Car Companies Agree to Pay Striking Workers in Unusual UAW Win
The UAW keeps racking up wins.
Normally, going on strike means forgoing your salary as a condition of withholding your labor from your employers. Not so for the United Auto Workers. According to the Wall Street Journal, UAW members are set to receive an average of $100 a day for the time they were out on strike. Who’s paying this money, you may ask? Why, the automakers of course: Ford, GM, and Stellantis. It’s an incredibly unusual arrangement and a sign of the union’s commanding victory in its dealings with the companies.
Seriously, somebody give UAW President Shawn Fain the dice. This man is on a hot streak.
© Provided by The Wall Street Journal
Ford Motor, General Motors and Chrysler-parent Stellantis agreed to pay striking workers for their time on the picket lines, as part of new labor deals reached late last month with the United Auto Workers to end the union’s walkout.
The move is an unusual one in the union’s history of negotiating with the car companies, according to people familiar with the talks.
UAW workers who walked the picket lines at the three companies are expected to receive on average slightly more than $100 a day for the time they were out on strike, the people said. This amount is on top of the $500 a week that the UAW has paid picketing workers out of its own strike fund.
More than 45,000 workers in total went on strike over roughly six weeks, although certain locations were out longer than others.
Unionized employees at the Detroit automakers who were temporarily laid off as a result of the strike are also expected to receive similar payment from the companies.
In recent weeks, the union has reached tentative agreements with each car company, resolving the first simultaneous strike of all three in UAW history. The deals, if ratified, would raise workers’ pay 25% over four years, as well as offer them cost-of-living adjustments and other improved benefits.
During a livestream to union members late Thursday, UAW President Shawn Fain reiterated plans to organize nonunionized factories of foreign automakers such as Toyota Motor. On Wednesday, Toyota said it was raising wages by 9% for most U.S. auto factory workers and shortening the time it takes to reach the maximum pay.
“Toyota isn’t giving out raises out of the goodness of their heart,” Fain said. “They did it now because the company knows we’re coming for them.”
In a statement after Fain’s remarks, Toyota said the decision to unionize ultimately will be made by its workers, and that the company has “a history of stable employment and income for our employees.”
“By engaging in honest, two-way communication about what’s happening in the company, we aim to foster positive morale,” Toyota said.
Fain also outlined details of the temporary pact the union reached with Stellantis, including the reopening of an assembly plant in Illinois the automaker had indefinitely closed earlier this year.
The UAW took some concessions in the deal, said Rich Boyer, vice president of the union’s Stellantis department, in the video address. The automaker had sought the right to close and consolidate parts depots and other facilities, such as its North American headquarters, or it would close plants and lead to job losses, the UAW said.
“It wasn’t an easy choice or decision,” Boyer said.
Still, Boyer said the UAW won the elimination of a lower pay scale for workers at the parts-distribution unit, a key demand during this current round of talks.
A Stellantis spokeswoman declined to comment. Company officials previously said the proposal for those facilities was intended to modernize its parts-distribution business, not to cut jobs, and that it isn’t leaving its North American headquarters.
This added perk for strikers is expected to cost each company in the tens of millions of dollars, some of the people said. The worker payments factored into the union’s decision to have members return to work at nine factories and dozens of parts-distribution centers before the tentative agreements were ratified, allowing the companies to restart production.
The union’s targeted strike approach meant that some members walked picket lines for more than 40 days, while others remained in their jobs logging full pay.
The UAW entered the strike with a $825 million fund to pay striking workers $500 a week during the walkout. Some employees on the picket lines said the labor action left them stretched financially.
“It’s been extremely hard,” said Nara Culberson, a worker at Ford’s Michigan Assembly plant who was on strike for about 40 days. Culberson tried to find outside work to supplement her income during the period, with little luck.
UAW members are also expected to receive a $5,000 ratification bonus if workers approve the tentative agreements. Voting is under way at Ford and is expected to begin at Stellantis and GM in the coming days.
This week, workers at the Michigan Assembly plant voted 82% in favor of the contract and those at other union locals representing Ford factories and facilities are expected to vote soon. The Dearborn, Mich.-based automaker has said it lost about $1.3 billion in operating profit as a result of the work stoppages.
The strike has also taken a financial toll on the other two car companies, with GM projecting last week it would dent its bottom line by at least $800 million. That figure had not factored in two walkouts called later at two large plants in Texas and Tennessee.
Stellantis said this week the strike had cost it under $800 million in profit.
Write to Nora Eckert at nora.eckert@wsj.com
Ford Motor, General Motors and Chrysler-parent Stellantis agreed to pay striking workers for their time on the picket lines, as part of new labor deals reached late last month with the United Auto Workers to end the union’s walkout.
The move is an unusual one in the union’s history of negotiating with the car companies, according to people familiar with the talks.
UAW workers who walked the picket lines at the three companies are expected to receive on average slightly more than $100 a day for the time they were out on strike, the people said. This amount is on top of the $500 a week that the UAW has paid picketing workers out of its own strike fund.
More than 45,000 workers in total went on strike over roughly six weeks, although certain locations were out longer than others.
Unionized employees at the Detroit automakers who were temporarily laid off as a result of the strike are also expected to receive similar payment from the companies.
In recent weeks, the union has reached tentative agreements with each car company, resolving the first simultaneous strike of all three in UAW history. The deals, if ratified, would raise workers’ pay 25% over four years, as well as offer them cost-of-living adjustments and other improved benefits.
During a livestream to union members late Thursday, UAW President Shawn Fain reiterated plans to organize nonunionized factories of foreign automakers such as Toyota Motor. On Wednesday, Toyota said it was raising wages by 9% for most U.S. auto factory workers and shortening the time it takes to reach the maximum pay.
“Toyota isn’t giving out raises out of the goodness of their heart,” Fain said. “They did it now because the company knows we’re coming for them.”
In a statement after Fain’s remarks, Toyota said the decision to unionize ultimately will be made by its workers, and that the company has “a history of stable employment and income for our employees.”
