on terminate the strike, Ford and United Auto Workers (UAW) tentatively agree on a 25% salary increase

 on terminate the strike, Ford and United Auto Workers (UAW) tentatively agree on a 25% salary increase

After reaching a preliminary labor deal with Ford Motor Company, the United Auto Workers placed pressure on the automaker's two main competitors to stop a lengthy strike that has resulted in billions of dollars in losses for the industry.

Over the course of the deal, which is more than four years, Ford consented to a record hourly salary boost of 25%. The highest salary rate is anticipated to rise by 33% with cost-of-living adjustments. The union said that the maximum wage would be more than $40 per hour.

The accord will go to a vote by UAW leadership on October 29. The 57,000 US hourly employees of Ford must then approve it, a procedure that might take several weeks.

In a video uploaded on X on Wednesday night, UAW President Shawn Fain said, "We won things nobody thought was possible." "Ford has increased its offer by 50% since the strike started."

President Joe Biden praised "worker power" in a statement he released on Wednesday, praising Ford and the union for their agreement.

One of the final things to be resolved throughout the negotiations was pay. Before lowering its demands, the union had called for a 32-hour workweek and a 40% rise. Ford has already committed to cost-of-living benefits, full-time hiring for temporary employees, and accelerating the time it takes for employees to reach the highest pay rate.

Details on important matters, such as pay and benefits at battery facilities and Fain's original proposal for a 32-hour workday, were omitted from Wednesday's statement.

Fain did not clarify whether the provisional deal helps organize the UAW at the new electric truck assembly facility the carmaker is developing in Tennessee or whether it includes Ford's four battery factories that are currently under development.

Similar Deals

According to sources involved with the discussions who were not allowed to comment publicly, the union expects that General Motors Co. and Stellantis NV would agree to the same parameters when they meet with the UAW on Thursday.

According to Chuck Browning, the UAW's lead Ford negotiator, the company instructed Ford employees to report back to work during the ratification process in order to "keep the pressure on Stellantis and GM."

In the video, Browning said, "The last thing they want is for Ford to get back to full capacity while they mess around and lag behind."

In different email messages, GM and Stellantis said that they are working with the UAW to come to agreements "as soon as possible."

Ford released a statement expressing its "pleasure" at having reached a settlement with the UAW, "calling 20,000 Ford employees back to work and shipping our full lineup to our customers again."

Lost Profits

Each of Detroit's historic manufacturers had one car assembly facility impacted by the Sept. 15 strike at first. It was Fain's gamble to leave them wondering about his next move, since it was the first time all three enterprises were attacked at once. Over 45,000 workers from eight assembly factories and 38 parts-distribution sites joined the walkout in less than six weeks.

The UAW declared that it was changing its approach to organize strikes with little notice after organizing an unexpected walkout at Ford's very successful Kentucky Truck Plant on October 11. The UAW said that this was in reaction to firms who were slow-walking negotiations before making any meaningful concessions.

Two further unexpected attacks occurred on October 23 and 24, respectively, at the Stellantis factory in Sterling Heights, Michigan, which produces the company's best-selling Ram 1500 pickup vehicle, and at the GM site in Arlington, Texas, which assembles the Chevy Tahoe, GMC Yukon, and Cadillac Escalade.

If a deal couldn't be reached, Fain hinted that Ford would face a more serious strike.

Ford was aware of what would happen on Wednesday if an agreement couldn't be reached. In the video on X, Fain said, "That was checkmate."

As of October 23, Deutsche Bank analyst Emmanuel Rosner estimated that the strike had cost GM, Ford, and Stellantis around $2.1 billion in missed profits before interest and taxes. Due to the strike clouding its forecast, General Motors withdrew its profit projection this week.

Since July, the shares of GM and Ford have seen sharp decreases, and this year they are lagging the S&P 500. With its US shares up 33% so far in 2023, Stellantis stands out.

According to Bloomberg Intelligence, "Ford's tentative labor agreement through the UAW may put additional pressure on the business's attempts to enhance its mediocre profitability by increasing its costs by more than $900 million in its first year, based on an 11% raise in year one."

High-Risk Bet Fain placed a risky wager in the hopes of recovering advantages lost more than ten years ago during the financial crisis. About 147,000 workers at the three automakers make up the union, and in the four years since the previous contract was signed, they have been ready to partake in the corporate profits that have skyrocketed.

The deal may be historic in scope if it is authorized. According to a Bloomberg Law analysis of the last ten contracts between the UAW and the Big Three automakers, increases never exceeded 3% in a single year throughout that time. In actuality, workers earned no yearly salary increases at all during 21 of the 36 years covered by these previous contracts.

The UAW plan is indicative of the US labor movement's comeback. Unionized workers have won many wins at well-known US corporations in the recent year, including Kaiser Permanente and United Parcel Service Inc. They have been emboldened by tight labor markets and irritated by inflation and the dangers incurred during the epidemic.

"This agreement puts Ford, the Big Three, and the auto industry on a new path to make things right," said Fain.