UPDATE 2-CAW, Ford Canada reach surprise labor agreement

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By John McCrank

TORONTO, April 28 (Reuters) - The Canadian Auto Workers union said in a surprise announcement on Monday that it has reached a tentative three-year agreement with Ford Canada (F.N: Quote, Profile, Research) that includes a wage freeze, and will form the basis for talks with other "Big Three" Detroit-based automakers.

The deal, which hinges on the completion of local agreements later this week, comes about five months before the current contract ends, and took many in the industry -- even those involved in the talks -- by surprise.

"If you'd have talked to me three weeks ago, I never would have dreamed that we'd be where we are today," said Buzz Hargrove, president of the CAW.

The deal would also see Ford Canada's assembly plant in St. Thomas, Ontario, remain open until 2011. The plant had been scheduled to close in 2010.

If it goes through, the agreement will see no change in base wages, one week less paid vacation per year, and the suspension of cost of living increases for five quarters.

It would also see a cap on the cost of long-term care for retirees, workers would pay for a bigger percentage of the cost of prescriptions, and the CAW would look at the possibility of establishing a health-care fund similar to what the United Auto Workers union agreed to in the United States, which would shift more of the health-care burden to the union.

CAW Economist, Jim Stanford, said the changes will save hundreds of millions of dollars for the automaker, which has posted multibillion-dollar losses in recent years.