(Detroit) The United Auto Workers (UAW) has overwhelmingly ratified a new contract with Ford, a pact that, along with similar agreements with General Motors and Stellantis, will increase wages across the industry, will force automakers to absorb higher costs and help reshape the auto industry as it moves away from gasoline-powered vehicles.
Ford workers voted 69.3 percent in favor of the deal, which passed by a margin of nearly 15,000 votes in voting that concluded Saturday morning. Earlier this week, GM workers narrowly approved a similar contract. At Stellantis, 68.7% of workers favored ratification, an insurmountable lead with votes at only two small facilities remaining to be counted.
The new labor contracts, in effect until April 2028, will end contentious negotiations that began last summer and led to six-week strikes at the three automakers.
After summer-long negotiations failed to produce an agreement, UAQ leader Shawn Fain launched strikes on September 15 at an assembly plant at each company. The union then expanded the strike to parts warehouses and other factories in an attempt to step up pressure on automakers until a tentative agreement was reached in late October.
The new contract agreements were widely seen as a victory for the UAW. The companies agreed to significantly raise wages for workers at top-performing assembly plants, with raises and cost-of-living adjustments that would result in wage increases of 33 percent. Key assembly plant workers will receive an immediate 11% raise and earn about $42 an hour when their contracts expire in April 2028.
As part of the deals, automakers also ended many of the multiple wage levels they used to pay different workers. They also agreed in principle to include new electric vehicle battery factories in the national union contract. The provision will give the UAW the opportunity to unionize electric vehicle battery factories, which will account for a growing share of the industry’s jobs in the years to come.
In the United States, three non-union foreign automakers – Honda, Toyota and Hyundai – quickly responded to the UAW contract by raising their workers’ wages. They did so after Mr. Fain said the UAW would make aggressive efforts to unionize their factories. He also said the union would try to recruit workers at Tesla.
Foreign automakers have argued in the past that their workers earn about the same as UAW members, denying the need for a union. They also accused the UAW of forcing GM and the former Chrysler company into bankruptcy in 2009 and of engaging in corruption after federal prosecutors dismantled a massive bribery and embezzlement scandal that started in 2017.
Contracts with automakers are also expected to lead to higher wages at auto parts suppliers and other industries, said Art Wheaton, director of social studies at Cornell University.
But under the deal, new hires and temporary workers will receive much larger raises than longtime assembly plant workers, with some even doubling their pay. This problem almost ruined the contract at GM. Mr. Wheaton noted that raising wages for the lowest paid workers has been a priority of the labor movement in the United States over the past year.
Neutral sales
All three automakers have reported millions of dollars in lost revenue because of the strikes and said they will absorb at least part of the increased costs of wage increases in a competitive market that makes it difficult to raise prices.
Michelle Krebs, an analyst at Cox Automotive, said the slowdown in the U.S. auto market and already inflated prices that have made new vehicles unaffordable for many people will make it difficult for companies to charge more.
Cox forecasters predict stagnant U.S. auto sales next year. Slowing demand and increasing industrial production are likely to lead to more cuts, Krebs said. In addition, auto loan rates hover on average around 10%, a rate that will further slow down auto sales by increasing monthly payments.