“By engaging in honest, two-way communication about what’s happening in the company, we aim to foster positive morale,” Toyota said.
Fain also outlined details of the temporary pact the union reached with Stellantis, including the reopening of an assembly plant in Illinois the automaker had indefinitely closed earlier this year.
The UAW took some concessions in the deal, said Rich Boyer, vice president of the union’s Stellantis department, in the video address. The automaker had sought the right to close and consolidate parts depots and other facilities, such as its North American headquarters, or it would close plants and lead to job losses, the UAW said.
“It wasn’t an easy choice or decision,” Boyer said.
Still, Boyer said the UAW won the elimination of a lower pay scale for workers at the parts-distribution unit, a key demand during this current round of talks.
A Stellantis spokeswoman declined to comment. Company officials previously said the proposal for those facilities was intended to modernize its parts-distribution business, not to cut jobs, and that it isn’t leaving its North American headquarters.
This added perk for strikers is expected to cost each company in the tens of millions of dollars, some of the people said. The worker payments factored into the union’s decision to have members return to work at nine factories and dozens of parts-distribution centers before the tentative agreements were ratified, allowing the companies to restart production.
The union’s targeted strike approach meant that some members walked picket lines for more than 40 days, while others remained in their jobs logging full pay.
The UAW entered the strike with a $825 million fund to pay striking workers $500 a week during the walkout. Some employees on the picket lines said the labor action left them stretched financially.
“It’s been extremely hard,” said Nara Culberson, a worker at Ford’s Michigan Assembly plant who was on strike for about 40 days. Culberson tried to find outside work to supplement her income during the period, with little luck.
UAW members are also expected to receive a $5,000 ratification bonus if workers approve the tentative agreements. Voting is under way at Ford and is expected to begin at Stellantis and GM in the coming days.
This week, workers at the Michigan Assembly plant voted 82% in favor of the contract and those at other union locals representing Ford factories and facilities are expected to vote soon. The Dearborn, Mich.-based automaker has said it lost about $1.3 billion in operating profit as a result of the work stoppages.
The strike has also taken a financial toll on the other two car companies, with GM projecting last week it would dent its bottom line by at least $800 million. That figure had not factored in two walkouts called later at two large plants in Texas and Tennessee.
Stellantis said this week the strike had cost it under $800 million in profit.
Write to Nora Eckert at nora.eckert@wsj.com
Analysis by Elisabeth Buchwald, CNN
Thu, November 2, 2023
The historic United Auto Workers union strike against the nation’s three unionized automakers — Ford, General Motors, and Stellantis, known as the “Big Three” — could finally be over soon.
This news comes after all three automakers reached tentative deals with the union.
Ford was the first to announce it reached a tentative agreement with the UAW on Wednesday. Then came Stellantis over the weekend and GM today.
A brief refresher
The strike, which began nearly seven weeks ago, has been the longest US auto strike in 25 years. It was the first time in its history that the UAW staged a simultaneous strike against the nation’s three unionized automakers
The strike began at one assembly plant at each company, but the UAW expanded the scope of the strike six times since then in an effort to step up pressure on the companies at the bargaining table.
The production losses have likely cost the automakers billions of dollars. But the damage it’s done to the broader economy carries an even heftier price tag.
The first five weeks of the strike has had an economic impact of $9.3 billion, the Anderson Economic Group estimated.
Their estimate takes into account:
Lost wages for striking workers and other workers who were laid off or forced to work fewer hours
Lost earnings for the Big Three automakers
Supplier losses including delays and cancellations for car parts orders and the wage impact it’s had on workers within the industry
Dealer and customer losses as a result of indefinite delays of new vehicles
The final straw
The linchpin in negotiations between the UAW and Ford came on October 11, when the union struck Ford’s largest and most profitable plant, my colleague, Vanessa Yurkevich, reported.
Similarly, the UAW’s hardest hits against Stellantis and GM came shortly before both announced tentative deals.
What will this mean for car prices?
Now you’d think people in the market for a new car would pay the price, by way of higher car prices, given all the added costs the Big Three will face if the tentative deals go into effect.
But as my colleague Chris Isidore — CNN’s expert reporter in all things strike-related — tells me, there’s a good chance cars won’t get more expensive because of all this.
Here are a couple of reasons why:
Car prices are based on supply and demand. For instance, when demand was high but supply was constrained by a shortage of computer chips needed to build new cars a few years ago, prices went up to record levels. And at the end of the day, it was the auto dealers, which are independent businesses, that benefitted the most from buying cars at wholesale prices from automakers and selling them to consumers earning massive profits.
The automakers might cut corners somewhere else to maintain their pre-strike prices (think lower quality or less aesthetically appealing interiors, wheels or tires)
The Big Three have to stay competitive with nonunion automakers which keeps their car prices in check
The automakers will need to find ways to build cars more efficiently and figure out how to make money selling electric vehicles
TLDR: The biggest loser is probably going to be the automakers who are going to see their profits decline one way or another.
One last thing — none of this is a done deal
You may have noticed I use the word “tentative” multiple times. That’s because the historic strike doesn’t officially end until it is ratified by rank-and-file members.
And it is possible that members at one or more companies could vote down the tentative deal, leading to a resumption of the strike at that company, CNN’s Yurkevich and Isidore wrote.
Stellantis to give big raises, invest billions in UAW deal
Thu, November 2, 2023
By David Shepardson
(Reuters) -Chrysler-parent Stellantis has agreed to build a new $3.2 billion battery plant and invest $1.5 billion in a new mid-size truck factory in Illinois under its tentative labor agreement, the United Auto Workers union said on Thursday.
UAW President Shawn Fain disclosed new details of the labor deal that includes a 25% pay hike, better retirement benefits and other significant improvements and runs through April 2028 after union leaders agreed earlier on Thursday to send the deal to members for a ratification vote that will take about two weeks.
Stellantis will also offer hourly employees a company-subsidized lease program that will make it more affordable to drive a new vehicle, similar to programs U.S. automakers offer for white collar employees, the UAW said.
