A tentative labor agreement has been reached between the United Auto Workers (UAW) and Ford Motor Co., placing pressure on the carmaker’s competitors to end a lengthy strike that has resulted in significant losses for the industry. The UAW leadership is set to vote on the deal on October 29, after which it will need to be ratified by Ford’s 57,000 US hourly workers.
Under the proposed agreement, Ford has agreed to a record 25% hourly wage increase over the duration of the contract, exceeding four years. Including cost-of-living allowances, the top wage rate is expected to rise by 33%, reaching over $40 per hour. UAW President Shawn Fain expressed his satisfaction, stating, “We have achieved what many thought was impossible. Ford has offered 50% more since the strike began.”
In a statement, President Joe Biden commended Ford and the UAW for their agreement, emphasizing the importance of “worker power.”
While the deal successfully addresses several issues, such as converting temporary hires to full-time positions and expediting the journey to the top wage rate, details regarding key matters like wages and benefits at battery plants and Fain’s initial demand for a 32-hour workweek have not been disclosed.
The UAW hopes that General Motors Co. and Stellantis NV will agree to the same terms during their meetings on Thursday. The union has encouraged Ford workers to return to work in order to maintain pressure on the other companies. GM and Stellantis have expressed their commitment to reaching agreements with the UAW as soon as possible.
Ford, pleased with the agreement, has stated that it will restart its plants and begin shipping its full lineup to customers again.
The strike, which started on September 15, initially affected one vehicle-assembly plant at each of the legacy automakers in Detroit. Over time, it expanded to include more than 45,000 workers across eight assembly plants and 38 parts-distribution facilities. Fain employed surprise walkouts to keep companies guessing about his next moves.
The strike is estimated to have cost GM, Ford, and Stellantis a combined $2.1 billion in lost earnings before interest and taxes as of October 23. GM has already withdrawn its earnings guidance due to the strike’s impact.
Despite facing declines in share prices in recent months, Stellantis is an outlier, with its US shares seeing a 33% increase so far this year.
Fain’s strategic gamble to regain benefits lost during the financial crisis appears to have paid off. If approved, the contract could be of historic significance as it includes wage raises greater than 3% in a single year, a rarity in the last 36 years of UAW contracts.
The labor activism seen in the current UAW negotiations reflects a resurgence in the US labor market. Unionized workers, empowered by favorable labor market conditions and motivated by concerns over inflation and pandemic-related risks, have achieved notable victories at prominent US companies over the past year.
“This agreement sets us on a new path to set things right at Ford, at the Big Three, and across the auto industry,” said Fain.
(Updates with context throughout.)
