Oct 30 (Reuters) – General Motors (GM.N) and the United Auto Workers (UAW) have reached a tentative agreement, they said on Monday, with its members winning record pay hikes to end six weeks of a coordinated strike against the Detroit Three automakers.
The accord follows deals reached in the last few days by the union with Ford Motor (F.N) and Chrysler-owner Stellantis (STLAM.MI), in what amounts to significant victories for auto workers after years of stagnant wages and painful concessions made by the union following the 2008 financial crisis.
The new contracts will significantly raise costs for the automakers. The companies and some analysts have said the deals will place the Detroit Three at a disadvantage compared with electric-vehicle leader Tesla (TSLA.O) and foreign brands such as Toyota Motor (7203.T) which are not unionized.
The UAW won from GM roughly the same package of wage increases to which it agreed with the other two automakers. This raises top pay for veteran workers by 33%.
GM workers will end their strike and return to work while the new contract is ratified, the union said in a statement. The company will make $2,500 in lump sum payments to retirees under the new agreement.
“GM is pleased to have reached a tentative agreement with the UAW that reflects the contributions of the team while enabling us to continue to invest in our future and provide good jobs in the U.S.,” said GM CEO Mary Barra.
“We are looking forward to having everyone back to work across all of our operations.”
Nearly 50,000 workers out of nearly 150,000 union members at the Detroit automakers eventually joined a series of walkouts that began on Sept. 15. The UAW’s strategy of escalating, targeted strikes cost the Detroit Three and suppliers billions of dollars.
UAW leaders argued their contract fight was part of a larger movement to reverse decades of economic setbacks for working-class Americans and some analysts agreed.
“This is more than an auto industry story; it is a signal to the entire country that unionized workers can demand and get big wage increases,” said Patrick Anderson of the Anderson Economic Group.
The three tentative deals are a win for the strategy orchestrated by UAW President Shawn Fain. This involved simultaneous bargaining with the Detroit Three and dangling the threat of strikes at key factories to achieve results.
Fain then kept most UAW members working in order to hoard strike funds. He expanded the strike slowly, when he decided that progress in talks had stalled.
[1/3]The GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, U.S., March 16, 2021. REUTERS/Rebecca Cook// Acquire Licensing Rights
Now, Fain must get the contracts ratified by rank-and-file UAW members. That process began on Sunday as he met with leaders of Ford-UAW local unions.
GM shares closed up 0.5% on Monday while Ford closed down 2%. Stellantis shares closed down nearly 2% in Milan.
PRAISE FROM BIDEN
U.S. President Joe Biden praised the UAW agreements with the Detroit Three.
“These record agreements reward auto workers who gave up much to keep the industry going during the financial crisis, more than a decade ago,” Biden said at a White House event. “These agreements ensure the iconic Big Three can still lead the world in quality and innovation.”
Aides to Biden had worried that a prolonged auto strike would damage both the U.S. economy and the Democratic president’s chances of re-election in 2024.
The new contract will cost GM $7 billion over 4.5 years in higher labor costs, two sources told Reuters.
“Consumers will bear some of the cost burden over time … automakers will not have an easy time passing along all of the costs … and will have to seek efficiencies in other ways, or further limit production to more expensive vehicles that can absorb higher labor costs,” Cox Automotive’s chief economist, Jonathan Smoke, said.
The UAW, in a series of social media posts, said it is committed to expanding to other carmakers, saying it wants negotiations in 2028 to be between the union and the “Big Five or Big Six.”
The strike against the Detroit Three began at relatively unimportant plants, spreading to the biggest money-makers that produce pickup trucks and SUVs as Fain accused the automakers of enriching executives and investors while neglecting workers.
Momentum toward deals accelerated over the past two weeks after UAW workers walked out at three of the most profitable factories in the world including GM’s Arlington, Texas, assembly plant that makes the Chevy Tahoe and Suburban.
The UAW eventually struck against nine plants, most recently GM’s Spring Hill, Tennessee, manufacturing complex that makes engines for a total of nine North American assembly plants, seven of which were not already on strike.
Reporting by David Shepardson in Washington and Joseph White in Detroit
Additional reporting by Shivansh Tiwary and Kannaki Deka in Bengaluru
Writing by Deepa Babington and Sayantani Ghosh
Editing by David Gaffen, Alistair Bell and Matthew Lewis
Our Standards: The Thomson Reuters Trust Principles.
