The automotive industry's major strike is nearing its end: a 25% pay raise! General Motors and Stellantis are close to reaching an agreement with the union.
General Motors and Stellantis have both agreed to provide a 25% pay raise to members of the United Auto Workers (UAW), which is consistent with the pay raise offered by Ford Motor Company. Earlier this week, Ford Motor Company stated that the major strike had caused $1.3 billion in losses for the company, while General Motors reported losses of $800 million due to its major strike.
With Ford Motor Company taking the first shot in reaching a wage agreement with the union, General Motors and Stellantis are also close to reaching agreements with the union. The six-week strike in the US automotive industry is expected to come to an end.
On Friday, media reports cited sources familiar with the matter revealing that both General Motors and Stellantis have agreed to provide a 25% pay increase to members of the United Auto Workers (UAW), which is consistent with the pay increase offered by Ford. General Motors will also provide additional compensation for increased living expenses during the more than four years of contract negotiations. The full version of the contract has not been finalized yet, and the two sides are still discussing details, including how to handle temporary workers.
General Motors hopes to finalize the agreement on Friday, but the announcement may not be made until Sunday. UAW President Shawn Fain plans to update members on the latest details of the deal with Ford.
Any final agreement must be approved by the union leadership and then voted on by the company's union members, a process that could take several weeks.
As Stellantis shifts towards electric vehicle production, job security for workers has been a key issue in negotiations between the company and the union. Earlier this year, Stellantis angered the union by idling an assembly plant in Belvidere, Illinois, that once employed 5,000 workers and hiring more low-wage temporary workers. Stellantis proposed closing 18 plants, including 10 component and distribution centers.
Several sources revealed that Stellantis has proposed producing a new vehicle at the idle Belvidere plant and adding a battery plant. Stellantis also proposed creating a parts distribution center similar to Amazon to absorb workers from the merged parts plants.
As part of the temporary agreement reached with the UAW, Ford has agreed to convert temporary workers to full-time employees. Compared to the other two automakers, Ford has a relatively small number of temporary workers, making this move easier to implement. If General Motors and Stellantis also offer the same concessions, it will bring the costs of these two automakers closer to Ford's costs. Currently, Ford's costs are higher than the other two automakers.
On Friday, the stock prices of the three major US automakers all fell, but the declines were inconsistent. Ford's stock price plummeted more than 12% during intraday trading as the company withdrew its full-year profit guidance. General Motors' stock price fell more than 4.5%, and Stellantis' stock price fell more than 2%. The above news was released after the market closed, and the stock prices of Stellantis and General Motors both rose slightly.
The strike, which began on September 15th, marked the first time that the Detroit Big Three automakers were simultaneously targeted by a strike. Since the start of the strike, the UAW has continued to increase pressure on automakers. Negotiations have focused on wages, pensions, and future battery plant workers, among other issues. Each automaker has conducted separate negotiations with the UAW for their own four-and-a-half-year contracts, but they have also closely monitored the actions of other automakers. As of now, the strike has involved over 45,000 workers, affecting 8 assembly plants and 38 parts distribution centers in 22 states across the United States. Earlier this week, Ford Motor Company stated that the strike has caused a loss of $1.3 billion for the company, while General Motors reported a loss of $800 million due to the strike.