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The Canadian Auto Workers stunned the auto industry yesterday by announcing it had reached agreement with Ford Motor Co. on key monetary items for a three-year deal that would freeze wages for current workers, cut one week of vacation pay and trim some retiree benefits.

In a dramatic shift from traditional bargaining at the Big Three automakers, the union revealed it had negotiated the "centrepiece" of a new deal five months earlier than in past contract years and it would set the pattern for subsequent bargaining at General Motors Corp. and Chrysler LLC.

"We do recognize the problems of the companies and the industry and we recognize the times are different and we (have) got to do things different," CAW president Buzz Hargrove said in an interview.

"I’ve read a lot about the tsunami. If I was on low ground and saw it coming I would be heading to high ground. That’s what we did here."

Hargrove said union and company negotiators would now drive for a tentative contract, including resolution of local issues, by the end of the week at a Toronto hotel.

If the two sides reach a deal, about 9,000 workers in Oakville, Windsor and St. Thomas would vote on it within a week.

Ford spokesperson Lauren More cautioned that a tentative contract will depend on successful agreement on local issues specific to each operations.

If workers ratify, the union would press for similar deals at GM and Chrysler, which have taken a harder public position on the need to cut labour costs significantly so they can compete with Japanese-based rivals.

The Ford deal could set the stage for a major confrontation. Hargrove, however, avoided using the word strike.

Analyst Dennis DesRosiers said the monetary terms with Ford put GM and Chrysler in a difficult position that could ultimately give an edge to the Japanese auto giants, which have no unions in North America.

"Both these companies (GM and Chrysler) were looking for the CAW to give back a lot more than this contract ended up giving up so they are going to be very disappointed," said DesRosiers. "They were looking for upwards of $30 per hour and this agreement doesn’t even come close to that number."

The union has said this year’s bargaining would be the most difficult round of negotiations in its 23 year-history because of the continuing slide in market share by the Big Three, competitive pressures and significant concessions in last year’s deals by the United Auto Workers in the U.S faxless cash advance.

The current contracts in Canada affect more than 30,000 workers and expire in mid-September. Production technicians currently earn about $33.90 an hour while skilled trades people receive about $40.30. They are among the highest paid industrial workers in the country.

Under the Ford deal, the starting wages of new employees would drop to 70 per cent of full rates but they would gradually increase to 100 per cent after three years. In the current contract, new workers start at 85 per cent and move to 100 per cent after three months.

Although the provision cuts starting rates, Hargrove stressed that the union had successfully beatenback the controversial two-tier wage and benefit system that the UAW accepted last fall in efforts to slash labour costs at U.S. operations.

But under terms of the Ford deal here, the union agreed to an immediate freeze in a cost-of-living allowance until September next year and a reduction in vacation pay by 40 hours or one week annually.

In exchange for the freeze, Ford would give workers a $2,300 bonus this fall and a $3,500 special payment the following year for the loss of vacation pay over three years.

The union said it had also gained a reprieve on any decision about the future of the company’s sputtering assembly plant in St. Thomas until the fall of 2011. The plant operates on only one shift and Ford had committed to production only until 2010.

Union officials acknowledged that the monetary cuts won’t match the labour savings in the UAW deals in the U.S. But CAW economist Jim Stanford emphasized that the Big Three operations in Canada are more productive so the deal shouldn’t jeopardize future investment.

The union’s main bargaining committee has endorsed Ford’s offer, which followed secret negotiations during the last two weeks.

Hargrove explored early bargaining but found little interest from the automakers and indicated recently that chances of success were remote. But the union and Ford found common ground to spur full bargaining two weeks ago.

And thousands of retirees won’t get an increase in their inflation-indexed pensions for a year as protection will resume in the second and third years.

The sides also negotiated a stricter limit on long-term care expenses for retirees plus a 10 per cent increase in prescription drug payments to a maximum of $250 annual per family.

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LONDON – Oil hit a new record near $120 (U.S.) a barrel on Monday, boosted by a string of bullish factors that include a UK refinery strike and disruptions to Nigeria’s output that highlight the market’s anxieties over threats to supply.

Oil held firm despite a rally in the U.S. dollar versus the euro, which reflected growing expectations that the U.S. Federal Reserve may not cut interest rates this week.

