After more than six weeks of expanding strikes, financial losses and mounting pressure, the United Auto Workers union has concluded its historic series of ongoing strikes against the Detroit Three. Shortly after announcing massive escalations last week, Ford (F) – Get a free report signed a tentative agreement with the union on October 25. Three days after Ford closed, Stellantis (STLA) – Get a free report It also agreed to provisional terms.
And after an extension of the strike on October 28, General Motors (G.M.) – Get a free reportAccording to sources familiar with the matter, a provisional agreement was reached with the union on Monday. Both the union and the automaker have yet to officially announce the agreement and subsequent strike stoppage.
The agreement with Ford gives autoworkers 25% raises over the life of the contract, starting with an 11% raise and a $5,000 bonus immediately after ratifying the contract. The deal also includes cost-of-living adjustments, increased profit sharing, enhanced retirement contributions and about $8.1 billion in investments in new plants, according to the UAW.
Related: After $8 Billion Hit, Auto Union Targets Tesla, Other Automakers
While all the details of the agreement with Stellantis have not yet been revealed, it broadly reflects the contract the union reached at Ford.
The deals come after both Ford and GM withdrew their full-year guidance due to uncertainty caused by the strike. Ford said last week that the strike caused the company to lose more than $1.3 billion; GM’s losses are not far below that figure.
Anderson Economic Group estimated that, after five weeks of strikes, the action and continued expansion caused the industry to lose a total of more than $9 billion, most of which were losses to automakers. The strike also affected suppliers and supply chain economics, causing hundreds of millions in lost wages.
“Once again, we have accomplished what we were told just weeks ago was impossible,” union president Shawn Fain said in a statement. statement. “At Stellantis in particular, we have not only secured a record contract, but we have begun to turn the tide of the war against the American working class.”
The way to follow
Former Ford CEO Mark Fields speaking with CNBC On Monday, he called the new deal a “very rich contract,” saying it allows workers to “bounce back” after a challenging and inflationary economic environment.
Going forward, Fields said, automakers will have to closely examine their production processes, looking for ways to increase efficiency to offset the additional labor cost that will result from the new arrangements. Ford, for example, said the contract would make each vehicle the company produces about $900 more expensive.
“Automation in plants will now look much more compelling,” Fields said, noting that these upcoming cost-saving efforts will influence automakers’ “future investment and hiring decisions.”
Fields added that the terms of the contract give automakers room to explore further automation. The union did not immediately respond to TheStreet’s request for comment on this point.
Related: Former Ford CEO has a strong warning for the electric vehicle industry
Fields said that from the union’s perspective, the success of this contract will revolve around an expansion of membership at the end of this contract, something the union appears to be interested in.
After Fain suggested in early October that Tesla workers (TSLA) – Get a free reportHonda and Toyota are the “UAW members of the future,” the union said in a statement Domingo: “When we return to the negotiating table in 2028, it will not just be with the Big Three, but with the Big Five or Six.”
Fields said the likely reason automakers ended up giving in to many of the union’s demands centers on a perfect storm of high inflation, the union’s recent popularity and the record profits automakers recently posted.
“The automakers knew they were going to pay,” Fields said, “but it came out richer than expected.”
Related: Ford Stock Wobbles as Company Puts Dollar Figure on UAW Auto Strikes
Get investment guidance from trusted portfolio managers with no management fees. Enroll in Action Alerts MORE now.
