On Oct. 30, the United Auto Workers and General Motors agreed to a tentative deal that put an end to bargaining between the union and the Detroit Three automakers following more than six weeks of targeted U.S. labor strikes. GM was the last of the Detroit Three to reach a deal with the union following contentious talks. Roughly a third of the union’s 146,000 workers with GM, Ford and Stellantis went on strike after the sides failed to reach agreements by a Sept. 14 deadline.
The new contract includes: 27 percent in compounded base wage increases for hourly employees, a revival of cost-of-living adjustments, a shorter timeline to the top wage, rollover commitments for temporary and supplemental workers, and a pathway for employees at future battery plants to become organized under the union’s master agreement with the companies.
Workers with pensions also will see increases for when they retire, and those hired after 2007 with 401(k) plans will get large increases. For the first time, the union will have the right to go on strike over company plans to close factories. The deals would end in April 2028.
Workers at Stellantis got something extra. The deal includes a commitment by Stellantis to produce a new midsize truck at its assembly plant in Belvidere, IL, which was slated to be closed. About 1,200 workers will be hired back, plus another 1,000 workers will be added for a new electric vehicle battery plant. In addition, the workforce will be doubled at the company’s machining plant in Toledo, OH.
“Like the agreements with Ford and Stellantis, the GM agreement has turned record profits into a record contract,” the UAW said in a release. “The deal includes gains valued at more than four times the gains from the union’s 2019 contract.”
UAW president Shawn Fain touted the agreements during a Facebook Live event on Nov. 8. “As you all know by now, I’m not afraid to trash a contract... But I truly believe these are record contracts and are a major victory for our movement,” he said. “There were many in the media and in the corporate class who were saying we didn’t know what we were doing. And they thought we’d never get a deal. But then we got all three.”
The UAW didn’t get everything it wanted. For example, it came up short on getting better retirement benefits. The union wanted to see pensions for all workers and retirement healthcare coverage. The UAW agreements with the Detroit Three include $500 annual payments for current retirees and surviving spouses. For current traditional members, they include a $5 increase to the basic benefit.
Ratification Not Certain
Given the “record contracts,” one might think ratification would have been a slam dunk. Not so. Workers at Ford, the first to reach a deal with the union, supported the agreement by 69 percent. At Stellantis, it was 70 percent. Employees at GM passed the deal by almost 55 percent.
Not everyone was happy with the new deal, however. Fourteen GM facilities voted against it, including assembly plants in Spring Hill, TN; Lansing, MI; Toledo, OH; and Tonawanda, NY. Ford workers are keener on the contract, but membership at the company’s assembly plants in Louisville, KY, voted against it. Three Stellantis facilities, including the Toledo assembly plant, voted no.
The strikes were not without negative consequences. The stoppages have collectively cost GM, Ford and Stellantis billions of dollars in lost production. Ford said that the strike has cost it $1.3 billion and the deal would increase labor costs by roughly $850 to $900 per vehicle produced. GM said the strike had cost it about $800 million.
Tier 1 automotive suppliers like Lear Corp., Aptiv and Magna International Inc. largely shrugged off major financial impacts from the strike in the third quarter. But in earnings reports released at the end of October and early November, most warned of larger hits in the fourth quarter, when much of the work stoppage occurred. Smaller suppliers have been hit harder, and many reported temporary layoffs.
On the other hand, the strike is improving the lots of nonunion workers, as well. Starting in January, Hyundai Motor Co. will give its U.S. production hourly workers wage increases that will reach 25 percent by 2028. Toyota and Honda are also hiking pay for their U.S. workers. Subaru Corp. is thinking about giving raises in “response to current industry circumstances.” (As the satisfied owner of two Subarus assembled in Lafayette, IN, let me say this: Pay your people! They do good work.)
As strikes go, it could have been worse. Among strikes with more than 1,000 workers in the past 30 years, the average work stoppage lasted five weeks, according to the Bureau of Labor Statistics. So the latest work stoppages at the Detroit Three were about par for the course.
The last UAW strike was against GM in 2019, when 48,000 workers walked out of 50 U.S. factories in mid-September. It lasted six weeks, and cost the company about $4 billion in lost earnings and 300,000 units in production.
The last major strike to hit the auto industry in the U.S. occurred in 1970, when 400,000 workers at 145 factories walked off the job at GM—then the largest corporation in the world—for 67 days. In total, the strike cost GM more than $1 billion and is considered one of the “most expensive strikes in American history.”
The longest strike occurred 78 years ago. From November 21, 1945, to March 13, 1946 (113 days). Some 320,000 UAW workers went on a nationwide strike against GM. (Read an account of the famous 1936 GM sit-down strike that changed labor history here.)Thankfully, the contact has been approved. I don’t know how any worker anywhere could be displeased with a 27 percent raise these days. No one gets that kind of boost outside of college or professional sports. Let’s all get back to work.