U.S. light crude for June delivery was up 57 cents at $119.09 (all figures U.S.) a barrel, after an earlier lifetime high of $119.93. Prices are up almost 25 per cent since the start of the year.

London Brent crude was up 38 cents to $116.72.

"The Federal Reserve will have a chance to bolster the dollar if it decides to hold the line on further rate increases," Edward Meir, analyst with broker MF Global, said in a research note. "Both these developments could possibly induce a correction in energy prices later in the week, but for now the trend appears higher still."

Crude prices have surged more than fivefold since 2002 as global supplies struggle to keep pace with rising demand in emerging economies, such as China.

The Organization of the Petroleum Exporting Countries (OPEC), that produces more than a third of the world’s oil, has refused to pump more, saying the market is adequately supplied.

OPEC President Chakib Khelil blamed the fall in the U.S. dollar for high prices and did not rule out prices rising to $200 a barrel.

"Without geopolitical problems and the fall in the dollar, the prices of oil would not be at this level," he was quoted saying in Algerian government newspaper El Moudhajid.

A fall in the U.S overnight payday loans. dollar has played a big part in oil’s surge, boosting the value of commodities priced in the U.S. currency.

Gold, for example, hit a record high of more than $1,000 an ounce on March 17. But gold is now more than 13 per cent below its peak as investors wait to see the direction of U.S. interest rates.

The 700,000-barrel-per-day (bpd) Forties North Sea crude oil pipeline remained closed on Monday due to a strike at the neighbouring 210,000 bpd Grangemouth refinery after the collapse of talks over pensions.

Ineos, the owner of the Grangemouth refinery, expects striking employees to return to work on Tuesday. BP has said the Forties pipeline could then be back in operation within 24 hours but might take a few more days to get back to full flow.

In Nigeria, unidentified gunmen killed five policemen and seized several weapons in a raid on a police station in the oil-rich southern Nigerian state of Rivers on Sunday..

Last week a strike and attacks by rebels forced Nigeria’s two largest oil firms, Exxon Mobil and Royal Dutch Shell, to shut some 369,000 bpd of production.

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Citing soaring fuel prices, Air Canada has decided to follow a move by several U.S. carriers and begin charging some passengers $25 to check a second piece of luggage on certain flights.

The country’s largest airline, which already charges fees for a number of formerly complimentary services, said that passengers flying within Canada or to the United States on its cheaper "Tango" or "Tango Plus" fares will now be permitted only one piece of checked luggage for free.

Air Canada said the decision to move away from the previous industry standard of two pieces of checked luggage won’t be applied to passengers who purchase more expensive fare classes, fly on international routes or hold certain frequent flier status.

"The Americans led on this one and we are just aligning ourselves," said Isabelle Arthur, an Air Canada spokesperson. "It’s very important that Air Canada find ways of responding to the pressures of dramatically rising fuel costs.

"With this specific change customers can choose to control their own costs because they can choose to pack lighter."

While the two affected fare classes are the airline’s most popular, Arthur said Air Canada research shows that only about 20 per cent of those passengers check more than one bag.

In February, UAL Corp.’s United Airlines became the first U.S faxless payday advance. carrier to deviate from the standard policy of two free checked bags by charging some passengers $25 for a second piece of luggage.

Since then most of the other major U.S. carriers have followed suit. The list includes Continental Airlines, Delta Air Lines, Northwest Airlines and US Airways.

Even some low-cost carriers are implementing the extra charge. JetBlue Airways recently said it would begin charging $20 while AirTran Airways said it would charge $10.

Air Canada, though, has gone further than most when it comes to asking passengers to pay for extras that used to be given away free.

Since exiting its restructuring in 2004, the airline has started charging fees for everything from pillows and blankets to enhanced customer service when flights are cancelled because of airport delays or bad weather.

Richard Bartrem, a spokesperson for WestJet Airlines Ltd., said the Calgary-based carrier had not yet decided whether it would match Air Canada’s luggage fees.

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OTTAWA–Canada’s economy has nearly stalled and won’t get fully back on its feet until 2010 as a result of the unexpectedly steep decline in business conditions in the United States, the Bank of Canada said today.

