Ford to shut down Canadian plant in deal with union

The Canadian Auto Workers union has reached a cost-cutting deal with Ford Canada that will give the company lower operating costs and guarantee two new vehicle programmes for the automaker's major Canadian assembly plant just west of Toronto.

However, the deal will also see Ford go ahead with plans announced earlier to close its 1,600-employee plant in St Thomas, Ontario, which makes full-sized cars no longer in demand.

"During the negotiations, Ford threatened that if we didn't come to an agreement, the company would begin shifting investment out of Canada," CAW president Ken Lewenza told a news conference in Toronto. "In today's globalised economy where companies attempt to bypass community commitments, it's crucial that we don't allow this to happen," he added.

Under the agreement, Ford's engine plant in Essex, near Windsor, will also get additional work over the life of the new contract, which expires on 17 September 2012.

"Ford sells hundreds of thousands of vehicles in Canada each year and we must ensure that they continue to employ Canadians in the production of just as many vehicles," Lewenza said.

Workers still need to ratify the agreement, which cuts labour, pension, health benefit and other costs for the car producer.