Negotiators representing the United Auto Workers (UAW) and Ford Motor reported substantial progress in pay negotiations following a recent proposal from the automaker. Sources close to discussions involving the three major Detroit automakers and the union revealed this development on Wednesday. UAW President Shawn Fain is slated to brief the union’s 150,000 members, spanning Ford, General Motors, and Stellantis, Chrysler’s parent company, on Friday, according to an insider familiar with the union’s plans.
The next steps remain uncertain, with speculation ranging from the possibility of a fresh round of walkouts to potential postponement of strikes at secondary plants, pending Fain’s announcement. In addition to Ford, discussions between Stellantis and other automakers and the UAW have intensified in recent days, according to insider sources. Stellantis employees declined to provide comments on the matter.
Ford unveiled a comprehensive offer on Tuesday, highlighting a “more than 20% general wage increase, not compounded” with a double-digit rise in the inaugural year. Specifics regarding this proposal were not disclosed by Ford. Those privy to the situation suggested that when integrated with previously proposed cost-of-living adjustments, the cumulative wage increase might approach nearly 30% over the contract’s duration.
Despite these advancements, crucial issues such as pay scales and union representation at upcoming battery plants, as well as the UAW’s push for reinstatement of retirement plans offering fixed benefits, have not yet received official confirmation from both parties. Ford’s Chief Financial Officer, John Lawler, assured that the company’s retirement proposal would enable UAW employees to retire with a savings of one million dollars.
However, given some UAW officials’ indications of an extended strike, General Motors bolstered its financial standing by securing a new six-billion-dollar line of credit, as disclosed by a company spokesperson on Wednesday. The strike, initiated on September 15, is currently in its twentieth day. General Motors reported a $200 million cost attributable to the United Auto Workers strike during the third quarter.
GM Chief Financial Officer Paul Jacobson emphasized the prudence behind this new line of credit, highlighting GM’s groundbreaking contract offer, which he believes puts the company “on par with our competitors.” As part of the strike, the union targeted two GM assembly plants and twenty parts distribution centers. An average daily cost of $12.5 million for General Motors has been indicated, with potential escalation if the UAW expands production plant closures in the coming weeks.
In anticipation of the contract expiration on September 14, Ford had already secured its own four-billion-dollar line of credit in August. GM’s newly acquired line of credit aims to fortify its financial position against potential disruption of production for high-yield vehicles like Chevrolet and GMC pickup trucks, as well as large SUVs like the GMC Yukon and Cadillac Escalade. GM shares experienced a modest 1% decline in trading on Wednesday.
Under the terms of the credit agreement, GM is obligated to maintain a minimum of four billion dollars in global liquidity, with an additional two billion dollars in U.S. liquidity, and is subject to constraints on mergers, asset sales, and incurring further debt. Despite a fresh contract offer presented by the UAW to GM on Monday, the automaker asserted that “significant gaps remain.”
In the wake of the strike, the motor company has been compelled to lay off 2,100 workers across five plants spanning four states. Ford confirmed on Wednesday that they would be initiating layoffs of four hundred workers in Michigan starting Thursday, following the earlier furlough of nine hundred thirty employees. Stellantis also announced three hundred seventy layoffs in Ohio and Indiana due to the ongoing strike.
A survey by the Motor Equipment Manufacturers Association indicated that twenty percent of auto parts makers had initiated layoffs in response to the UAW strikes, with sixty percent anticipating further layoffs by mid-October if the protests persist. As the UAW strike enters its twentieth day without a contract resolution in sight, both the financial toll on businesses and the workforce continues to mount. With ongoing negotiations between UAW and Ford, these costs are likely to rise for companies and workers alike.
Source: Reuters