Canadian economic growth will drop to a very weak 0.3 per cent in the April-through-June period, significantly lower than the 2 per cent forecast by the central bank only three months ago, the bank said in its latest Monetary Policy Report.

"Growth in the global economy has weakened" since January, Bank of Canada Governor Mark Carney remarked at a news conference. He said this deterioration reflects "the effects of a sharp slowdown in the U.S. economy and ongoing dislocations in global financial markets.

"Growth in the Canadian economy has also moderated."

In the past two months, Carney has tried to invigorate the Canadian business environment with the biggest interest rate cuts in seven years. But more may be needed, he said today. However, there were no hints as to when he might again trim the bank’s benchmark rate, now at 3 per cent. The next scheduled rate-setting is in June.

"The U.S. economic slowdown is projected to be deeper and more protracted" than the bank expected earlier this year, Carney said.

The impact will be particularly damaging in Ontario, Carney indicated, as a decline in exports exerts a "significant drag" on growth in 2008 instant payday loan. Because of the high concentration of manufacturing in Ontario, the province ais bearing the brunt of the downturn in the U.S. export market.

The Bank also said that business and consumer sentiment in Canada is expected to soften a bit this year.

Carney said Canada has so far dodged the runaway price inflation on food and other items experienced in other countries. Canada has dodged the trend toward higher prices because of the reduction in the GST brought in by the federal government in the fall and the lower prices on goods imported from the United States resulting from the rise in the value of the loonie.

Consumer price inflation, on a year-over-year basis, averaged 1.8 per cent in the first three months of this year.

But there is a threat of higher inflation if demand for commodities in China, India and other emerging economic powers remains robust, the Bank said.

It said global inflationary pressures "could spill over to Canada and lead to higher-than-projected inflation through increased costs for imports."

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OTTAWA – Dell Canada plans to close its customer contact centre in Ottawa by mid-year, bringing the total number of Canadian job cuts announced this year by the computer maker to about 2,000 as part of a global downsizing by the computer maker.

About 1,100 employees in Ottawa will be affected by the closure announced today. The layoffs were announced at a meeting this morning, where 500 people were laid off effective immediately. The rest go by the end of June.

Today's announcement follows Dell's decision to close its Edmonton customer call centre, announced in January, affecting 900 employees there, and the cancellation of an Ottawa expansion that was to make room for an additional 1,200 employees.

In total, Canada has accounted for nearly one-quarter of the job cuts announced so far by the Texas-based computer maker.

Earlier this month, Dell Inc. founder and CEO Michael Dell said the Texas-based company (Nasdaq: DELL) would cut more jobs than the 8,800 that had been announced last year.

Dell's chief financial officer said on April 3 that 5,500 jobs had been cut since the first round of downsizing was announced, with another 1,000 to come in this quarter, which ends June 30.

Michael Dell also said "we will go past the 8,800 target previously discussed" as the company worked to lower its costs further.

Once the world's biggest maker of personal computers, Dell was overtaken by long-time rival Hewlett-Packard in 2006.

HP and Dell also face challenges from Lenovo, a China-based company that bought IBM's personal computer business, as well as from the ever-changing demands of technology buyers.

Dell originally sold to companies and consumers with its own direct-sales force and without the retail channels that were used by IBM, HP, and Apple to reach at least some of their customers.

However, with the maturing of the personal computer industry as a whole and the company itself, Dell has begun selling through retailers including Best Buy Co., Wal-Mart Sores Inc fast payday loan no faxing. and Staples Inc.

It has also diversified its product line to include laptops, servers, printers and flat-panel monitors. In January, the company completed a $1.4 billion acquisition of EqualLogic Inc., which makes data-storage network systems.

Although Dell has had a Canadian subsidiary headquartered in Toronto since the company's early days, the Ottawa site is relatively new.

Operational since February 2006, the Ottawa site was is one of several customer contact centres that the Texas-based company opened around the world, including in the United States, Philippines and India, in recent years.

The Ottawa site initially had about 500 employees but was expanded once and there were plans to build another building in a second expansion that was abandoned after last year's restructuring was announced.

In October 2005, the company said it would expand its workforce at a similar centre in Edmonton to 1,000, from 750. The company announced the closure of the Edmonton site in January 2008.

