
Following a tentative labor agreement agreed late Wednesday between the United Auto Workers (UAW) union and the corporation, Ford (F.N) autoworkers were scheduled to resume work.
After 45,000 workers joined the strikes in mid-September, Ford was the first of Detroit’s Big Three automakers to negotiate a settlement. This agreement is expected to set the precedent for future agreements with General Motors (GM.N) & Chrysler parent Stellantis (STLAM.MI).
On Thursday morning, the UAW had a meeting with GM and scheduled a later meeting with Stellantis. According to people briefed on the situation, GM and the UAW have similar views on economic matters.
The Ford accord, which still needs to be approved by union members, calls for raising wages by 25% over the course of the 4-1/2-year contract, increasing retirement payments, and doing away with pay tiers that are lower for employees working in certain Ford parts plants. In addition, the eight-year wait for top pay is shortened to three years, and the UAW was granted the authority to go on strike in response to plant closures.
Before ratification, Ford employees would resume work, according to the UAW. Ford has started phoning back employees as it attempts to reopen its three strike-affected assembly facilities.
With workers walking out or threatening to strike in a number of industries this year, including rail, entertainment, shipping, and casinos, the Ford deal represents a major win for labor.
The destiny of the workers at battery plants is still a major concern, which the UAW did not address when announcing the agreement on Wednesday.
Jim Farley, the CEO of Ford, claimed last month that the UAW was trying to “hostage” the labor agreement by making the manufacturer pay employees at its new battery plants the same premium rates as those at its assembly plants.
The deal undoes concessions that the union had accepted in a string of contracts since 2007, when Ford was mortgaging assets to keep alive and GM and the erstwhile Chrysler were heading toward bankruptcy. It is still less than the UAW’s original demands for a 40% pay increase, a 32-hour workweek, and the reinstatement of defined benefit pensions.
All in all, the companies have improved their current position, but they have all expressed concern that overpaying employees may make it more difficult for them to compete with other, less expensive automakers in the future, such as Tesla (TSLA.O), the industry leader in electric vehicle sales.
When cost-of-living and compounding are taken into account, the agreement translates to overall wage increases of more than 33%, according to the UAW.
In a video speech on Wednesday night, UAW President Shawn Fain stated, “We know it breaks records.” “We are aware that lives will alter. But it’s up to you all what occurs next.”
During the ratification process, UAW members who are currently on strike at Ford are asked to report back to work. This suggests that this week could see the commencement of production of Ford Super Duty pickup trucks, Ford Bronco and Explorer SUVs, and Ford Ranger trucks.
“We are very happy to have concluded a tentative agreement on a new employment agreement with the UAW covering our U.S. operations,” Farley stated.
In Thursday’s trading, GM fell 1.4% and Ford fell 1.7%.
In remarks released on Wednesday, GM and Stellantis stated that they were attempting to reach agreements as quickly as possible.