DETROIT (AP) — The United Auto Workers union has overwhelmingly ratified a fresh contract with Ford, a deal that, along with similar agreements with General Motors and Stellantis, will result in wage hikes across the industry, enabling automakers to soak up higher costs and will aid in reshaping the auto industry as it transitions away from gasoline-fueled vehicles.Thank you for reading this post, don't forget to subscribe!
The approval rate for the agreement among Ford workers was 69.3%, with a margin of about 15,000 votes in favor, as the voting process concluded early Saturday. Earlier this week, a comparable contract was endorsed by GM employees. At Stellantis, 68.7% of workers voted in favor, maintaining a strong lead with only votes from two smaller facilities awaiting tally.
These contracts, valid until April 2028, will put an end to the tumultuous negotiations that commenced last summer and led to a six-week strike at all three automakers. The new head of the UAW, Shawn Fenn, has characterized the companies led by highly paid CEOs as the union’s adversaries and has announced the termination of the era of collaboration with automakers.
After unsuccessful negotiations spanning the summer, Fenn initiated a strike at one assembly plant at each company on September 15. Subsequently, the union expanded the strike to encompass parts warehouses and other factories as a means to intensify pressure on automakers, until a temporary agreement was reached by the end of October.
The new contract agreements are widely perceived as a triumph for the UAW. The companies have pledged substantial wage increases for top-level assembly plant workers through cost-of-living adjustments, resulting in a 33% wage gain. Top assembly plant workers will receive an immediate 11% raise and will be making approximately $42 per hour when the contract expires in April 2028.
Under these agreements, automakers have also abolished several wage tiers used for remunerating different workers. They have also tentatively agreed to incorporate new electric-vehicle battery plants within the national union contract. This provision will afford the UAW the opportunity to unionize EV battery plants, which are expected to account for a greater portion of industry jobs in the forthcoming years.
Art Wheaton, who directs labor studies at Cornell University, expressed, “I view this as a major triumph for the UAW in obtaining approval for all three contracts.” “This is lifting the incomes of many, if not all, autoworkers.”
Three non-union, foreign automakers in the United States – Honda, Toyota, and Hyundai – promptly responded to the UAW contract by enhancing wages for their factory workers, subsequent to Fenn’s declaration of the UAW’s aggressive intentions to unionize their facilities and the endeavor to enlist workers at Tesla.
Foreign automakers have previously asserted that their employees receive equivalent compensation to UAW members, obviating the necessity for a union. They have also accused the UAW of involvement in corruption after federal prosecutors compelled GM and the former Chrysler into bankruptcy in 2009 while a widespread bribery and embezzlement scandal surfaced in 2017.
However, with Fenn’s election and the new contracts, Wheaton remarked that the union has “altered or adjusted all that rhetoric.”
Despite wages potentially being almost equivalent in nonunion plants, UAW workers receive superior healthcare and retirement benefits, likely to be appealing to workers in nonunion plants as they age, Wheaton highlighted.
Wheaton posited that contracts with auto companies should also result in augmented wages at auto parts supply companies and other sectors.
“The agreement empowers the union,” asserted Mark McGill, a 67-year-old employee at Ford’s assembly plant in Wayne, Michigan, which was embroiled in a six-week strike. “Look at everyone now. People are interested in forming a union.”
McGill, a Ford veteran of 28 years involved in assembling Ford Bronco SUVs and Ranger pickup trucks, expressed contentment that he will be earning $42 per hour by the contract’s conclusion. He is also gratified that Fain’s negotiators were able to secure approximately $100 per day for workers during the strike.
Nonetheless, under the agreement, new hires and temporary workers will receive significantly larger raises than long-standing assembly plant employees, with some seeing their wages more than double. This issue nearly jeopardized GM’s contract. Wheaton revealed that elevating wages for the most underpaid workers has been a focal point of the US union movement in the past year.
All three automakers reported substantial revenue losses due to the strikes and indicated that they will absorb at least part of the added cost from wage hikes in a competitive market that makes raising prices challenging. Ford’s chief financial officer, John Lawler, disclosed that the deal would upsurge labor costs per vehicle by $850 to $900. All three companies stated that they had already trimmed other expenses in anticipation of the UAW resolution.
Michelle Krebs, an analyst at Cox Automotive, contended that the deceleration in the U.S. auto market and the already inflated prices have rendered new vehicles unaffordable for many, thereby making it arduous for companies to raise prices.
Cox projectors foresee a softening of U.S. auto sales in the upcoming year. According to Krebs, subdued demand coupled with a rise in factory output is likely to prompt more discounts. Moreover, auto loans currently hover around an average of 10%, a rate that will further attenuate auto sales by increasing monthly payments.
The UAW’s triumph in securing significant wage improvements could prove to be a political advantage for President Joe Biden, who had liaised with workers on picket lines in the Detroit area and traveled to Belvidere, Illinois, as per Cornell Wheaton. There, the union obtained a commitment from Stellantis to reopen a shuttered factory and even include an EV battery plant.
Biden, the first President to visit a union picket line, has presented himself as a proponent of the working class, having emerged from a blue-collar background in Scranton, Pennsylvania. Wheaton stated that the strikes did not harm the economy but did lead to higher wages for middle-class workers, whose support Biden would require as he seeks reelection.
Tom Krisher, The Associated Press