In trading today on the Nasdaq stock market Dell Inc. shares rose one cent to US$19 on a volume of 13.2 million shares.

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Canadian pension plans remain fairly healthy despite a third consecutive quarter of lost ground as a credit crisis rocked markets worldwide, RBC Dexia Investor Services says.

In its first-quarter survey of pension funds, RBC Dexia found the plans’ assets declined 1.9 per cent in the January-March period, pushing the sector’s 12-month loss to 2.7 per cent.

Even so, "by and large pension plans were in pretty good shape" at the end of last year, Don McDougall, director of the firm’s advisory services, said yesterday after the release of the survey. "I suspect that’s also true as of the end of March. Their health has deteriorated a little bit, but this is a three-month snapshot," he added. If markets bounce back over the next six months, "that could be fixed pretty quickly."

Global equity suffered most among the asset classes surveyed, mitigated somewhat by a weaker loonie. The MSCI World Index plunged 11.9 per cent in local currency terms, McDougall said.

"Performance nearly matched the index, but Canadian pensions lost only 5.5 per cent once exchange rates are taken into account," he said.

McDougall noted the Canadian dollar depreciated almost 7 per cent versus a basket of world currencies during the period, falling 2.7 per cent against the U.S easy fast cash. dollar, 10 per cent against the euro and 13 per cent against the Japanese yen.

The Canadian stock market was down 2.8 per cent during the period, bolstered somewhat by strong commodity prices, the report said, with gold and crude oil reaching record highs.

While the materials sector was up 7.3 per cent and energy 1.2 per cent, "unfortunately, Canadian pensions had generally reined in their exposure to both growth sectors and underperformed the S&P TSX composite index by 1.6 per cent this quarter, and by 3.8 per cent over the year," McDougall said.

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NEW YORK–AT&T Inc. on Friday said it plans to cut about 4,600 jobs, or 1.5 per cent of its work force, to shift resources to growing parts of its business.

The nation's largest telecommunications provider said most of the layoffs will be among managers.

"Even with the reductions announced today, we expect our head count overall to remain stable this year as we hire additional employees to support growth areas like wireless and TV," said spokesman Michael Coe.

The San Antonio-based company said in a regulatory filing that it plans to take a $374 million first-quarter pretax charge against earnings due to the job cuts payday loan low fee. The company reports first-quarter earnings on Tuesday.

The company had 309,500 employees at the end of last year. When it announced the acquisition of BellSouth Corp. in 2006, it has said it would cut 10,000 jobs over three years from the combined company to eliminate overlap. But the combined work force grew by 7,000 last year, as the company built up its growing wireless and TV divisions even as land lines shrank in the face of competition from wireless and cable phone service.

Its shares rose 40 cents to $37.97 in morning trading Friday.

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SAN FRANCISCO – Benefiting from a weak U.S. dollar, online auction company EBay Inc. beat Wall Street's expectations today, reporting a 22 per cent hike in first-quarter profit and raising its outlook for the rest of the year.

EBay reported net income of US$460 million, or 34 cents per share, on revenue of $2.19 billion in the quarter that ended March 31. In the year-ago quarter, EBay earned $377 million, or 27 cents per share, on revenue of $1.77 billion.

Excluding one-time items, EBay's net income was $562 million, or 42 cents per share, compared to $460 million, or 33 cents per share, in the first quarter of last year. On that basis, analysts polled by Thomson Financial expected, on average, earnings of 39 cents per share on revenue of $2.08 billion.

More than half of EBay's business – including its core online auction, fixed-price and store listings, PayPal, Skype and classifieds – takes place overseas. Sales in those stronger foreign currencies translate to more dollars for EBay.

EBay raised its outlook for 2008, saying it now expects revenues between $8.7 to $9 billion with earnings per share between $1.35 to $1.40. Excluding special items, it expects earnings per share between $1.70 to $1.75.

The company said it repurchased 37 million shares of its stock at a cost of $1 billion in the first quarter.

"This was a very strong financial quarter for the company," EBay chief executive John Donahoe said in a company statement. "The results reflect the strength provided by our diverse portfolio of businesses."

Donahoe said the company's stability and growth give it the confidence to change its products.

