Ford and its main union begin talks in Toronto on Tuesday designed to cut the recovering car company's costs and possibly decide the fate of a plant in Ontario.

Ford is sitting down with the Canadian Auto Workers, which represents about 7,000 Ford employees, to find the best way to reduce operating costs even though the existing labour contract is not set to expire until 2011.

Ford is the only one of the former Big Three not to seek creditor protection in 2009. (Jim Young/Reuters)

The automaker finds itself lagging behind its main domestic competitors — Chrysler Canada and General Motors — in terms of wages and other payments after earlier CAW deals gave those two carmakers a $19-an-hour advantage in labour concessions.

Ford, the only one of the three main North American carmakers not to declare bankruptcy during the recent economic downturn, asked for new talks back in July, discussions to which the CAW agreed.

Ford's sales in Canada rose seven per cent in August, the third consecutive month of gains but it still faces more competition from foreign companies, experts said.

"Once again we see a Big Six rather than a Big Three emerging in the market in Canada with the Detroit one, the government two, the Japanese two and the new kid on the block from Korea," auto analyst Dennis DesRosiers said in August.

Union demands

But the CAW, long considered to be one of North America's more agile unions, has its own agenda in the new talks, namely the fate of the 1,600-person plant in St. Thomas, Ont.

The Ford plant, which makes Crown Victorias, Grand Marquises and Lincoln Town Cars, does not have any production scheduled after 2011.

CAW president Ken Lewenza said the company and the union are trying to figure out whether new vehicles can go into the southern Ontario plant.

"The situation at St. Thomas is especially challenging, and we are working furiously to try to identify alternative products (even in partnership with other companies) for that location," he said in a letter to his union members in the summer.

The CAW also figures to use the future of the St. Thomas facility in discussions concerning Ford's overall production in Canada. In talks with GM and Chrysler, the union was able to squeeze a commitment from those two companies to maintains facilities in Canada.

"If Ford Motor Company is serious about reaching a new agreement with our union, it must commit to maintaining, and hopefully expanding, its Canadian production footprint.... Already Ford's proportional Canadian presence is much smaller than that of General Motors, Chrysler and even Honda and Toyota," Lewenza said.

The CAW also does not plan to put basic wages and pension benefits up for discussion.

Instead, the CAW would be interested in extending a new health trust, which was part of the final deals with GM and Chrysler, to Ford, he said.

In this arrangement, the automaker would make up-front payments to cover employee pensions, cash that would remain available to retirees even if the manufacturer went bankrupt.