Stellantis declined to comment, saying it would wait for workers to vote first before discussing the deal.
Ford production workers are getting a $1,500 voucher they can use toward the purchase of a new vehicle.
The UAW detailed many of Stellantis investment plans, the biggest of which of was convincing the company to reopen the Belvidere, Illinois assembly plant that shuttered operations in February.
Belvidere will begin producing 80,000 to 100,000 mid-size trucks annually in 2027 and the $3.2 billion battery plant with a yet to be named joint venture partner will open in 2028.
The new investments include $1.5 billion in its Toledo Jeep operations, including building an EV Jeep Wrangler in 2028.
Stellantis will invest $3.5 billion in three Michigan assembly plants, including $1.5 billion in a Detroit plant to updated versions of the Dodge Durango and Jeep Grand Cherokee, including electric versions of those in 2026 and 2027.
In North America, Stellantis is focusing its investments on trucks and SUVs, and covering its bets on both gas-powered and EV versions through 2028.
Stellantis will also offer $50,000 buyouts in 2024 and 2026 to UAW production workers, allowing it to cut costs by hiring fresh workers who start at lower wages.
The UAW said the Stellantis investment commitments total about $19 billion, but that includes some previously announced plans.
Stellantis has slightly longer than rival Ford to convert current temporary workers to permanent employees. Within the first year, 3,200 temporary workers will be converted to full time and after that they will automatically get full-time status after nine months of service.
A source confirmed the UAW tentative agreements with Stellantis, General Motors and Ford include an additional ratification bonus of around $110 per day for employees who were on strike or laid off during the work stoppage that began in mid-September.
That is on top of the $5,000 bonus hourly workers will get on ratification along with an 11% immediate pay hike.
(Reporting by David Shepardson in Washington; additionnal reporting by Paul Lienert; Editing by Chris Reese, Diane Craft and Jamie Freed)
Thu, November 2, 2023
By David Shepardson
(Reuters) -Chrysler-parent Stellantis has agreed to build a new $3.2 billion battery plant and invest $1.5 billion in a new mid-size truck factory in Illinois under its tentative labor agreement, the United Auto Workers union said on Thursday.
UAW President Shawn Fain disclosed new details of the labor deal that includes a 25% pay hike, better retirement benefits and other significant improvements and runs through April 2028 after union leaders agreed earlier on Thursday to send the deal to members for a ratification vote that will take about two weeks.
Stellantis will also offer hourly employees a company-subsidized lease program that will make it more affordable to drive a new vehicle, similar to programs U.S. automakers offer for white collar employees, the UAW said.
Stellantis declined to comment, saying it would wait for workers to vote first before discussing the deal.
Ford production workers are getting a $1,500 voucher they can use toward the purchase of a new vehicle.
The UAW detailed many of Stellantis investment plans, the biggest of which of was convincing the company to reopen the Belvidere, Illinois assembly plant that shuttered operations in February.
Belvidere will begin producing 80,000 to 100,000 mid-size trucks annually in 2027 and the $3.2 billion battery plant with a yet to be named joint venture partner will open in 2028.
The new investments include $1.5 billion in its Toledo Jeep operations, including building an EV Jeep Wrangler in 2028.
Stellantis will invest $3.5 billion in three Michigan assembly plants, including $1.5 billion in a Detroit plant to updated versions of the Dodge Durango and Jeep Grand Cherokee, including electric versions of those in 2026 and 2027.
In North America, Stellantis is focusing its investments on trucks and SUVs, and covering its bets on both gas-powered and EV versions through 2028.
Stellantis will also offer $50,000 buyouts in 2024 and 2026 to UAW production workers, allowing it to cut costs by hiring fresh workers who start at lower wages.
The UAW said the Stellantis investment commitments total about $19 billion, but that includes some previously announced plans.
Stellantis has slightly longer than rival Ford to convert current temporary workers to permanent employees. Within the first year, 3,200 temporary workers will be converted to full time and after that they will automatically get full-time status after nine months of service.
A source confirmed the UAW tentative agreements with Stellantis, General Motors and Ford include an additional ratification bonus of around $110 per day for employees who were on strike or laid off during the work stoppage that began in mid-September.
That is on top of the $5,000 bonus hourly workers will get on ratification along with an 11% immediate pay hike.
(Reporting by David Shepardson in Washington; additionnal reporting by Paul Lienert; Editing by Chris Reese, Diane Craft and Jamie Freed)
The UAW strike might be over, but will consumers feel it later?
Breck Dumas
Thu, November 2, 2023
The United Auto Workers' six-week strike against Ford, General Motors and Stellantis could be over now that the union has reached tentative deals with each of Detroit's Big Three, but the new labor costs incurred by automakers in the fresh contract agreements may be felt by consumers down the road.
Although the strike was limited in its scope, the automakers felt it was due to the UAW shutting down several major assembly plants. The work stoppage cost the industry billions of dollars, and the Big Three all ratified record contracts with the union in order to get production lines running again.
A "UAW On Strike" sign held on a picket line outside the General Motors Co. Spring Hill Manufacturing plant in Spring Hill, Tennessee, on Oct. 30, 2023.
Each of the major U.S. automakers agreed to increase their union workers' pay by 25% over the life of the four-and-a-half-year contracts, along with cost-of-living adjustments that Consumer Reports says will push the employee pay hikes to 33% above current levels.
That is a steep increase in labor costs, but some experts say only time will tell whether the raises will amount to higher vehicle prices in the future. Others say vehicle price hikes are inevitable.
Data from auto inventory and information tracking firm Edmunds indicates the strike was not long enough to impact vehicle prices in any particular direction in the short term, but a spokesperson told FOX Business the firm's experts say it is too early to tell how added labor costs might affect prices in the long term.
Workers put engines on the frame of Ford Motor Co. fuel-powered F-150 trucks under production at their Truck Plant in Dearborn, Michigan, on Sept. 20, 2022.
Ford withdrew its full-year forecast last week citing "uncertainty" over its tentative deal with the UAW, and CFO John Lawler told investors during the company's third-quarter earnings call that the new agreement will add another $850 to $900 in labor costs to each vehicle made.
