entry into municipal politics a little more than 10 years ago was met with disapproval by other Hamilton city councilors on account of her having small children. She said that her male colleagues did not face the same criticism.

Peggy Nash, assistant to CAW president, federal NDP president and former MP, said that women can get involved in politics by putting their passion about a particular issue into action. “Whatever your passion is, there’s a political aspect to it.”

She said that although some women may not want to run for office, they must put their efforts into electing those women who are willing to go into politics. “We need women’s voices in the House before we’re going to make a difference for all Canadians.”

MPP for Parkdale-High Park in Toronto Cheri DiNovo also weighed in on political life. She spoke about an initiative called Girls Government which invites six girls from two different elementary schools to participate in the year long program where the girls not only see through a chosen project, but also experience the political processes at Queen’s Park and Parliament Hill first hand by working with women MPs and MPPs. She said that years down the road, she hopes these same girls will be running for office – municipally, provincially or federally.

The evening was emceed by CAW Local 1285 Women’s Committee Chair Gwen Campbell and included addresses by Edna Toth of Elect Women Everywhere and ONDP Women’s Committee President Effie Vlachoyannacos and entertainment by the Peel Aboriginal Network (PAN) hand drummers.

Good Green Jobs for All

The Good Green Jobs for All conference promises to bring together participants dedicated to creating green jobs, including green manufacturing jobs in the Greater Toronto Area.

The conference runs Saturday, November 7 at the Allstream Building at the Princes’ Gate in the Canadian National Exhibition. Presentations, speakers and workshops on the environment, green jobs, equity and social justice will run throughout the day.

The registration fee is $75. Anyone interested in taking part is urged to register online at www.goodjobsforall.ca or to contact Ana Fonseca at 416-441-3663 ext. 221.

Workers Compensation Conference

More than 90 delegates and presenters took part in the CAW Ontario Workers’ Compensation Conference at the CAW Family Education Centre in Port Elgin, Ontario.

Delegates heard presentations on the new policies and practices in the workers’ compensation system and the appeals tribunal and from various unions and injured workers’ organizations on the direction they are taking to deal with the problems with Ontario’s WSIB.

One of the highlights of the September 25-27 conference was the Saturday evening voluntary session where delegates had a lengthy discussion about how to take on the fight to challenge the failures of the compensation system and defend union members who are being impoverished because of workplace injuries.

Scott McIlmoyle – new chair of the CAW Council Workers’ Compensation Committee – will initiate an email list serve to: co-ordinate the fight back – including building for successful injured workers demonstrations across the province on June 1st next year; as a contact point for compensation reps with mentors who can assist newer reps regarding case strategies; and to share new developments in compensation law and experiences representing CAW members.

CAW Members Take Part in Etobicoke Creek Clean-Up

A small but determined group of volunteers including a number of CAW Local 1285 members took part September 26 along Etobicoke Creek in the TD Great Canadian Shoreline Clean-up.

Forty volunteers were on hand to remove, as much as possible, the footprint of man from the creek, its banks and the surrounding wetlands.

Two municipal trucks winched old sofas from a bend at the center of the creek and many shopping carts and household furnishings followed.

Volunteers were surprised by the number of old shopping bags, discarded pop cans and water bottles along the creek banks and nearby walking paths.

Michel Le Page, CAW environmental committee member at the Brampton Assembly Plant (BAP), said volunteers worked hard to clean up the creek in an effort to ensure wildlife like the family of Mallard Ducks swimming near where volunteers worked would continue to thrive, while at the same time ensuring people could enjoy a more pristine environment.

New Ford tech gives
cars sound start

Bryce G. Hoffman / The Detroit News

Oct 7, 2009

Dearborn -- Ford Motor Co. is using technology from the video gaming industry to evaluate sound levels in its new cars and trucks before the first prototype is even built.

Using a system that looks like a gamer's dream machine, Ford engineers are able to simulate the interior sound of a vehicle under a variety of driving conditions, at different speeds and on various road surfaces.

"We can actually drive it with real context and see if there are any failures that are occurring or whether it's sporty enough or if it's too smooth or too rough. We can drive it against key competitors and evaluate it with customers. And we can do all that before we even make a prototype," said Mark Clapper, technical leader for noise, vibration and harshness at Ford. "We aim to hit the bull's-eye on the first pass."

