The Canadian Auto Workers are not backing away from their $1.5-billion contract with Ford Motor Co. and will continue to use the money to buy used cars and to pay off debts, a company spokesman said Wednesday.
The announcement came two days after the union backed out of its deal to buy about 800 used cars a year from Ford.
Ford had announced a $1-billion agreement to buy back its vehicles at a cost of about $1 billion.
In a statement, Doug Creutz, the union’s president, said the union “will continue to work with Ford on our auto business strategies and we look forward to a successful transition.”
The union said the new contract “will allow us to better meet the needs of our members and provide the stability that our members expect and deserve.”
Ford declined to comment.
Under the agreement, the auto maker is also buying back up to 1,100 of its older vehicles and leasing them back to Ford for up to two years at $10,000 a month.
Ford said the buybacks will help fund a $300-million buyback program aimed at increasing sales of new cars and trucks.
Under that program, Ford is also giving out free repairs to its older fleet.
Ford and the auto companies are also negotiating an agreement on the future of the Canadian Auto Parts union, which represents about 700,000 auto parts workers across the country.
Ford is still negotiating its deal with the union, and a deal could not be reached, the company said.
The agreement with Ford came after the Canadian Union of Public Employees, which the union represents about 1,000 workers, said it would not support a deal with Ford that includes the purchase of used cars.
The Canadian Auto Union, which includes the Canadian Association of Machinists and Aerospace Workers, also backed out from the Ford deal.
“We’re disappointed, but we’ll continue to engage,” said the group’s president Mike Lister.
“I’m not surprised.
They have been negotiating for years and years.”
The two companies agreed to a plan to buy Ford’s vehicles at about $10.8 billion, a figure that included a $900-million loan and other commitments.
The Canadian Automobile Workers had agreed to buy cars for $1 million a year for the next three years.
Under Ford’s contract, it will buy back up 1,400 vehicles a year at $1,100 a month for a total of $2.2 billion.
Ford agreed to pay the Canadian Automotive Workers a $5.5 million lump sum for each car it bought, plus an additional $2 million a month in loan payments.
Ford also agreed to make a loan guarantee for $4.6 billion to cover costs related to the financing of the purchase and to make another $2 billion in additional loan guarantees.
The auto makers deal includes an option for Ford to buy some of the vehicles back at a reduced price.
Ford already sells used vehicles in Canada at a discount to the original price.
The union has said it plans to negotiate an agreement with the company on a buyback.
Ford and the Canadian auto companies have been locked in negotiations for months over a plan that would give the union more than $1 trillion in new revenue.
Under a deal announced in July, the Canadian union is to receive a portion of the proceeds from the sale of Ford vehicles.
Ford has said that it will spend $600 million on new cars.
The plan also included a loan guaranteed to the union at the end of each of Ford’s 10-year term.
Ford announced in March that it would buy back vehicles at $2,500 a month, a price that includes a $500-a-month loan and another $1 a month loan guarantee.