The United Auto Workers (UAW) has been on strike for a month and a half since mid-September.。Two of Detroit's "Big Three" already "can't handle it" in this union-auto giant battle, tentative deal with UAW。Only GM is still negotiating.。

            

Ford: First to reach tentative deal

                

Last Wednesday (October 25), the UAW reached a tentative labor agreement with Ford.。Under the tentative agreement, Ford agreed to raise its employees' base pay by 25 percent by April 2028, a record high.。Together with the cost-of-living allowance, the maximum wage would reach more than $40 an hour, a cumulative increase of more than 30 per cent, but still slightly less than the 40 per cent pay rise initially demanded by the union.。In addition, the starting salary of employees increased by 68% to more than $28 per hour.。Ford also agreed to provide conditions such as converting temporary employees to full-time employees and speeding up workers' time to reach maximum wages.。

The deal is still subject to approval by the UAW National Committee, as well as about 5.Majority of 70,000 Ford workers approved。

After reaching a preliminary agreement, the UAW asked Ford workers who were on strike to return to work before approving the agreement.。This means that production at Ford's factories will be restarted one after another.。

Ford CEO Jim Farley said in a statement: "We are pleased to have reached a preliminary agreement with the UAW on a new labor contract covering our U.S. operations.。"Our focus is on restarting the Kentucky Truck Plant, Michigan Assembly Plant and Chicago Assembly Plant, putting 20,000 Ford employees back to work, and getting our full range of products back to customers."。"

Ford also released its third-quarter earnings after hours last Thursday after reaching an agreement with the union。Ford's third-quarter revenue was $43.8 billion, better than analysts' expectations of $41 billion.。On the earnings front, Ford's adjusted earnings per share were 39 cents in the third quarter, 9 cents higher than a year earlier but below analysts' consensus estimate of 47 cents.。Ford's shares fell 12 percent on Friday, their biggest drop in eight months, as earnings missed expectations。

Farley said on a conference call, "We were negatively impacted by the strike and our costs and quality continue to weigh on our business.。"

Ford Chief Financial Officer John Lawler said the union shutdown, which began Sept. 15, had already cost the company $100 million in the third quarter, for a total loss of $1.3 billion to date.。He said Ford's agreement with the UAW would result in an additional $850 to $950 in labor costs per vehicle, reducing profits by 60 to 70 basis points.。

"It is important for us to reach an agreement and get work back and get the plant running again."。Lawler stressed, "We must improve efficiency and productivity across the system and across the company to help mitigate the impact."。"

The contract with Ford is a big win for the union and also puts pressure on GM and Stellantis to negotiate in disguise。

Gavekal Research analysts said: "The UAW's big win over Ford shows a significant improvement in workers' bargaining power and, if approved, the deal would secure an 11% wage increase in the first year of the contract, along with other gains in pensions and job security.。"Typically, an agreement with one automaker causes other automakers to follow suit."。"

                 

Stellantis: Following Ford, tentative deal also reached

                  

Just days after Ford reached a tentative agreement with the union, Stellantis and the UAW also reached a tentative agreement to end a six-week strike.。

Under the deal, Stellantis agreed to a 25 percent increase in base pay by April 2028, as well as an increase in living allowances and significant pay increases for new and temporary workers.。Starting salaries for new hires will rise 67% and temps will get more than 165% raises。Most of the terms in the agreement are similar to those reached with Ford on Wednesday.。

UAW Chairman Shawn Fain also mentioned that Stellantis has pledged $19 billion in new investment in U.S. operations and created 5,000 jobs, after the company planned to cut 5,000 jobs.。Meanwhile Belvidere, Illinois assembly plant that idled before strike will reopen。The assembly plant will subsequently produce medium-duty trucks to compete with models such as Ford's Ranger and GM's Chevrolet's Colorado and GMC Canyon.。

Like Ford's tentative agreement, the agreement would need to be approved by union members before it would take effect.。

The UAW said in a statement that the benefits of the agreement negotiated with Stellantis were more than four times the benefits of the contract signed with the UAW in 2019.。By April 2028, base wage increases for top assembly plant workers will exceed all increases over the past 22 years.。