Before they began using this system six months ago, Clapper and his team were limited to testing the sound quality of individual components under a single driving condition. Now, they can hear how they sound together as their simulated car accelerates and decelerates along a virtual roadway complete with passing vehicles and wind noise.

Ford is the first North American automaker to employ the technology and is currently using it to refine the design of a luxury vehicle that will not hit showrooms for another four years, as well as other future products.

Though that car does not yet exist in physical form, Clapper and his team were able to identify an unacceptable noise level caused by engine vibration. Within this virtual world, they substituted one type of engine mount for another and eliminated the noise. Though the new mounts cost a little more, they were able to convince Ford executives that it would be worth using the more expensive mounts in the actual vehicle.

Analyst Erich Merkle of Autoconomy.com says vehicle sound is "the last frontier."

"Sound is a very important aspect of the product," he said. "It plays a key role in conveying a sense of quality or performance. It's the icing on the cake."

Merkle said Ford has done a better job of using sound to its advantage than most of its competitors, pointing to the throaty exhaust note of the Mustang by way of example, but said a lack of sound can be just as powerful.


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Nortel pensioners protest pay
loss as 'corpse being cut up'

Mary Jane MacKinnon, recently turned 60 and the grandmother of two, spent 30 years as a customer service representative at Nortel Networks Corp. in Belleville, Ont.

She retired two years ago on a reduced pension to make sure her husband had a survivors benefit, she said, since he doesn't have a pension of his own.

Then in January 2009, along with thousands of other retired Nortel workers across Canada, she watched her former employer enter bankruptcy protection. She began to wonder about the future of her loved ones.

"I was counting on that pension to keep us going – and the kids. And now it's uncertain and the benefits are going to be gone as soon as they go into bankruptcy," she said on Wednesday as hundreds of people in her situation gathered around her at Queen's Park. "This will seriously impact our family."

Under grey skies and cold rain, with a brisk wind unfurling and snapping their Canadian Auto Workers flags, Nortel's retired, long-term disabled and former employees gathered at the legislature.

It was fitting weather for a similarly bleak task: demanding that the provincial government step in to secure their rights to full and protected pensions, severance pay and benefits during the veritable yard sale of Nortel's global assets after the company entered creditor protection earlier this year.

Wednesday also saw the announcement of Ciena Corp.'s opening bid for Nortel's Ethernet division, which employs 1,430 in Canada, and is likely to see a 15 per cent cut in its global workforce.

"The corpse is being cut up, dissected, and handed all around," said Eddie Halpin, 70, who stopped working for Nortel in London, Ont., in 1994. "They are taking the money and running."

Currently, under terms of the Companies' Creditors Arrangement Act (CCAA), Nortel does not need to give notice of termination or severance pay, and people laid off in the current restructuring receive only 69 per cent of their earned pension assets. There are now more former Nortel employees receiving pensions in Ontario than are currently paying in.

Signs at Wednesday's rally called the CCAA "legalized theft."

"This is a national crisis," said Ken Lewenza, national president of the CAW, as a crowd of several hundred roared in support. "To think, now that workers are retired, that they may take a 30 per cent reduction in their pension, after 30, 35, 40 years of deferred wages – it should be unlawful in Canada."

In Quebec, Employment Minister Sam Hamad said he would attempt to give Quebec's Régie des rentes, which regulates pensions, the ability to manage the Nortel plan, should employees choose the option. But from Queen's Park or Ottawa, there has been no clear indication of whether the government will intervene.

"This is a difficult time for Nortel employees, retirees, and their families," Ontario Finance Minister Dwight Duncan told the Star. "Ministry officials have met with the pensioners to hear their concerns and recommendations."



Nortel pensioners protest
at Queen's Park

Wednesday, October 8, 2009

CBC News

A group of former Nortel employees gathered outside the Ontario legislature on Wednesday, angry that they may be losing their pensions as the company goes insolvent.