Those increases will either be reflected in new vehicle price tags, absorbed by the company, result in automakers reducing costs in other ways, or some combination of the three.
"The concessions the automakers have made are already being positioned as significant by the automakers themselves, which is setting the stage for those costs to be passed through to consumers," Alain Nana-Sinkam, co-founder of industry tracking firm Remarkit Automotive, told CR. "However, given that consumers are already pretty well tapped out in terms of vehicle affordability, I’m not sure how much of that is going to end up sticking."
Cox Automotive chief economist Jonathan Smoke said in a statement earlier this week that the new UAW contract will have both positive and negative impacts on the economy.
Ford F-150 pickup trucks at a dealership in Colma, California, on July 22, 2022.
"Union contracts with cost-of-living adjustments contributed to the wage-inflation spiral the economy experienced in the 1970s. And wage gains at UAW plants could increase labor costs in factory towns, as all industries compete for workers," Smoke wrote. "The higher labor costs will also contribute to ongoing inflation in vehicle prices."
He added, "Consumers will bear some of the cost burden over time but given that affordability is already a challenge for the market, the automakers will not have an easy time passing along all of the costs to buyers and will have to seek efficiencies in other ways, or further limit production to more expensive vehicles that can absorb higher labor costs."
Original article source: The UAW strike might be over, but will consumers feel it later?
Breck Dumas
Thu, November 2, 2023
The United Auto Workers' six-week strike against Ford, General Motors and Stellantis could be over now that the union has reached tentative deals with each of Detroit's Big Three, but the new labor costs incurred by automakers in the fresh contract agreements may be felt by consumers down the road.
Although the strike was limited in its scope, the automakers felt it was due to the UAW shutting down several major assembly plants. The work stoppage cost the industry billions of dollars, and the Big Three all ratified record contracts with the union in order to get production lines running again.
A "UAW On Strike" sign held on a picket line outside the General Motors Co. Spring Hill Manufacturing plant in Spring Hill, Tennessee, on Oct. 30, 2023.
Each of the major U.S. automakers agreed to increase their union workers' pay by 25% over the life of the four-and-a-half-year contracts, along with cost-of-living adjustments that Consumer Reports says will push the employee pay hikes to 33% above current levels.
That is a steep increase in labor costs, but some experts say only time will tell whether the raises will amount to higher vehicle prices in the future. Others say vehicle price hikes are inevitable.
Data from auto inventory and information tracking firm Edmunds indicates the strike was not long enough to impact vehicle prices in any particular direction in the short term, but a spokesperson told FOX Business the firm's experts say it is too early to tell how added labor costs might affect prices in the long term.
Workers put engines on the frame of Ford Motor Co. fuel-powered F-150 trucks under production at their Truck Plant in Dearborn, Michigan, on Sept. 20, 2022.
Ford withdrew its full-year forecast last week citing "uncertainty" over its tentative deal with the UAW, and CFO John Lawler told investors during the company's third-quarter earnings call that the new agreement will add another $850 to $900 in labor costs to each vehicle made.
Those increases will either be reflected in new vehicle price tags, absorbed by the company, result in automakers reducing costs in other ways, or some combination of the three.
"The concessions the automakers have made are already being positioned as significant by the automakers themselves, which is setting the stage for those costs to be passed through to consumers," Alain Nana-Sinkam, co-founder of industry tracking firm Remarkit Automotive, told CR. "However, given that consumers are already pretty well tapped out in terms of vehicle affordability, I’m not sure how much of that is going to end up sticking."
Cox Automotive chief economist Jonathan Smoke said in a statement earlier this week that the new UAW contract will have both positive and negative impacts on the economy.
Ford F-150 pickup trucks at a dealership in Colma, California, on July 22, 2022.
"Union contracts with cost-of-living adjustments contributed to the wage-inflation spiral the economy experienced in the 1970s. And wage gains at UAW plants could increase labor costs in factory towns, as all industries compete for workers," Smoke wrote. "The higher labor costs will also contribute to ongoing inflation in vehicle prices."
He added, "Consumers will bear some of the cost burden over time but given that affordability is already a challenge for the market, the automakers will not have an easy time passing along all of the costs to buyers and will have to seek efficiencies in other ways, or further limit production to more expensive vehicles that can absorb higher labor costs."
Original article source: The UAW strike might be over, but will consumers feel it later?
This forced Ford, General Motors to give UAW workers a huge payday
Detroit’s big three had to agree to a surprising package of pay and perks to get workers back on production lines.
Todd Campbell
Nov 2, 2023
The UAW workers' strike forced America’s largest automakers into a corner. Faced with increasingly more strikes at their highest-profit manufacturing plants, Ford Motor Company, General Motors, and Stellantis (STLA) - Get Free Report, owner of Chrysler, Dodge, and Jeep, agreed to a slate of wage concessions in what turned out to be a record-setting contract.
The striking workers still need to ratify the tentative agreements. However, workers returned to their jobs this week, and most are expected to vote in favor of the plan, which boosts workers’ pay by 25% and gives them a surprisingly big upfront payment.
UAW members attend a rally in support of the labor union strike at the UAW Local 551 hall on the South Side on October 7, 2023 in Chicago, Illinois.
Image source: Jim Vondruska/Getty Images
Striking auto workers had a slate of costly demands
Auto workers were committed to striking as long as necessary to squeeze a record compensation deal and other perks out of Ford, General Motors (GM) - Get Free Report, and Stellantis.
Initially, their wish list was long, including a 40% pay increase, a 32-hour work week, annual cost-of-living increases, more retirement money, additional vacation time, and removing wage tiers.
Former Ford CEO has a blunt warning for workers following the conclusion of historic auto strikes
That long list of demands would’ve been expensive for automakers. Ford said that agreeing to them would put it on a path to bankruptcy. General Motors argued that workers' demands would mean competitors with non-union workforces would leapfrog it, including Tesla (TSLA) - Get Free Report, Honda Motor (HMC) - Get Free Report, and Toyota Motor (TM) - Get Free Report.
