UAW and Automakers Indicate Progress After Days of Stalemate – Sources By Reuters

By Joseph White and David Shepardson

DETROIT – Negotiators from the United Auto Workers (UAW) and Ford Motor Company have made significant progress in their discussions regarding pay increases, following a new proposal from the automaker amidst ongoing negotiations involving the Detroit Three automakers and the union.

UAW President Shawn Fain is expected to provide an update to the union’s 150,000 members at Ford, General Motors, and Stellantis on Friday. It remains uncertain whether he will initiate a new wave of strikes or announce that sufficient progress has been made to postpone walkouts at additional facilities.

In addition to Ford, talks involving Stellantis and other manufacturers have intensified in recent days. Stellantis has opted not to comment on the negotiations.

Ford announced on Tuesday that it had presented a new, “comprehensive” offer, featuring a wage increase exceeding 20%, not compounded, with a double-digit rise in the first year. This proposal, along with prior cost-of-living adjustments, could result in a total wage increase of nearly 30% over the term of the contract, as stated by sources familiar with the matter.

Nonetheless, the UAW and Ford have yet to reach agreements on other critical topics, including compensation and union representation at upcoming battery plants, as well as the union’s advocacy for a return to defined pension benefits.

Ford’s Chief Financial Officer mentioned that the retirement plan proposed by the company could allow UAW members to retire with savings of $1 million.

In an indication that the automakers are preparing for a prolonged negotiation process, General Motors has recently secured a new $6 billion credit line and estimated that the UAW strike has cost the company $200 million during the most recent quarter.

The strike against the Detroit automakers commenced on September 15 and is currently in its 20th day. GM’s CFO described the new line of credit as a "prudent" measure given comments from some UAW officials hinting at an extended strike. He emphasized that General Motors has put forth a record contract proposal and underscored the need for a deal that puts the company on equal footing with its competitors.

The union’s strikes have targeted two GM assembly plants and 20 distribution centers, with the costs reflecting 16 days of halted production at a Missouri assembly plant for midsized trucks and vans, as well as impacts resulting in production stoppages at other facilities.

The estimated average daily cost of the strike for GM from its recent filing could rise significantly if the UAW expands its production shutdowns.

Against this backdrop, GM’s new credit line, secured through October 2024, is intended to strengthen its financial position against a lengthy strike that could impede production of some of its most profitable vehicles. GM’s shares saw a slight decline on Wednesday.

This new line of credit requires GM to maintain a minimum global liquidity of $4 billion and U.S. liquidity of $2 billion, with additional conditions that restrict mergers and asset sales while limiting new debt.

The UAW indicated on Monday that it had submitted a new contract offer to GM, which responded by noting that "significant gaps remain" despite the proposal, leading to layoffs of 2,100 workers across five plants in four states.

On Wednesday, Ford announced that it would lay off another 400 employees in Michigan starting Thursday due to the strike, adding to the previous furloughs of 930 workers. Stellantis also reported laying off 370 workers in Ohio and Indiana as a consequence of the strikes.

Moreover, nearly 30% of auto parts manufacturers surveyed by an industry trade group reported having laid off staff because of the ongoing strikes, with 60% anticipating more layoffs by mid-October if the strike actions persist.