The rally, organized by the Canadian Auto Workers Union, hoped to persuade legislators to change bankruptcy laws to ensure that current and former employees don't take a back seat to bondholders and other parties when companies undergo financial restructuring.

Workers rally at Queen's Park on Wednesday to protest what they call unfair laws concerning current and former employees of companies undergoing restructuring. (Priya Sankaran/CBC)

"This travesty is being ignored by the Government of Ontario and the federal government," CAW leader Ken Lewenza said. "Governments in other countries where Nortel operated are taking action to secure pensions and not punish retirees for their years of service."

But in Canada, retired workers who helped build successful companies are being put at a disadvantage, Lewenza said.

Some former Nortel executives were on hand at the rally.

"This is about fairness," former Nortel president Robert Ferchat said. "We want justice for pensioners who stand to lose retirement savings, for fired employees who were denied severance payments and for disabled employees who were promised income replacement while they could not work."

Ferchat came to show support for the workers, he said, adding his own pension has been affected by unfair regulations.

Agnes Murray of London, Ont. was one of hundreds of former Nortel employees on hand for the rally. "I have 32 years with Northern Telecom," she said. "And as of January this year I don't know what the status is going to be — whether I'll have a pension, partial pension, benefits or no benefits.

"That's what we're after," she said.

Many firms affected

Nortel filed for bankruptcy protection in Canada on Jan. 14, 2009 under the Companies Creditors Arrangement Act. Since then, more than 1,000 workers have been terminated without severance pay, and in May, the company announced its defined benefit pension plans are only 69 per cent funded.

A similar situation faces workers laid off by Canwest Global Communications Corp, now that the media giant has put some of its business units under creditor protection.

'This travesty is being ignored'— CAW president Ken Lewenza

"If Canwest is in bankruptcy protection right now, what's that going to mean for me?" former Global TV producer Neil McArtney told CBC News.

As part of a severance package he signed earlier this year, he was to receive severance payments up until January 2010. But when the company sought protection from its creditors on Tuesday, he was informed his next payment, due Oct. 15th, would be the last.

He's still owed $12,000, he said. "The company says this is their right under the law, but I disagree," he said. "This is not right [and] I'm just one of thousands."

The Nortel pensioners are planning a similar rally in Ottawa on Oct. 21.


Members at GM Upset
over Pay Increases

The Canadian Auto Workers is under fire from some of it own members upset over recent pay raises awarded to the union’s shop committee at the General Motors Transmission Plant.

“The plant is in an uproar,” said Gene Locknick, a 28-year employee who retired in August. “While the rest of us had to accept wage freezes, they arbitrarily gave themselves a raise.”

At issue are hikes of $3.50 that boosted the hourly pay to $37.58 for five of seven shop committee members who work full-time as union representatives at the plant.
The raises — which were negotiated between the shop committee and plant management and took effect in August — were designed to bring their pay in line with that of shop committee members at other GM plants, said Bill Reeves, president of CAW Local 1973. “General Motors is paying it,” he said, noting that plant-based union reps are paid directly by the company. “It didn’t take anything out of anyone’s pocket; General Motors is paying it. It’s just for a small group and some people are making it a bigger issue than it really is.”

He also rejected Locknick’s claim that there is widespread anger over the raises. “I was just in the plant when two people talked to me about it, and they were fine with it. It was raised at our last membership meeting. It was addressed and everyone who left there, they were fine with it.”

Stew Low, GM director of communications, said in a statement that “There is an interpretation issue with repect to what is allowed under the collective agreement. When we learned of this we began discussions with the union and we expect to resolve this issue shortly.”

As part of a massive restructuring, GM and the CAW negotiated a new agreement which slashed hourly labour costs by $19. It also froze wages and pension during the life of the deal, which expires in 2012.

Wages for GM’s CAW workers range from about $34 to $41 an hour.
CAW negotiators managed to preserve the closure agreement for about 1,200 workers at the transmission plant, which is slated to shut down permanently next June. That deal offers employees — most of whom have earned enough seniority to retire — buyouts of up to $125,000, plus a $35,000 car voucher. Currently, about 500 employees remain at the plant after more than 600 opted for retirement this summer.

Locknick said wage parity with union reps at other GM facilities “was not the tradition at GM transmission. So, hourly pay rate was based on seniority and current job classification.”

