(Bloomberg) -- Ford Motor Co.'s tentative agreement to end the six-week strike by the United Auto Workers includes $8.1 billion in investments at both internal combustion and electric vehicle plants, as well as record raises.
In a livestream broadcast Sunday evening, UAW President Shawn Fain called the contract “a huge victory,” and touted its economic improvements, job protections and “pathway” for future EV workers to be able to come under the union's master agreement.
“We went to Ford with a goal of not leaving a dime on the table and we accomplished that,” Fain said. Vice President Chuck Browning said that “we have won things we haven't seen in years.”
Earlier Sunday, Ford's UAW delegates approved the deal reached on Oct. 25. It includes:
- A 25% general raise over the four-year, eight-month contract.
- Immediate pay increase of 11% for top earners. With the end of wage tiers, the lowest-paid workers get an immediate 88% hike.
- Restoration of cost-of-living increases that, when combined with the general wage increase, will lift total pay by more than 30%; top pay will go to $42.60 an hour. Restored COLA will add an estimated $8,800 to pay during the life of the contract.
- $5,000 ratification bonus.
- $1,500 voucher toward a new vehicle purchase.
- Profit sharing based on company profits including the Ford Credit unit, which would have added $1,200 last year.
- Current temporary workers become permanent at contract ratification.
- New temporary workers will be converted to permanent employees after nine months.
- Ford's payment to employee 401(k) retirement saving plans raised to 10% from 6.4%.
- Right to strike over future plant closures.
- Juneteenth has been added as paid day off.
- Two weeks paid parental leave.
- $8.1 billion in investments for internal combustion and EV plants (though it was unclear how much of this was previously committed).
Temp workers will now start at $21 an hour, up from $16.67, and new hires will convert to permanent after nine months. They also get the same $5,000 ratification bonus as full-time workers.
Existing Ford-UAW members will have the ability to transfer into a new electric truck plant in Tennessee and into the automaker's new battery plant in Marshall, Michigan, the union said. Ford paused construction of the $3.5 billion battery plant in September while it was awaiting contract ratification and clarity on government support for the facility.
And Ford-owned LLCs at Blue Oval City in Tennessee will have a pathway for its future workers to come under the UAW's master agreement through use of “card check,” a quicker and easier way to organize where the company recognizes the union once a majority of workers sign up.
Ford declined to comment, but pointed to the company's earnings call last week in which Chief Financial Officer John Lawler said the new UAW contract would add $850 to $950 in costs to each car the company builds, shaving margins by 60-to-70 basis points.
Next Steps
Fain said he intends to use the Ford deal as a calling card to non-union auto factories to convince workers to embrace UAW representation.
“One of our biggest goals coming out of this historic contract victory is to organize like we've never organized before,” Fain said. “When we return to the bargaining table in 2028, it won't just be with a Big Three, but with a Big Five or Big Six.”
The contract must now be ratified by Ford's 57,000 US hourly workers, a process that could take weeks, though union members have returned to work in the meantime.
The vote outcome isn't assured. The union originally demanded a 40% raise before reining in its demands to a 30% bump after cost-of-living increases, which it won. But the UAW also was seeking a 32-hour work week, the restoration of traditional pensions and retiree health care.
In speech after speech to members during the strike, UAW President Fain has raised expectations for a big contract by pointing to the automakers' profits and the more than $1 billion in pay awarded to their chief executive officers since 2010.
“They've got money left to spend,” Fain said Oct. 20.
Read More: UAW's Bid to Upend the Auto World Began With a Snub of Bill Ford
Ford was the first of the big Detroit automakers to reach a deal with the union, and this put pressure on its rivals to do the same. Stellantis NV, maker of the Jeep, Ram and Chrysler brands, reached its own tentative deal on Saturday, which included the same pay raises Ford had offered and job security agreements to keep plants open.
General Motors Co. CEO Mary Barra and Fain were expected to talk on Sunday, people familiar with the discussions said. The automaker and UAW made progress on the status of temporary workers but still needed to agree on retiree benefits, the people said. With 300,000 retirees — the most of any automaker— a $500 annual payment would cost the company $150 million a year for the life of the deal.
Tensions between GM and the UAW escalated Saturday evening when about 3,200 union workers walked out of GM plants in Spring Hill, Tennessee. In addition to building the Cadillac Lyriq electric vehicle, that complex supplies engines to nine assembly plants and could cause much wider production losses at GM.
The UAW's strike against the three automakers began Sept. 15. It was the first time in the union's history that it struck all three of Detroit's major carmakers at once and grew to include more than 45,000 workers, eight assembly plants and 38 parts distribution facilities.
Automaker Costs
The strikes have taken their toll on the automakers. GM and Ford both pulled earnings guidance due to questions about the outcomes. Ford said on Oct. 26 that the work stoppage had already cost the company $1.3 billion and GM said Oct. 24 the work stoppages costs had reached $800 million.
Meanwhile, the Detroit automakers' plans to build up EV production have been upended by slowing sales. GM has delayed opening a second electric truck plant in Michigan. Ford's second planned battery plant in Kentucky with South Korean partner SK ON has also been delayed, and it is cutting production at its electric Mustang Mach-E at a plant in Mexico.
(Updates with Ford costs, Fain's comments on organizing non-union plants, status of GM talks from ninth paragraph.)
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