TORONTO (AP) -- The Canadian Autoworkers and Ford Motor Co. agreed to the outline of a tentative three-year contract, a surprise early settlement that could set a pattern for negotiations with the other U.S. automakers.
Canadian Auto Workers President Buzz Hargrove said Monday the deal freezes wages and cuts vacation pay, but avoids changes to base wages.
It also prevents a two-tier wage system used in the U.S. where new hires would be paid about half the hourly wages of older employees. However, new hires start work at 70 percent of the top wage, reaching the maximum three years later.
The union said it reached the deal, which will cover about 8,000 Canadian auto workers, nearly five months before the September deadline.
Ford spokeswoman Lauren More said the framework agreement covers wages, benefits and pensions. She declined to release further details as negotiations are continuing.
''These discussions have progressed more quickly than usual,'' More said. ''I think both the company and the CAW recognize the importance of reaching a settlement that provides a competitive future for our business and our employees.''
Canada's auto industry long had an advantage over the U.S. industry because Canada has free health care and the Canadian dollar was weak, but those advantages no longer exist as the dollar is almost at par with the U.S. greenback and U.S. auto industry has fewer health care costs because of recent agreements.
Hargrove said Ford's assembly plant near St. Thomas, Ontario, which was scheduled to be closed in 2010, will be kept open another year. But he said the union cannot guarantee that they will be able to keep the plant open past that.
Hargrove said the union will be meeting with GM and Chrysler next week.
''We now have the pattern established for the Canadian negotiations with GM, Ford and Chrysler for 2008,'' Hargrove said.
Canadian auto analyst Dennis DesRosiers said the agreement with Ford will be a disappointment for GM and Chrysler, who are looking for upward of US$30 per hour of savings.
''This agreement doesn't even come close to that number,'' DesRosiers said. ''One thing for near certain is that with this new agreement, Canadian operations of the Detroit Three will remain the highest cost locations anywhere in the world for GM, Ford and Chrysler.''
DesRosiers said the U.S. automakers will likely look to Canada if further layoffs are needed. Canada has not borne the brunt of layoffs so far.
''The prevailing view in Canada is that our costs, all in, are between US$75 and US$80 per hour in a CAW plant. We also know that the new U.A.W. Agreement in the US brought their total ''all in'' compensation down to between US$50 and US$55 per hour or at least that is the number bandied about so much these days,'' DesRosiers said.
CAW economist Jim Stanford said Canadian autoworkers make an average of US$32.10 per hour compared to US$29.25 for U.S. autoworkers.
The agreement with Ford must be ratified by CAW workers.