Importantly, Detroit’s big three felt that workers' terms would leave them financially hamstrung at a time when the auto industry is knee-deep in a seismic shift toward electric vehicles away from internal combustion engine (ICE) vehicles.
Electric vehicle sales are quickly displacing traditional ICE vehicles, so automakers are investing heavily to ensure they capture their fair share of the market opportunity.
According to Cox Automotive’s Kelley Blue Book, U.S. electric vehicle sales surged by nearly 50% year-over-year in the third quarter, accounting for nearly 8% of all vehicles sold. That growth is far faster than the mid-teens growth for all vehicles sold.
EV growth is only beginning. Wall Street analysts expect EVs will represent 40% of all vehicles sold by 2030.
Tesla, a non-union company that pioneered the shift to EVs, dominates the market with a 50% market share. If Ford, General Motors, and Stellantis hope to chip away at Tesla's lead, they'll need to design and launch new and better EV models at similar or lower prices. Last quarter, Ford and GM both lost EV market share to rivals like Hyundai.
Auto workers' ultimatum secures a massive payday
Striking workers didn’t get everything on their wish list, but the pay package offered by Ford, General Motors, and Stellantis is eye-popping.
Ford Motor was the first to ink a tentative agreement with workers, and its deal served as the template for the agreements cut with GM and Stellantis.
Recently, the UAW’s President Shawn Fain explained the details of Ford’s deal to workers ahead of their planned vote.
“For months we’ve said that record profits mean record contracts. And UAW family, our Stand Up Strike has delivered,” said Fain.
Ford Motor’s pay package includes pay raises through 2026, the reinstatement of COLA increases given up during the Great Recession, the elimination of wage tiers put in place during the Great Recession, annual bonuses for retired workers, more profit sharing and retirement money for existing workers, a faster path to the top wage tier, and other perks, including better healthcare, an additional holiday, and more protections for workers if they miss a shift.
Altogether, the UAW says the deal is four times the value of the last contract negotiated in 2019.
Pay will climb 25%, including an immediate 11% bump up in wages. Workers will also pocket a surprising $5,000 bonus for voting for the deal. The top pay hourly pay rate will climb 30% during the contract period to over $40 per hour, including expected inflation adjustments.
Newly hired workers will see a starting pay increase of 68% while existing lower-paid temporary employees could see their pay climb up to 150%. The wage increases over the next four and a half years are larger than all the pay increases given to workers over the last 22 years combined.
Ford also agreed to allow the union to strike over plans to close plants, which wasn’t included in prior contracts. Its 300,000 retirees will collect a $500 annual bonus, costing Ford about $150 million annually. Oh, and if that isn't already enough, workers will receive a $1500 voucher for a new car too.
Overall, Ford estimates the new contract will cost $850 to $900 per car. It doesn’t plan to increase prices to offset the cost, hoping to find the money by cutting other expenses instead. But there’s no guarantee that this agreement won’t cost car buyers more. This year, the average cost of a new car exceeds $48,000, up $10,000 since September 2020, according to Consumer Reports.
While the deal is costly, it would've been even more expensive to let the strike continue.
Ford revealed on Oct. 26 that the strike had already cost it $1.3 billion, and that was without workers striking at its profitable F-150 plant yet. GM said on Oct. 24 that the strike’s cost exceeded $800 million so far, and that was before workers went to the picket line at Arlington Assembly, its biggest money maker.
Ultimately, it was the threat to Ford's F-150 production that got the deal done with it, paving the way to similar agreements with GM and Stellantis.
"We knew we were getting close, but we also knew the companies needed a major push if we were going to make sure we got every penny possible in this agreement. So we took our strike to a new phase and hit the companies with maximum effect," said Fain. "Ford knew what was coming for them on Wednesday if we didn’t get a deal. That was Checkmate."
Detroit’s big three had to agree to a surprising package of pay and perks to get workers back on production lines.
Todd Campbell
Nov 2, 2023
The UAW workers' strike forced America’s largest automakers into a corner. Faced with increasingly more strikes at their highest-profit manufacturing plants, Ford Motor Company, General Motors, and Stellantis (STLA) - Get Free Report, owner of Chrysler, Dodge, and Jeep, agreed to a slate of wage concessions in what turned out to be a record-setting contract.
The striking workers still need to ratify the tentative agreements. However, workers returned to their jobs this week, and most are expected to vote in favor of the plan, which boosts workers’ pay by 25% and gives them a surprisingly big upfront payment.
UAW members attend a rally in support of the labor union strike at the UAW Local 551 hall on the South Side on October 7, 2023 in Chicago, Illinois.
Image source: Jim Vondruska/Getty Images
Striking auto workers had a slate of costly demands
Auto workers were committed to striking as long as necessary to squeeze a record compensation deal and other perks out of Ford, General Motors (GM) - Get Free Report, and Stellantis.
Initially, their wish list was long, including a 40% pay increase, a 32-hour work week, annual cost-of-living increases, more retirement money, additional vacation time, and removing wage tiers.
Former Ford CEO has a blunt warning for workers following the conclusion of historic auto strikes
That long list of demands would’ve been expensive for automakers. Ford said that agreeing to them would put it on a path to bankruptcy. General Motors argued that workers' demands would mean competitors with non-union workforces would leapfrog it, including Tesla (TSLA) - Get Free Report, Honda Motor (HMC) - Get Free Report, and Toyota Motor (TM) - Get Free Report.
Importantly, Detroit’s big three felt that workers' terms would leave them financially hamstrung at a time when the auto industry is knee-deep in a seismic shift toward electric vehicles away from internal combustion engine (ICE) vehicles.
Electric vehicle sales are quickly displacing traditional ICE vehicles, so automakers are investing heavily to ensure they capture their fair share of the market opportunity.
According to Cox Automotive’s Kelley Blue Book, U.S. electric vehicle sales surged by nearly 50% year-over-year in the third quarter, accounting for nearly 8% of all vehicles sold. That growth is far faster than the mid-teens growth for all vehicles sold.
