Negotiations between the United Auto Workers (UAW) and Ford Motor have entered a crucial phase, with the two parties closing in on an agreement regarding pay increases. According to sources familiar with the discussions, Ford made a new offer that includes a more than 20% general wage increase, not compounded, with a double-digit increase in the first year. While the exact details of the proposal remain undisclosed, it is estimated that, when combined with cost-of-living adjustments previously offered, the total wage increase could reach close to 30% over the life of the contract.
UAW President Shawn Fain is expected to update the union’s 150,000 members at Ford, General Motors (GM), and Chrysler parent Stellantis on Friday. It remains unclear whether Fain will order further strike action or declare sufficient progress has been made to delay walkouts at additional plants. The strike against the Detroit Three automakers began on September 15 and has now entered its 20th day.
Negotiations with Chrysler parent Stellantis and other automakers have also been active in recent days. However, agreements on other significant issues, such as pay and union representation at future battery plants and the UAW’s push for a return to retirement plans with defined benefits, have not been announced by Ford and the UAW.
Ford Chief Financial Officer John Lawler has stated that the automaker’s retirement offer would guarantee UAW workers the ability to retire with $1 million in savings. While progress has been made on pay increases, there are still hurdles to overcome in other areas of negotiation.
In a sign that the Detroit automakers are preparing for a potentially protracted struggle, General Motors recently secured a new $6 billion line of credit. The automaker estimates that the cost of the UAW strike during the third quarter was $200 million. GM’s Chief Financial Officer Paul Jacobson described the line of credit as “prudent” given the possibility of the strike continuing for months. He also emphasized the need for a deal that puts GM “on par with our competitors.”
The strike has already affected GM’s production, resulting in a halt at one assembly plant in Wentzville, Missouri, as well as disruptions at GM parts facilities. The strike’s average cost for General Motors is estimated at $12.5 million per day. This figure could rise if the UAW shuts down more vehicle production in the coming weeks.
The new line of credit obtained by GM will provide additional support in case of an extended strike. It will specifically safeguard the automaker’s balance sheet against potential disruptions to the production of its most profitable vehicles, such as large Chevrolet and GMC pickup trucks and SUVs.
Ford also secured a $4 billion line of credit before the contract expiration with the UAW, highlighting the automakers’ awareness of the possibility of a prolonged strike.
Meanwhile, the UAW said it presented a new contract offer to GM on Monday, but significant gaps still remain. GM has been forced to lay off 2,100 workers across several states, while Ford has also announced further layoffs due to the strike.
Additionally, the UAW strikes are impacting auto parts makers, with nearly 30% of surveyed companies reporting layoffs as a result. Another 60% of respondents expect more layoffs if the walkouts continue.
As negotiations progress, both the UAW and automakers are facing the challenge of reconciling their differences in various areas. Pay increases appear to be nearing resolution, but other issues related to retirement plans and union representation at battery plants may require further discussion. The coming days will be crucial in determining whether agreements will be reached or if the strikes will continue, affecting both automakers and their employees.