By Paul Vieira 

OTTAWA -- Ford Motor Co. of Canada has reached a tentative deal with its 5,400 unionized employees in Canada, in a settlement that also secures a nearly $1.5 billion investment in two plants and a commitment to build electric cars in suburban Toronto.

The decision from the Dearborn, Mich.-based auto maker represents a shot of confidence for Canada's auto sector. Factories here produce roughly two million vehicles annually, but Canada has sustained a 25% drop in production since 2000 as car makers invest in relatively lower cost jurisdictions such as Mexico and the U.S. Sunbelt.

The president of Unifor, Canada's largest private-sector union, revealed the details at a press conference Tuesday. Ford's Canadian unit issued a brief statement, saying a tentative three-year deal is subject to ratification by union members. Until ratification, the company said it wouldn't comment further.

Unifor president Jerry Dias said the settlement, reached early Tuesday, covers wages and benefits, and members will vote starting Sunday. He said the biggest accomplishment of the deal was an investment in two Ford Motor factories -- an engine plant in Windsor, Ontario, and a vehicle-assembly factory in Oakville, Ontario -- of 1.95 billion Canadian dollars, the equivalent of $1.46 billion. The plant in Oakville will be retooled to build five models of electric vehicles, with production starting in 2025, Mr. Dias said.

Last week, Ford said it would spend $700 million to expand its largest and oldest factory to make electric pickup trucks in Michigan, which is next door to Ontario, Canada's most populous province.

Canada's Liberal administration and the government in the province of Ontario are expected to contribute toward the investment package, Mr. Dias said, but didn't disclose how much. An Ontario government spokeswoman said Tuesday the province is negotiating the terms of its contribution with Ford and the Canadian government, and Ontario is prepared to make a sizable contribution.

A spokesman for Canada's minister for industrial policy didn't respond with a request for comment. On Monday, he declined to comment on an earlier report from The Toronto Star that federal officials were considering a C$500 million package for Ford.

Canada's government is set to make investments in clean-technology -- such as the manufacturing of batteries required for electric vehicles -- a component of its post-pandemic recovery plan to be unveiled Wednesday.

Research published this year from KPMG suggested Canada was a laggard in electric-vehicle production, accounting for just 0.4% of global manufacturing.

Mr. Dias said the settlement, including the investment in plants, was the result of months of talks involving Ford, Canadian Prime Minister Justin Trudeau and the Ontario government. At the start of talks with Ford, Mr. Dias said Unifor was concerned about the future of the employees at the Oakville factory, because of the company's lack of long-term commitment to build another vehicle there beyond the Ford Edge.

"We were determined to ensure we solidified a product for our Oakville plant. I think it is fair to say as an organization we hit a home run," Mr. Dias said.

Mr. Dias added the agreement also secures production in Oakville of the batteries required for the electric cars, which could add an additional 300 jobs.

Write to Paul Vieira at paul.vieira@wsj.com

 

(END) Dow Jones Newswires

September 22, 2020 15:00 ET (19:00 GMT)

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