Facing the loss of another $200 million this week to a lengthy strike, General Motors CEO Mary Barra wrapped up her weekend by going to the United Auto Workers’ Detroit headquarters intent on getting a new contract.
Joined by manufacturing chief Gerald Johnson at the meeting that started late Sunday, they were able to close a deal with UAW President Shawn Fain and other bargainers early Monday that should end a contentious six-week work stoppage, three people briefed on the matter said Monday.
The tentative deal, which came on Fain’s 55th birthday, capped a furious few days of agreements that still need to be ratified by 146,000 UAW members at GM, Ford and Jeep-maker Stellantis. Ford agreed to a new contract last week and was followed by Stellantis on Saturday, which raised the pressure on GM to settle for essentially the same terms.
Members could still vote down the contracts, but it’s likely they would bring labor peace to the domestic auto industry, at least until they’d expire on April 30, 2028.
All three companies agreed to raise general wages by 25 per cent for top assembly plant workers and add cost of living adjustments that would bring their pay increases to over 30 per cent by the time the contracts end, said the people, who asked not to be identified because they weren’t authorized to talk publicly about the deal. Workers would get an immediate 11 per cent pay raise upon ratification.
The GM deal should make Fain’s birthday a happy one. Most industry analysts say contracts with the Detroit Three are victories for the UAW, which had sought big gains to make up for concessions it made to help the companies get through the Great Recession of late-2007 to 2009. Initally Fain wanted 40 per cent raises and even asked for a 32-hour work week for 40 hours of pay, but he didn’t get all of his demands.
During the talks, which began last summer, the companies said they were reluctant to agree to the union’s terms, fearing they would force them to raise vehicle prices higher than competitors with nonunion factories in the U.S., including Toyota and Tesla.
For GM, which was losing millions of dollars each week the strike lasted, the impetus was clear: Reach a deal so it could open an SUV factory in Spring Hill, Tennessee, on time Monday morning, and get a highly profitable truck-based SUV plant in Arlington, Tennessee, back online as soon as possible.
That didn’t happen, as workers at Spring Hill and about 18,000 others on strike at GM assembly plants and parts warehouses awaited official word of the agreement Monday from the union. However, workers were expected to start returning to work as early as Monday.
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Mike Huerta, president of UAW Local 602, which was on strike in Lansing, Michigan, was hesitant to celebrate the deal before seeing more information, saying that “the devil’s in the details.”
“Our bargainers did their job. They’re going to present us with something and then we get to tell them it was good enough or it wasn’t,” said Huerta.
With workers huddled around a fire behind him, Huerta said that it’s been a tough few nights on the picket lines with dropping temperatures and rain, but that spirits have remained high.
“We were ready to continue if we needed to,” Huerta said. “And if we do turn it down, we’ll be ready to go back again.”
Shammira Marshall, a forklift driver at GM’s parts warehouse in Van Buren Township, Michigan, west of Detroit, said the holidays will be a bit nicer this year thanks to the tentative deal.
“Christmas, Thanksgiving, the New Year _ that’ll help,” she said of her expected raise.
This marked Marshall’s second strike against GM, having walked picket lines in 2019. As word came down of a deal, she and other UAW members worked to disassemble a tent that strikers had used.
“This time it wasn’t bad, because I knew what to expect,” she said.
GM was the last company to reach a deal, and it came after nearly 4,000 union workers walked out of GM’s largest North American plant, in Spring Hill, Tennessee, by surprise on Saturday night.
President Joe Biden was asked about the deal Monday, as he boarded Air Force One back to the White House. He gave a thumbs-up and said: “I think it’s great.”
Also Monday, 8,200 Stellantis workers in Canada represented by a different union, Unifor, briefly went on strike before reaching a deal that comes with base hourly wage increases of nearly 20 per cent for production workers. General Motors and Ford workers in Canada have already voted to ratify a three-year contract agreement with the company.
Spring Hill, where workers hit picket lines Saturday, is a key facility that would have brought down other GM factories had its workers stayed on strike. It produces the engines for vehicles assembled at nine plants as far afield as Mexico, plus the electric Cadillac Lyriq, GMC Acadia and two Cadillac crossover SUVs.
Erik Gordon, a business and law professor at the University of Michigan, said the union got much of what it wanted in the deals, which will raise the companies’ costs at a critical and historic time as the industry switches from internal combustion engines to electric vehicles.
“The companies are trying to figure out how to transition to EVs without losing too many billions of dollars, and now face a huge bump in labor costs for the products that will finance the EV transition,” he said.
A study this month by Moody’s Investors Service found that annual labor costs could rise by $1.1 billion for Stellantis, $1.2 billion for GM and $1.4 billion for Ford in the final year of the contract. The study assumed a 20 per cent increase in hourly labor costs. Ford said the deals will add $850 to $900 in labor costs per vehicle.
Wells Fargo Analyst Colin Langan estimated that the contracts would drive up the companies’ hourly total labor costs by about 30 per cent to $76.08 at Ford, $78.15 at GM and $75.63 at Stellantis. Analysts have said that foreign automakers with U.S. factories generally have hourly labor costs of $45 to $60, which includes what they spend on worker benefits.
The union, however, said the companies are making billions of dollars in profits per year and can afford to pay workers to make up for previous concessions. It contends labor expenses are only four per cent to five per cent of a vehicle’s costs.
The higher costs, plus a more combative stance against the companies from Fain, could make GM, Ford and Stellantis rethink opening any new factories in the U.S., said Gordon.
Although the agreements give the UAW the right to strike over any U.S. plant closures, the companies can still set up new facilities in Mexico or even Canada, where the Unifor union agreed to a less-costly contract than the UAW, Gordon said.
Fain has repeatedly accused the companies of being greedy and lying, and said the days of the union working with them are over.
“If you were the CEO of a car company, where would you rather have it (a new plant)?” Gordon asked. “Probably Mexico and maybe even in Canada, where Unifor is tough but not overtly hostile.”
Unlike Fain, Unifor President Lana Payne never said the car company CEOs “worship at the altar of greed. She never said working together doesn’t work for us,” Gordon said.
Presidents of the Ford union locals voted unanimously in Detroit on Sunday to endorse that tentative contract after Fain explained its details, the union tweeted.
At Stellantis, workers would get cost-of-living pay that would bring raises to a compounded 33 per cent, with top assembly plant workers making more than $42 per hour. Top-scale workers there now make around $31 per hour.
Starting wages for new Stellantis hires will rise 67 per cent including cost-of-living adjustments to over $30 per hour. Temporary workers will get raises of more than 165 per cent.
Like the Ford agreement, it will take just three years for new workers to get to the top of the assembly pay scale, the union said.
The UAW began targeted strikes against all three automakers on Sept. 15 after its contracts with the companies expired. At the peak, about 46,000 UAW workers were on strike _ about one-third of the union’s 146,000 members at all three companies.
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