EV growth is only beginning. Wall Street analysts expect EVs will represent 40% of all vehicles sold by 2030.
Tesla, a non-union company that pioneered the shift to EVs, dominates the market with a 50% market share. If Ford, General Motors, and Stellantis hope to chip away at Tesla's lead, they'll need to design and launch new and better EV models at similar or lower prices. Last quarter, Ford and GM both lost EV market share to rivals like Hyundai.
Auto workers' ultimatum secures a massive payday
Striking workers didn’t get everything on their wish list, but the pay package offered by Ford, General Motors, and Stellantis is eye-popping.
Ford Motor was the first to ink a tentative agreement with workers, and its deal served as the template for the agreements cut with GM and Stellantis.
Recently, the UAW’s President Shawn Fain explained the details of Ford’s deal to workers ahead of their planned vote.
“For months we’ve said that record profits mean record contracts. And UAW family, our Stand Up Strike has delivered,” said Fain.
Ford Motor’s pay package includes pay raises through 2026, the reinstatement of COLA increases given up during the Great Recession, the elimination of wage tiers put in place during the Great Recession, annual bonuses for retired workers, more profit sharing and retirement money for existing workers, a faster path to the top wage tier, and other perks, including better healthcare, an additional holiday, and more protections for workers if they miss a shift.
Altogether, the UAW says the deal is four times the value of the last contract negotiated in 2019.
Pay will climb 25%, including an immediate 11% bump up in wages. Workers will also pocket a surprising $5,000 bonus for voting for the deal. The top pay hourly pay rate will climb 30% during the contract period to over $40 per hour, including expected inflation adjustments.
Newly hired workers will see a starting pay increase of 68% while existing lower-paid temporary employees could see their pay climb up to 150%. The wage increases over the next four and a half years are larger than all the pay increases given to workers over the last 22 years combined.
Ford also agreed to allow the union to strike over plans to close plants, which wasn’t included in prior contracts. Its 300,000 retirees will collect a $500 annual bonus, costing Ford about $150 million annually. Oh, and if that isn't already enough, workers will receive a $1500 voucher for a new car too.
Overall, Ford estimates the new contract will cost $850 to $900 per car. It doesn’t plan to increase prices to offset the cost, hoping to find the money by cutting other expenses instead. But there’s no guarantee that this agreement won’t cost car buyers more. This year, the average cost of a new car exceeds $48,000, up $10,000 since September 2020, according to Consumer Reports.
While the deal is costly, it would've been even more expensive to let the strike continue.
Ford revealed on Oct. 26 that the strike had already cost it $1.3 billion, and that was without workers striking at its profitable F-150 plant yet. GM said on Oct. 24 that the strike’s cost exceeded $800 million so far, and that was before workers went to the picket line at Arlington Assembly, its biggest money maker.
Ultimately, it was the threat to Ford's F-150 production that got the deal done with it, paving the way to similar agreements with GM and Stellantis.
"We knew we were getting close, but we also knew the companies needed a major push if we were going to make sure we got every penny possible in this agreement. So we took our strike to a new phase and hit the companies with maximum effect," said Fain. "Ford knew what was coming for them on Wednesday if we didn’t get a deal. That was Checkmate."
Toyota raises pay across the board in response to historic UAW deals
Chris Teague
Wed, November 1, 2023
The UAW and the Detroit three automakers have reached tentative agreements, and while the two sides haven’t officially voted on the deals, they’re already impacting the rest of the auto industry. The pay raises and other benefits doled out by American companies have put pressure on the non-unionized automakers, leading Toyota to increase pay at all its U.S. facilities.
Toyota VP for corporate resources Chris Reynolds told Axios, “We value our employees and their contributions, and we show it by offering robust compensation packages that we continually review to ensure that we remain competitive within the automotive industry.” Early reports note that production workers got a $2.94 pay increase and skilled trades workers got a $3.70 bump, but a Toyota spokesperson declined to confirm those numbers.
Toyota’s factories aren’t unionized, but UAW president Shawn Fain aims to change that. He’s repeatedly hinted at wanting to draw in non-union auto workers, saying earlier this year, "Non-union auto workers are not the enemy. Those are our future union family. We’re going to organize non-union autoworkers everywhere. Together, we’re going to stand up and take on corporate greed.”
The UAW’s influence had been on the decline for decades, but these recent negotiations have given it a significant boost. Fain and union leaders came to the negotiating table with a tough but risky strategy that ultimately paid off. Workers will see immediate pay raises of double-digit percentages, and they will regain cost-of-living pay increases that the union lost more than a decade ago.
UAW officials also got a five-year deal, longer than most in recent history. As Axios reported, that will give the union a longer runway to attract workers from other automakers, including Tesla, Toyota and perhaps even the Korean automakers. Either way, Toyota’s pay raises are likely just the start, and they will add to the pressure created by the union’s deals. That means we’ll probably see similar moves by the other non-union automakers in the near future as they seek to retain workers and stay competitive.
Chris Teague
Wed, November 1, 2023
The UAW and the Detroit three automakers have reached tentative agreements, and while the two sides haven’t officially voted on the deals, they’re already impacting the rest of the auto industry. The pay raises and other benefits doled out by American companies have put pressure on the non-unionized automakers, leading Toyota to increase pay at all its U.S. facilities.
Toyota VP for corporate resources Chris Reynolds told Axios, “We value our employees and their contributions, and we show it by offering robust compensation packages that we continually review to ensure that we remain competitive within the automotive industry.” Early reports note that production workers got a $2.94 pay increase and skilled trades workers got a $3.70 bump, but a Toyota spokesperson declined to confirm those numbers.
Toyota’s factories aren’t unionized, but UAW president Shawn Fain aims to change that. He’s repeatedly hinted at wanting to draw in non-union auto workers, saying earlier this year, "Non-union auto workers are not the enemy. Those are our future union family. We’re going to organize non-union autoworkers everywhere. Together, we’re going to stand up and take on corporate greed.”
