Ford workers have voted overwhelmingly to accept concessions after their union warned them the company would soon start pulling more production out of Canada without cuts in labour costs.

About 83 per cent of production, skilled and office workers approved changes to their contracts Sunday that will freeze wages and increase benefit costs for the next three years at the sputtering automaker.

Ratification protects key production in Oakville and Windsor but other terms of the deal will close Ford's St. Thomas assembly plant in less than two years. That will eliminate about 1,500 Canadian Auto Workers jobs, plus employment for thousands of others who supply parts and services in the region.

It will lower Canada's share of Ford's North American production to 10 per cent from 13 per cent.

In bargaining, the union had vowed to maintain the 13-per-cent level. Instead, CAW, representing about 7,000 workers, negotiated a "closeout" agreement for the St. Thomas plant that will provide significant pension incentives and severance packages for those choosing to leave the company.

"No one should mistake workers' approval as satisfaction with the new agreement," CAW president Ken Lewenza said in a statement. "Members had faith in the union to negotiate the best agreement possible and protect their interests over the long term, but the problems faced by industry cannot be resolved at the bargaining table."

He noted governments must realize Canada's industrial base is quickly eroding along with the middle class.

CAW promoted a policy of no concessions in contracts for several years but recession and a major auto-industry downturn seriously weakened that hard-line stance.

In a brochure for weekend membership meetings, CAW said Ford "threatened" to start transferring plans for new engines at its Windsor operations and models for the Oakville assembly complex, elsewhere, soon.

"Make no mistake: Ford's top executives were ready to start pulling out of Canada if we did not reach this agreement," three senior union leaders state in the brochure. "They threatened us explicitly to move the new Coyote engine and the future replacement for the Edge/MKX right out of Canada. Moreover, they wouldn't wait until 2011 to start the process." Detroit-based Ford said last month its Canadian plants had the highest labour costs of any place where it operates and, if that continued, it would affect future investment here.

The previous contract, which expires in 2011, had left Ford workers at a competitive disadvantage after their counterparts at General Motors of Canada Ltd. and Chrysler Canada accepted concessions earlier this year so those teetering automakers could qualify for billions of dollars in government aid.

Despite an upswing in its financial and market fortunes, Ford still has a higher debt burden than GM or Chrysler and will close more plants with unused capacity continentwide, the union said. "We must position ourselves to hang on to every job we possibly can in Canada," said the message in the CAW brochure.

Ford workers in the U.S. have rejected contract concessions in the past week, which means the money-losing company will still struggle against its rivals in the U.S.

The deal here will freeze wages and a cost-of-living allowance until September 2012. It eliminates a week of holidays for workers at the three production locations and a parts depot in Brampton.

Workers earning about $34 an hour and retirees will lose or pay more for some benefits. Pensions for workers and retirees will remain intact. New workers will start at 70 per cent of the current top rate with gradual increases to 100 per cent after five years; they must contribute $1 an hour to help fund a pension plan and will get lesser benefits during layoffs.

The closeout at St. Thomas will offer retirement incentives of up to $90,000 for eligible workers, plus vouchers for new vehicles worth $35,000, or $25,000 in lieu of autos.

Workers with eight or more years service who lose jobs will receive $100,000, a $30,000 vehicle voucher, or $25,000 in lieu of an auto, and six months of health coverage. Those with at least five years would get $75,000, the temporary health care coverage and vehicle voucher.

Ford will offer special incentives for workers to retire or leave its Oakville and Brampton operations in 2011 to create job openings so some St. Thomas staff can relocate.