Ford puts cash up north - Investing in Canadian plant after new employee contract

DETROIT (AP):

Ford says it will sink Can$700 million (US$680 million) into an assembly plant near Toronto, Canada, to add models and meet increased demand for vehicles around the world.

The investment will preserve the Oakville, Ontario, plant's 2,800 jobs and expand its manufacturing capability, the company said Thursday.

The 5.5 million square-foot plant now makes the Ford Edge and Flex crossover SUVs, as well as the Lincoln MKX and Lincoln MKT.

The investment is good news for Canadian auto workers, whose future looked bleak last year because they were paid higher wages than workers in the United States. Several auto executives called Canada the most expensive place in the world to build automobiles. But about a year ago, the workers agreed to a new contract that cut US automakers' costs in the country.

Ford Motor Co, said in a statement, that it will bring several new models to the plant to meet rising sales in North America and elsewhere. The company wouldn't identify the models, but the plant is likely to get the next generation of the Edge and other crossovers.

The factory will become more flexible, with the ability to make more of a particular model if sales rise, the company said.

"If consumers suddenly shift their buying habits, we can seamlessly change our production mix without having to idle a plant," Joe Hinrichs, the company's president of the Americas, said in the statement.

Also, as part of the investment, the company will increase fuel efficiency research and development efforts in Ontario.

Ford says work on the plant is already underway, with the changes expected to be done by the fall of 2014.

more competitive market

The investment comes about a year after Canadian auto workers voted in favour of a new cost-cutting four-year contract negotiated with Ford that made Canada more competitive with the United States and other countries for auto assembly.

The contract cut wages for new hires and froze pay for current workers. New hires now get about Can$20 per hour, about 60 per cent of the top wage paid to union members. The new workers will move up the wage scale and reach the top pay in 10 years.

Ford said there would be significant cost savings realised through the wage structure for new employees. Canada's advantages in the past - a weak Canadian dollar and government health care - have all but vanished compared with US factories.