The United Auto Workers union has overwhelmingly ratified a new contract with Ford, a pact that, along with similar deals with General Motors and Stellantis, will raise wages across the industry, force automakers to absorb higher costs and to help reshape the automotive industry as it moves away. from gasoline vehicles.
Ford workers voted 69.3 percent in favor of the pact, which passed by nearly 15,000 votes in a vote that ended early Saturday. Earlier this week, GM workers approved a somewhat similar contract. In Stellantis, 68.7% of workers favored ratification, an insurmountable lead with votes in two small facilities still to be counted.
The deals, which run until April 2028, will end contentious talks that began last summer and led to six weeks of strikes at all three automakers. Shawn Fain, the UAW's aggressive new leader, had called the companies enemies of the UAW, led by overpaid CEOs, saying the union's days of working with the automakers were over.
After summer negotiations failed to produce an agreement, Fain began strikes on September 15 at an assembly plant at each company. The union later expanded the strike to parts warehouses and other factories to try to increase pressure on the automakers until tentative agreements were reached in late October.
The new contract deals were widely seen as a victory for the UAW. The companies have agreed to dramatically increase wages for workers at top-scale assembly plants, with increases and cost-of-living adjustments that will translate into wage gains of 33 percent. Top workers at the assembly plant will receive immediate 11 percent raises and will earn about $42 an hour when the contracts expire in April 2028.
Under the agreements, the automakers also ended many of the multiple wage tiers they had used to pay different workers. They also agreed in principle to include new electric vehicle battery facilities in the national union contract. This provision will give the UAW an opportunity to unionize EV battery factory plants, which will represent a growing share of industry jobs in the coming years.
“I think this is a huge win for the UAW that they ratified all three contracts,” said Art Wheaton, director of labor studies at Cornell University. “Raises the boats of all or many working cars.”
Three non-union, foreign-owned automakers in the United States — Honda, Toyota and Hyundai — quickly responded to the UAW contract by raising wages for their factory workers. They did so after Fain said the UAW would make an aggressive effort to unionize their plants. He also said the union would try to hire workers at Tesla.
Foreign automakers have argued in the past that their workers earn roughly the same as UAW members, negating the need for a union. They also accused the UAW of forcing GM and the former Chrysler into bankruptcy in 2009 and of engaging in corruption after federal prosecutors unraveled a broad bribery and embezzlement scandal that began in 2017.
But with Fein's election and the new contracts, the union has “cured or readjusted all that rhetoric,” Wheaton said.
While wages at non-union plants may be about the same, he said, UAW workers receive much better health care and retirement benefits, which is likely to be attractive to non-union plant workers as they age.
Contracts with automakers should also lead to higher wages in auto parts supply companies 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 workers 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 trucks, said he's content to make $42 an hour until the end of the contract. He's also happy that Fain's negotiators were able to get Ford to pay workers about $100 a day for the period they were on strike.
However, under the settlement, new hires and temporary workers will receive much larger raises than longtime workers at the assembly plant, with some more than doubling their pay. This issue almost sank the contract at GM. Wheaton noted that raising wages for the lowest paid workers has been a focus of the union movement in the US over the past year.
All three automakers reported millions in lost revenue from the strikes and said they would absorb at least some of the increased cost of wage increases in a competitive market that makes raising prices difficult. 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 preparation for the UAW settlements.
Michelle Krebs, an analyst at Cox Automotive, said the slowing U.S. auto market and already inflated prices that have put new vehicles out of reach for many people will make it harder for companies to charge more.
Cox's forecasts call for flat US auto sales next year. Slowing demand but rising factory output is likely to trigger more discounts, Krebs said. In addition, car loans average around 10%, which will further slow car sales by increasing monthly payments.
The union's success in securing significant wage gains could give a political boost to President Joe Biden, who visited workers on a Detroit-area picket line and traveled to Belvidere, Illinois, Cornell's Wheaton said. There, the union won a commitment from Stellantis to reopen a shuttered plant and even add an EV battery plant.
Biden, the first president in living memory to visit a union picket line, has portrayed himself as a champion of the working class who himself rose from a blue-collar background in Scranton, Pennsylvania. The strikes, Wheaton noted, did not hurt the economy, but they did lead to higher wages for middle-class workers whose votes Biden needs as he seeks a second term.