The pay hikes were not driven by parity but enriching the pensions of the union representatives, he said. “It all makes sense. Because the plant’s shutting down next year, not only do they get an hourly pay increase that shows up on their cheque every week, this also affects the pension they’re going to get. It gives them $500 a month extra in their pension. They did it to top off their pensions.”
Reeves admitted that the timing of awarding the pay hike was related to the impending plant closure. “GM’s closing the plant, so if you’re going to get it, you might as well get it now, right?”

Locknick said he also objected to the “secretive” way in which these raises were negotiated. “During contract negotiations you have the published documents that govern the agreement. Then, people find out there are unpublished documents and these are secret agreements they make.”

When asked why the pay hikes weren’t spelled out in the collective agreement, Reeves said, “There’s a lot of things that are done under memorandum of understanding.”

Locknick said he is among a group of six, including five active workers, who are taking further steps against the pay hikes. He said they are circulating a petition at the plant as well as writing letters to the federal and Ontario governments. “We’re going to go to the government who gave a bailout to GM. This is taxpayers’ money that they shouldn’t be getting to boost their pensions.”

He said other angry employees were unwilling to comment on the record for fear of union retribution.


Labour costs threaten
CAW jobs, Ford says

Automaker revs up drive for wage concessions while union seeks deals to retain production levels

Tony Van Alphen
Business Reporter

Ford Motor Co. of Canada is warning that future investment and jobs could be in jeopardy here because its labour costs are now higher than in any other country in the world.

The news came as talks with the Canadian Auto Workers show no sign of progress. The company is pushing for concessions, while the union is seeking future production commitments in exchange.

A senior Ford official close to negotiations said the company is under heavy pressure to consolidate its manufacturing operations around the world in "competitive labour cost jurisdictions."

"We hope the rank and file workers understand that the best way to earn future investment is to be competitive," the official added. "We are now making decisions on product allocation for the next couple of years. There are enormous pressures."

The official said Ford's current labour costs, including benefits and pension obligations in Canada, are $16 (U.S.) an hour more than any of its plants south of the border and even higher elsewhere. Ford's labour costs in the U.S. are in the range of $50-$52 an hour.

"The labour costs in Canada are the highest of any jurisdiction where we operate in the world," the official added. "It's difficult to make the business case for investment."

Although labour costs represent less than 10 per cent of the cost of making a car, experts say it is still a critical factor that an automaker must take into account in the intensely competitive international auto industry.

The union represents more than 7,000 production and skilled trades people at operations in Oakville, St. Thomas and Windsor. Ford wants similar concessions that the union negotiated with General Motors of Canada and Chrysler Canada earlier this year. Those concessions – which include wage and pension freezes plus some reductions in benefits – have left Ford at a disadvantage here.

But the union is demanding commitments for future assembly or parts production so Ford of Canada would continue to maintain 13 per cent of the automaker's North American production here. Ford has announced no products for an assembly plant in St. Thomas after 2011 and there are rumblings the company will reduce engine operations in Windsor. The union says these cuts would reduce Ford's production to 9 per cent of North American operations. CAW negotiators argue GM and Chrysler made product commitments in exchange for concessions but Ford counters that those assurances were necessary for the two rivals so they could qualify for billions of dollars in government aid and stay alive.

Talks between Ford, which did not receive any government aid, and the union started about a month ago and the two sides are exchanging information and proposals.

While Ford presses for concessions to stay competitive, the union is also in a difficult position. Union sources say members in St. Thomas and Windsor would not support a deal that would put them out of work.

"We would never be able to get anything like that ratified if people know they're going to lose their jobs anyway, especially in St. Thomas," said one CAW insider.

Workers at the company's Oakville complex could also show resistance. In bargaining last year, their local became the first one at Ford to reject a major contract in the union's history. But other Ford locals voted in favour of the deal and assured overall support.

Union sources say the CAW believes it won't lose any further existing jobs so it would let the current contract expire in 2011. But at that time, the union would have to face the same GM and Chrysler concessions under the traditional concept of pattern bargaining at the three North American base automakers, according to the sources.





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