ONTARIO (CP) -- Ford Motor Co. of Canada Ltd. is facing a $1.8-billion shortfall in its pension plan -- a demonstration that the healthiest of the Detroit Three auto makers in Canada has been unable to avoid one of the biggest financial problems that caused its closest competitors to seek government financial help.
While Ford and its parent Ford Motor Co. did not seek a bailout by taxpayers in Canada or the United States, the Oakville, Ont.-based company wants the Canadian Auto Workers union to provide it with the same pension relief it gave to the Canadian units of General Motors Co. and Chrysler Group LLC.
"Prudent management of Ford's pension plans is important to the future success of Ford in Canada and cash conservation is more important than ever," Ford said in a letter to employees and retirees.
The pension plan held assets of $2.91 billion as of Dec. 31, 2008, which would cover just 62 percent of the liabilities if the plan were wound up, the letter said. Those figures mean the liabilities in the plan are about $4.7 billion.
While rising stock markets will help shrink the deficit, the pension shortfalls faced by Ford and many other industrial companies highlight a risk to the recovery in the manufacturing sector -- the cash drain of paying benefits to a big contingent of older and retired workers.
Ford wants to take advantage of a change in Ontario law that extends the period for addressing shortfalls to 10 years from five, but can't do so without approval of two-thirds of employees and retirees.
The pension shortfall was identified in a valuation of the plan done on Dec. 31, 2008, which was at the end of a year when pension assets were shredded by the collapse in global stock markets amid the credit crisis and the failure of large Wall Street investment houses.
Ford described the windup of the plan as unlikely.
"It's important to note that Ford of Canada's pension plans are funded in compliance with the Ontario Pension Benefits Act," spokeswoman Lauren More said Tuesday.
The changes to the pension are among several concessions Ford is seeking in its talks with the union, arguing that its manufacturing operations in Canada won't be competitive with Chrysler and GM if it isn't granted the same deal.