Stellantis North America Chief Operating Officer Mark Stewart thanked the negotiating team in a statement and said the company would "look forward to welcoming our 43,000 employees back to work and operations, serving our customers, and executing on our Dare Forward 2030 strategic plan to sustain Stellantis" capabilities. "。

A large Stellantis Jeep plant in Toledo, Ohio, has been on strike since September, and local union president Bruce Baumhower said he expected workers to vote to approve the deal because of a pay increase of more than 30 percent and an immediate and substantial increase.。

              

GM: Still Negotiating, Pensions for Retirees Focused on Consultation

                 

Now, Detroit's "Big Three" are left with only GM still negotiating with unions。As Ford and Stellantis have reached a preliminary agreement, GM has become "under pressure" and is expected to reach an agreement soon, according to people familiar with the matter.。

One key to GM's talks with unions is retiree pensions, sources say。GM has far more retirees eligible for pensions than Ford or Stellantis, as its workforce expanded dramatically in the 1980s and 1990s。

In an effort to speed up negotiations and pressure GM, on Oct. 28, the UAW expanded its strike against GM to include an engine plant in Spring Hill, Tennessee.。The plant is GM's largest in North America and employs nearly 4,000 people.。The plant supplies engines for several of GM's best-selling and most profitable cars。

In a statement, Fain said: "We are disappointed that GM has unnecessarily and irresponsibly refused to reach a fair agreement.。GM, for its part, said it was "disappointed by the UAW's actions given the progress we have made" and said it was still seeking a deal as soon as possible.。

On October 24, GM released its third-quarter earnings。Third-quarter revenue was $44.1 billion, up 5 percent from a year earlier, performance data showed..4%, slightly higher than expected。The profit is 30..$600 million, down 7% year-over-year, which the company said was due in part to disruptions caused by the UAW strike.。GM says UAW strike had $200 million impact in first two weeks of third quarter。And the ripple effect of the latest Plinghill strike could keep GM's costs rising。

During the earnings call, GM also said the company would slow the pace of its automotive electrification transition plan as the strike continues.。Chief Executive Mary Barra said slowing the pace of electric vehicle acceleration would allow the company to maintain strong pricing.。

At the same time, General Motors removed full-year guidance in its third-quarter earnings as the UAW strike increased uncertainty.。

                 

UAW: One step away from big win

             

The historic strike, pushed by the UAW in mid-September, is the first of its kind to target all three automakers at the same time and has a wide-ranging impact.。At the outset, the union's demands included a wage increase of about 40 per cent over four years, pension benefits for all employees, better job security and faster access to full-time status for temporary workers.。

Although the two-point preliminary agreement reached so far falls short of the 40 per cent pay increase initially requested, the wage increase of more than 30 per cent is considerable.。

The union is setting off a massive strike this time, which the union says is related to its previous concessions。

Union members have given up billions of dollars in annual salaries and benefits since Detroit's Big Three automakers fell into crisis in 2007.。According to estimates from the Federal Reserve, the wages forgone by unions have saved the Detroit Big Three an average of about $2 billion a year since 2007.。Management feedback and restructuring have improved the financial position of the three major automakers.。Since 2020, workers have made another concession to help automakers weather the dark times, taking into account factors such as high inflation and the epidemic.。

The union believes that the profits of the major automakers have now improved significantly, and that these automakers have benefited from the recent release of demand from the pent-up auto market during the epidemic, making them fully affordable to the union's demands.。

Regulatory filings show that from 2020 to June 30, 2023, GM, Ford and Strantis had combined operating profits in North America of more than $100 billion.。than before 3..Increased by more than 15% over a five-year period。

However, a one-time pay increase of more than 30% for employees is still a big challenge for car companies。Deutsche Bank analyst Emmanuel Rosner estimates the new contract will cost each automaker about $1 billion more in the first year.。Throughout the life of the contract, it will add about $20 billion in costs, in other words, the three companies add $6.7 billion in costs per year, or about $1.7 billion per year per automaker.。

And according to the 2022 results of the three major Detroit automakers, the three major automakers have an operating profit of about $30 billion in North America, with $6.7 billion accounting for more than 20 percent of that figure.。For the management of car companies, how to reduce the impact of this rising labor costs will be a major focus of the next work.。