The UAW’s influence had been on the decline for decades, but these recent negotiations have given it a significant boost. Fain and union leaders came to the negotiating table with a tough but risky strategy that ultimately paid off. Workers will see immediate pay raises of double-digit percentages, and they will regain cost-of-living pay increases that the union lost more than a decade ago.
UAW officials also got a five-year deal, longer than most in recent history. As Axios reported, that will give the union a longer runway to attract workers from other automakers, including Tesla, Toyota and perhaps even the Korean automakers. Either way, Toyota’s pay raises are likely just the start, and they will add to the pressure created by the union’s deals. That means we’ll probably see similar moves by the other non-union automakers in the near future as they seek to retain workers and stay competitive.
Toyota making a big new move against the threat from UAW union
Amid landmark UAW agreements, the Japanese automaker is feeling the heat.
James Ochoa
Nov 1, 2023
Following the tentative deals between Detroit's Big Three automakers Ford (F) - Get Free Report, General Motors (GM) - Get Free Report and Stellantis (STLA) - Get Free Report with the United Auto Workers, another manufacturer is feeling the heat and now has made a major move in the name of labor relations.
In a report by Axios, storied Japanese automaker Toyota (TM) - Get Free Report has given a pay increase to its non-union factory workers.
Toyota North America did not elaborate on a specific dollar amount. However, pro-labor publication Labor Notes reported that Toyota workers got hourly pay increases of $2.94 for production workers, while skilled trades worker’s pay increased by an extra $3.70.
With these raises in effect, the top pay rate for production workers at Toyota will be at a maximum of $34.80 per hour, while employees with skilled trades will earn a max of $43.20 per hour.
In comparison, the UAW’s tentative agreements grant wage increases across Detroit’s Big Three, with Stellantis and GM’s starting wage increasing to “over $30 an hour,” and the top wage to “over $42 an hour,” while Ford’s starting wage increased to “over $28 an hour” and top wage to “over $40 an hour.”
A worker on the assembly line at the Toyota Motor Corp. manufacturing facility in San Antonio, Texas.
Luke Sharrett/Bloomberg via Getty Images
In a statement, Toyota Motor North America executive vice president of corporate resources Chris Reynolds said that they “value our employees and their contributions, and we show it by offering robust compensation packages that we continually review to ensure that we remain competitive within the automotive industry.”
United Auto Workers president Shawn Fain said in a statement that the longer contracts that his union has negotiated gives more time for the union to organize workers at non-union auto manufacturers like Toyota, Tesla and Nissan, noting that “when we return to the bargaining table in 2028 it won't just be with the Big Three, but with the Big Five or Big Six.”
"Non-union auto workers are not the enemy. Those are our future union family," he said. "We're going to organize non-union autoworkers everywhere. Together we're going to stand up and take on corporate greed."
Toyota Wages and the Ford Maverick Show the Effects of UAW Talks
By Al Root
BARRONS
Updated Nov 02, 2023,
While the United Auto Workers’ 2023 labor negotiations were solely with the Detroit Three auto makers, the talks’ impact is evident across the entire U.S. auto industry.
News from car companies beyond those three—Ford Motor F 4.14% (ticker: F), General Motors GM 3.37% (GM), and Stellantis (STLA)—illustrates just how big the domino effect is.
In the latest example, The Wall Street Journal reported Wednesday that many of Toyota
1.77%‘s (TM) U.S.-based hourly employees got a 9% raise, effective Jan. 1, citing a company spokesman. Toyota declined to comment in response to a Barron’s request Wednesday.
The Toyota news comes in the wake of tentative agreements between the auto makers and the UAW, which will likely formally end the strike that began on Sept. 15. The agreements include wage increases of about 25% over the life of the contract for each auto maker over the life of the contract which runs through April 2028 plus some inflation protection. The immediate pay bump upon ratification is 11%.
Raises at Toyota, however, aren’t surprising. UAW President Shawn Fain has promised to try to organize nonunion auto makers in the coming years. That is mainly foreign auto makers that have operating plants in the U.S., such as Toyota.
Wages at Toyota would have to rise close to UAW levels simply to keep the union at bay. Lifting wages to just below UAW levels also gives Toyota a small competitive advantage over the Detroit Three, which can amount to a couple hundred dollars per car. Of course, who wins and loses in the car business is about much more than solely labor costs.
The UAW didn’t respond to a request for comment.
Ford said on its earnings conference call this past week that the agreed-upon labor-cost increases could translate into car-price increases of a few hundred dollars. That works out to less than 2% of current average sticker prices.
Car pricing is about more than just labor costs though, as well. Just look at what’s going on with the Ford Maverick pickup truck.
The strike affected Ford’s production system impacting vehicle supply. Lower supply always leads to higher prices. The disruptions comes amid steadily strong demand for the model—at one point in early 2022, Ford had to stop taking 2023 Maverick orders because it was already struggling to fill order backlogs.
A morning briefing on what you need to know in the day ahead, including exclusive
All of these factors are showing up on the Maverick price tag. Barron’s found a handful of instances of dealer websites that listed 2023 Mavericks over the manufacturer’s suggested retail price, or MRSP.
Sometimes dealers have no choice—for instance, they may have to pay above MSRP at vehicle auctions to fill customer orders. Still, no one likes to pay over sticker price. Ford didn’t respond to a request for comment about dealer markups.
Eventually, things will normalize and prices will return to normal. The same thing happened during the Covid-19 pandemic, when low or no auto production led to low dealer inventories.
Overall, the average transaction price for a new car in the U.S. is about $48,000, about $10,000 higher than it was prepandemic. Prices might come down a little, but they won’t be headed back to under $40,000. That isn’t due to price gouging or labor but a combination of many factors across the supply chain and in the broader economy.
Ford stock was up 1.1% in midday trading Thursday while the S&P 500
0.94% and Dow Jones Industrial Average 0.66% were up 1.5% and 1.2%, respectively. Toyota’s American depositary receipts are down 0.7%.