During the quarter, the company made several modifications aimed at boosting listings, improving buyers' experiences and making the site safer from fraud 1500 payday loans. The company changed its fee structure and feedback system, a move that some worried could dampen listings growth.

The number of listings on the site grew 10 per cent over the year-ago quarter, continuing growth seen in the fourth quarter, which came after two quarters of declining listings last year.

Growth in active users, however, remained flat at one per cent over the year-ago quarter and the growth rate has steadily declined, down from 10 per cent in the year-ago quarter. The growth rate for the total value of goods for sale on EBay, or GMV, is also down slightly at 12 per cent, versus 14 per cent a year ago.

Analyst Tim Boyd with American Technology Research said the numbers are strong overall, but the lag in key growth metrics could be a symptom of recession.

"The market was definitely hoping to see some of these key metrics turn around," Boyd said. "What is negative is the fact that GMV growth did not accelerate, so people wanted to see that 12 per cent growth go to 14 or 15 per cent growth, and it didn't get there even with a lot of currency help."

The San Jose-based company also raised its outlook for the current quarter, for revenue between $2.1 billion and $2.15 billion, with earnings per share between 30 cents and 32 cents. Excluding one-time items, it expects earnings per share between 39 cents and 41 cents in the second quarter.

Shares of EBay rose 10 cents in after-hours trading Tuesday, up 1.2 per cent from their closing point, $32.12, up 54 cents, or 1.7 per cent, for the day.

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CHARLOTTE, N.C.–Wachovia Corp. is getting a lesson in “timing is everything."

The nation's fourth-largest bank reported a $393 million (dollar figures U.S.) first quarter loss and has been forced to cut its dividend and seek a $7 billion cash injection to make up for a poorly timed expansion of its mortgage business.

The company also said it plans to cut 500 jobs in its corporate and investment bank.

"I'm deeply disappointed with our first-quarter results," Chief Executive Ken Thompson told analysts Monday on a conference call. "I know these actions aren't without cost. I wish they weren't necessary, but they are."

Shares in Wachovia fell $2.26, or 8.1 per cent, to $25.55 on Monday.

It's the second time this year the Charlotte-based bank has gone to the well for cash, a move analysts say more banks large and small will do to brace themselves against further loan losses.

"This isn't surprising and we'll see more of it," said Donn Vickrey, an analyst with Gradient Analytics Inc. in Scottsdale, Ariz.

As the housing market worsens and the credit crisis deepens into mortgages beyond subprime consumers to include even prime borrowers and commercial real estate, Vickrey said others like struggling Midwestern bank National City Corp. and regional bank holding company Chemical Financial Corp. are at risk for an earnings miss due to the rate of growth in nonperforming loans and charge-offs.

Even larger outfits, like Citigroup Inc., the No. 1 U.S. bank by assets, may have to have to raise more cash by selling additional stakes in themselves to outside investors or by slashing their dividends.

Last week, Seattle-based Washington Mutual Inc. said that a consortium of investors led by TPG would invest $7 billion into the struggling thrift.

"There's a number of banks out there that are really high-risk for this same thing," Vickrey said.

Wachovia's troubles with the housing slump have been compounded by its 2006 acquisition of California-based Golden West Financial Corp., a $25 billion deal whose timing, Thompson has acknowledged, "was not the best."

"With the benefit of hindsight, it is clear that the timing was poor for this expansion in the mortgage business," Thompson wrote in a letter to shareholders in February.

But in an interview Monday, Thompson reaffirmed Wachovia's commitment to the mortgage industry, saying "we see mortgage as a big opportunity for us."

"We think it's a market that's going to be dominated by a few large banks and we see Wachovia being a player in that," Thompson said.

Golden West's loans were concentrated in California, one of the hardest-hit housing markets in the United States cash advance loan. Wachovia said this month that it was considering halting the making of loans, including its signature Pick-A-Payment mortgage loans, in 17 California counties heavily affected by falling home prices and rising foreclosures.

Last week, it announced a new set of lending guidelines that appeared to be a broader step to help manage losses at the bank.

Wachovia's loss for the quarter works out to 20 cents a share. That compared with profit of $2.3 billion, or $1.20 a share, a year earlier. Excluding merger-related and restructuring charges, the bank lost $270 million, or 14 cents a share.

