Tentative UAW Contracts a Win-Win for All Parties, but Some Workers are Saying, No Deal

Tentative UAW Contracts a Win-Win for All Parties, but Some Workers are Saying, No Deal

Photo courtesy of Shutterstock & Luigi Morris
October 30, 2023 (With November 14th updates) — The dust is still settling from the recent tentative settlements between the United Auto Workers union and the Detroit Three automakers. Still, initial details reflect agreements that may be a win-win for both sides following a 40+ day strike costing automakers approximately $10 billion combined.

Terms of the new contracts show UAW members getting huge pay increases, increased job protections while the Detroit Three avoid fundamentally higher cost infrastructures that would have threatened their futures. 

Here’s what we do know. UAW members will receive 25% compounded raises over the next 41/2 years, including an 11% jump once the contracts are ratified; better profit-sharing bonuses, increased 401k automaker contributions into employee retirement accounts; and reinstitution of the cost-of-living adjustments; and the ending of the two-tier wage system.

Ratification should be a slam dunk, but some UAW members have complained on message boards and social media about the settlements and say they will vote against the tentative deals. 

(UPDATE: November 14th — General Motors is running into a possible buzz saw as 68% of the assembly workers at the plant in Spring Hill, TN voted against the deal, as did 61% in Lansing’s Delta plant, 56% at the Toledo propulsion facility, and 57% at Tonawanda’s engine plant, and 51.8% at GM’s Flint truck plant. At least 21% of GM’s 46,000 UAW employees have voted no so far.

Meanwhile, workers at Ford’s Kentucky plant also voted no.

Votes for approving the contracts still are in the majority for both automakers, but GM’s recent trend is beginning to raise questions. We could see a situation in which one or two of the automakers’ employees will not ratify the deal. A no vote for one automaker will not impact the deals other automakers have agreed to.

Ford UAW Vote Tracker — updated hourly

General Motors UAW Vote Tracker — updated hourly

Stellantis UAW Vote Tracker — updated hourly

Despite an unusually combative and public negotiation process, the parties avoided a protracted and costly strike. 

No doubt, UAW President Shawn Fain’s tactics, which blew apart historical norms, frustrated Detroit Three leadership. And his targeted strategy applied enough pressure on the OEMs to force them to agree to much richer terms than they had planned. 

Instead of calling for all of the UAW 146,000 workers to strike simultaneously, targeted and limited strikes mitigated the financial damage to the automakers, suppliers, and dealers. 

Furthermore, the parties were able to craft agreements that helped them dodge elements that could have proved harmful.

Below are the highlights:

Additional Cost Impact

The overall financial fallout from the new contracts may not be as damaging as once feared. Based on comments from Ford CFO John Lawler, the automaker estimates the new contract will add between $850 to $900 to its per unit labor costs. 

Stellantis and General Motors executives have not yet assigned a number to increased production costs, but their estimates will likely be similar to Ford’s. 

Other analysts have said the increased costs will push car prices up. Maybe not. That $900 figure should be a manageable cost for Ford (and the others). And whether it adds to the total sales price is debatable.

Vehicle prices move up and down all the time based on market conditions. And prices have been coming down as inventory continues to climb — down nearly 3% this year.

Additionally, if an OEM were to burden the customer with those extra costs, spreading that $900 across a five- to seven-year loan makes it less of an issue.

The Detroit Three have significant wiggle room to adjust those costs – all are still hugely profitable. And they may even drive more profit the next couple of years as they decrease/delay their investments in EVs. 

Battery Plant Employees

Whether the new master contracts would include employees at the various joint venture battery plants was a contentious sticking point in the negotiations. 

The UAW won big here. General Motors conceded for employees at GM’s two joint venture battery plants in Ohio and Tennessee managed by Ultium Cells immediately to be part of the master agreement.

For Ford’s two planned battery plants – in Kentucky and Michigan – when they come online (maybe a better word is, if), the JV companies managing the plants will license employees from Ford to work in those plants (essentially gaining “transfer rights” for UAW-represented employees). 

Although not a guarantee, Ford and the UAW likely will work out a plan for employees at future plants as they come online to have UAW representation. Stellantis likely will follow a similar pattern. 

This approach provides needed flexibility to the automakers while giving the UAW what it wants — protection for its members from job reductions.

Moving Plants Offshore (Mexico)

The agreement may make it harder for the Detroit Three to move plants to Mexico. As part of the new contract, Stellantis will reopen its Belvidere plant instead of shutting it down, while also adding 5,000 jobs there. 

According to language in the Ford contract, the automaker’s employees will have the right to strike over potential plant closures. (we’re still waiting to see whether GM and Stellantis include a similar concession). 

This concession, at a minimum, gives the UAW some say in whether an OEM can or should close a plant. 

Read what we wrote in early July about the then pending UAW negotiations. Get Ready to Rumble

Sorry, comments are closed for this post.



Subscribe Now to The Banks Report