Through midday trading Thursday however, Toyota shares were up about 13% over the past three months—the period during which the labor talks proceeded at Ford, GM, and Stellantis. Ford stock fell about 33% over the same span.
The Ford Maverick is manufactured in Mexico. An earlier version of this article incorrectly said it was manufactured in Michigan.
Amid landmark UAW agreements, the Japanese automaker is feeling the heat.
James Ochoa
Nov 1, 2023
Following the tentative deals between Detroit's Big Three automakers Ford (F) - Get Free Report, General Motors (GM) - Get Free Report and Stellantis (STLA) - Get Free Report with the United Auto Workers, another manufacturer is feeling the heat and now has made a major move in the name of labor relations.
In a report by Axios, storied Japanese automaker Toyota (TM) - Get Free Report has given a pay increase to its non-union factory workers.
Toyota North America did not elaborate on a specific dollar amount. However, pro-labor publication Labor Notes reported that Toyota workers got hourly pay increases of $2.94 for production workers, while skilled trades worker’s pay increased by an extra $3.70.
With these raises in effect, the top pay rate for production workers at Toyota will be at a maximum of $34.80 per hour, while employees with skilled trades will earn a max of $43.20 per hour.
In comparison, the UAW’s tentative agreements grant wage increases across Detroit’s Big Three, with Stellantis and GM’s starting wage increasing to “over $30 an hour,” and the top wage to “over $42 an hour,” while Ford’s starting wage increased to “over $28 an hour” and top wage to “over $40 an hour.”
A worker on the assembly line at the Toyota Motor Corp. manufacturing facility in San Antonio, Texas.
Luke Sharrett/Bloomberg via Getty Images
In a statement, Toyota Motor North America executive vice president of corporate resources Chris Reynolds said that they “value our employees and their contributions, and we show it by offering robust compensation packages that we continually review to ensure that we remain competitive within the automotive industry.”
United Auto Workers president Shawn Fain said in a statement that the longer contracts that his union has negotiated gives more time for the union to organize workers at non-union auto manufacturers like Toyota, Tesla and Nissan, noting that “when we return to the bargaining table in 2028 it won't just be with the Big Three, but with the Big Five or Big Six.”
"Non-union auto workers are not the enemy. Those are our future union family," he said. "We're going to organize non-union autoworkers everywhere. Together we're going to stand up and take on corporate greed."
Toyota Wages and the Ford Maverick Show the Effects of UAW Talks
By Al Root
BARRONS
Updated Nov 02, 2023,
While the United Auto Workers’ 2023 labor negotiations were solely with the Detroit Three auto makers, the talks’ impact is evident across the entire U.S. auto industry.
News from car companies beyond those three—Ford Motor F 4.14% (ticker: F), General Motors GM 3.37% (GM), and Stellantis (STLA)—illustrates just how big the domino effect is.
In the latest example, The Wall Street Journal reported Wednesday that many of Toyota
1.77%‘s (TM) U.S.-based hourly employees got a 9% raise, effective Jan. 1, citing a company spokesman. Toyota declined to comment in response to a Barron’s request Wednesday.
The Toyota news comes in the wake of tentative agreements between the auto makers and the UAW, which will likely formally end the strike that began on Sept. 15. The agreements include wage increases of about 25% over the life of the contract for each auto maker over the life of the contract which runs through April 2028 plus some inflation protection. The immediate pay bump upon ratification is 11%.
Raises at Toyota, however, aren’t surprising. UAW President Shawn Fain has promised to try to organize nonunion auto makers in the coming years. That is mainly foreign auto makers that have operating plants in the U.S., such as Toyota.
Wages at Toyota would have to rise close to UAW levels simply to keep the union at bay. Lifting wages to just below UAW levels also gives Toyota a small competitive advantage over the Detroit Three, which can amount to a couple hundred dollars per car. Of course, who wins and loses in the car business is about much more than solely labor costs.
The UAW didn’t respond to a request for comment.
Ford said on its earnings conference call this past week that the agreed-upon labor-cost increases could translate into car-price increases of a few hundred dollars. That works out to less than 2% of current average sticker prices.
Car pricing is about more than just labor costs though, as well. Just look at what’s going on with the Ford Maverick pickup truck.
The strike affected Ford’s production system impacting vehicle supply. Lower supply always leads to higher prices. The disruptions comes amid steadily strong demand for the model—at one point in early 2022, Ford had to stop taking 2023 Maverick orders because it was already struggling to fill order backlogs.
A morning briefing on what you need to know in the day ahead, including exclusive
All of these factors are showing up on the Maverick price tag. Barron’s found a handful of instances of dealer websites that listed 2023 Mavericks over the manufacturer’s suggested retail price, or MRSP.
Sometimes dealers have no choice—for instance, they may have to pay above MSRP at vehicle auctions to fill customer orders. Still, no one likes to pay over sticker price. Ford didn’t respond to a request for comment about dealer markups.
Eventually, things will normalize and prices will return to normal. The same thing happened during the Covid-19 pandemic, when low or no auto production led to low dealer inventories.
Overall, the average transaction price for a new car in the U.S. is about $48,000, about $10,000 higher than it was prepandemic. Prices might come down a little, but they won’t be headed back to under $40,000. That isn’t due to price gouging or labor but a combination of many factors across the supply chain and in the broader economy.
Ford stock was up 1.1% in midday trading Thursday while the S&P 500
0.94% and Dow Jones Industrial Average 0.66% were up 1.5% and 1.2%, respectively. Toyota’s American depositary receipts are down 0.7%.
Through midday trading Thursday however, Toyota shares were up about 13% over the past three months—the period during which the labor talks proceeded at Ford, GM, and Stellantis. Ford stock fell about 33% over the same span.
The Ford Maverick is manufactured in Mexico. An earlier version of this article incorrectly said it was manufactured in Michigan.
SEE
UAW members at the first Ford plant to go on strike overwhelmingly approve the new contract
Toyota raises pay across the board in response to historic UAW deals
How the UAW won a major victory and what it could mean for U.S. labor going forward
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