The United Auto Workers union overwhelmingly ratified new contracts with Ford and Stellantis, which, along with a similar deal with General Motors, will raise wages across the industry, force automakers to absorb higher costs and will help reshape the auto industry as it moves away from gasoline fuel. Vehicles.
Workers at Stellantis, the maker of Jeep, Dodge and Ram vehicles, voted 68.8% in favor of the deal. Their approval ended a controversial labor dispute that resulted in name-calling and a series of punitive strikes that imposed high costs on companies and led to significant gains in wages and benefits for UAW workers.
The deal at Stellantis passed by a margin of around 10,000 votes, with vote counting ending Saturday afternoon.
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.
The agreements, which run until April 2028, will end contentious negotiations that began last summer and led to six-week strikes at the three automakers. Shawn Fain, the UAW’s pugnacious new leader, had called corporations the enemy of the UAW, run by overpaid CEOs, declaring that the days of union cooperation with automakers were over.
After summer-long negotiations failed to produce an agreement, 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.
“I think having all three contracts ratified is a big victory for the UAW,” said Art Wheaton, director of social studies at Cornell University. “This raises the situation for all or many autoworkers.”
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 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.
But with Fain’s election and the new contracts, the union has “healed or readjusted all that rhetoric,” Wheaton said.
Even though wages in nonunion factories can be nearly equal, he said, UAW workers enjoy much better health care and retirement benefits, which is likely to be attractive to workers in non-unionized factories as they age.
Contracts with automakers also should lead to higher wages at auto parts suppliers and other industries, Wheaton said.
“The union has a lot more power” because of the agreements, said Mark McGill, a 67-year-old worker at the Ford assembly plant in Wayne, Michigan, where employees have been on strike for six weeks. “Look at everyone now. People want to unionize.”
McGill, a 28-year Ford veteran who helps assemble Ford Bronco SUVs and Ranger pickup trucks, said he’s happy to earn $42 an hour when the contract ends. It’s also fortunate that Fain’s negotiators were able to persuade Ford to pay workers about $100 a day during the strike period.
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. 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.
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. John Lawler, Ford’s chief financial officer, said the deal would increase labor costs by $850 to $900 per vehicle. All three companies said they had already cut other costs in anticipation of the UAW agreements.
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 but increasing industrial production should lead to more cuts, Krebs said. Additionally, auto loans average around 10%, a rate that will further slow auto sales by increasing monthly payments.
The union’s success in securing significant wage gains could provide a political boost to President Joe Biden, who visited workers on a Detroit-area picket line and traveled to Belvidere, Illinois , said Wheaton of Cornell. There, the union secured a commitment from Stellantis to reopen a closed factory and even add an electric vehicle battery factory.
Biden, the first president in memory to go to a union picket line, presented himself as a champion of the working class, himself coming from a blue-collar background in Scranton, Pennsylvania. The strikes, Wheaton noted, did not hurt the economy, but still led to higher wages for middle-class workers that Biden needs to run for a second term.