After weeks of tough negotiations amid targeted strikes, the United Auto Workers (UAW) union has reached a tentative deal with Ford Motor Company in the U.S. The deal still needs to be approved by union leaders and ratified via a vote by its members. If that happens, it marks an important breakthrough in the work conflict and we could see deals with rival auto giants General Motors and Stellantis soon fall in to place.
“We challenged Ford to step up, and they delivered,” said UAW President Shawn Fain. The agreement includes wage increases of 25 percent over the 4.5-year duration of the contract, starting with an immediate 11 percent increase. Temporary workers, generally lower paid than regular employees, are also set to benefit significantly with raises exceeding 150 percent over the contract period.
Ford has also agreed to give UAW the right to strike in the event of future plant closures.
“We are focused on restarting Kentucky Truck Plant, Michigan Assembly Plant and Chicago Assembly Plant, calling 20,000 Ford employees back to work and shipping our full lineup to our customers again.”
- Jim Farley, Ford CEO
Beyond the union ratification vote, which should happen in the coming days, attention then turns to rival U.S. auto giants General Motors and Stellantis. The template set by the new deal with Ford should pave the way for rapid agreements between those automakers and the UAW. This is especially so given that both GM and Stellantis have shown signs of being strongly affected by the work stoppages.
Stellantis recently saw the strike action extend to include its plant manufacturing lucrative Ram 1500 trucks. Given the financial strain, Stellantis is exploring options like selling 18 U.S.-based facilities to mitigate the strike's impact. The company also recently announced it’s pulling out of the upcoming SEMA show in Las Vegas and the Los Angeles Auto Show in November in order to cut costs.
GM meanwhile has seen many of its plants, including the Arlington assembly plant, affected by the conflict.
Both Stellantis and GM say they’re committed to work towards preliminary agreements with the UAW following Ford's deal.
The ongoing strike has had a substantial economic toll; the Anderson Economic Group estimated losses exceeding $9.3 billion earlier this week.
Even if deals are reached soon with GM and Stellantis, it's expected the repercussions of the strike will continue to reverberate, particularly in early 2024. We can expect price adjustments on the part of the Big Three automakers that will send the costs of new models rising in the short term.