Revenue fell 4.5 per cent to $7.89 billion from $8.27 billion last year.

Analysts surveyed by Thomson Financial had expected Wachovia to earn 40 cents per share on revenue of $7.98 billion. The earnings estimates typically exclude one-time items.

Wachovia also said it took write-downs of $2 billion during the quarter related to the credit crunch. It also set aside $2.8 billion to cover problem loans, up from $1.5 billion in the fourth quarter.

To shore up its balance sheet, Wachovia plans to cut its dividend by 41 per cent to 37.5 cents per share from 64 cents per share. It said the move is expected to save $2 billion annually in order "to build capital ratios and provide more operational flexibility."

The bank also said it plans to cut more jobs in its corporate and investment bank, an area that has been hit by a drop in issuance of complex securities. Since October, Wachovia has cut more than 260 jobs in corporate and investment banking, which had about 6,100 employees as of Dec. 31.

Its share sale will involve 145.8 million shares of common stock at $24 each, raising roughly $3.5 billion. Wachovia also expects net proceeds from a convertible preferred stock offering of about $3.4 billion. The bank said it intends to use the money it raises for general corporate purposes.

Brian Foran of Goldman Sachs said Wachovia will gain $11 billion in cash over the next two years, enough to cover losses from the company's loans. He lowered his profit estimates for the next three years, and trimmed his price target to $32 per share from $33.

Thompson said that the fresh capital will be enough to cover the bank's needs and more through 2009 even if Wachovia's worst-case scenario for the housing market proves true.

"We think we are now one of the best-capitalized major banks in the country and we think that will help us get through the credit cycle over the next couple of years," Thompson said.

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HARTFORD, Conn.—Stalwart General Electric Co., known for reliably meeting its targets, shocked investors yesterday with a 6 per cent plunge in first-quarter profit and a slashed earnings forecast. The shares took a beating of almost 13 per cent, dragging North America’s markets along for the dive.

GE’s businesses are so big and broad that the company is "truly the proxy for the economy," Paul Gardner, a manager at Avenue Investment Management in Toronto, told Bloomberg News.

And yesterday, it wasn’t looking healthy. GE’s shares plummeted $4.70 (U.S.) to $32.05 on the New York Stock Exchange, which swooned in unison. More than 2 per cent evaporated from the Dow Jones industrial average, which lost almost 257 points to a little more than 12,325. The Toronto Stock Exchange’s main index sagged 1.63 per cent to barely more than 13,683.

GE, meanwhile, indicated it, too, has become a victim of the wide-spreading global credit crisis.

GE said its profit fell to $4.3 billion (U.S.), or 43 cents per share, from $4.57 billion, or 44 cents, a year earlier. Earnings from continuing operations came to $4.4 billion, or 44 cents, down 8 per cent.

In releasing the numbers yesterday, GE said it hadn’t been able to warn Wall Street about the looming debacle because of disruptions late in the quarter at the company’s financial business.

Analysts, unaccustomed to being surprised, and for the worse, by the industrial, financial and media conglomerate, were unnerved by the magnitude and breadth of the decline.

"Disappointments were spread across the GE portfolio, with both industrial and financial businesses well below expectations," Goldman Sachs analyst Deane Dray wrote in a note to investors.

Just last month, chief executive Jeff Immelt had promised revenue and earnings would rise at least 10 per cent this year, despite the weakening U.S paydayloans. economy.

But earnings from continuing operations came to $4.4 billion, or 44 cents per share, down 8 per cent year-over-year.

That was well below the 51 cents per share expected by analysts surveyed by Thomson Financial for profit from continuing operations. The company itself had forecast a profit of 50 to 53 cents per share. CEO Immelt cited the surprise near-collapse of Wall Street investment firm Bear Stearns Cos. as playing a major role in GE’s woes.

"We had planned for an environment that was going to be challenging," he said, but "the Bear Stearns event" produced "an extraordinary disruption in our ability to complete asset sales . . ."

An analyst, however, saw weaknesses beyond the financial sector.

"The major surprise was that the driver to the downside was not confined to just GE Capital," Nigel Coe of Deutsche Bank Securities Inc. said in a note.

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