General Motors Co. GM-N and the United Auto Workers (UAW) said they struck a tentative deal on Monday that will end the union’s unprecedented six-week campaign of co-ordinated strikes that won record pay increases for workers at the Detroit Three automakers.
The accord follows deals reached in the last few days by the union with Ford Motor Co. F-N and Chrysler-owner Stellantis NV STLA-N, in what amounts to significant victories for auto workers after years of stagnant wages and painful concessions made by the union following the 2008 financial crisis.
“We wholeheartedly believe our strike squeezed every last dime out of General Motors,” UAW president Shawn Fain said in a video address on Monday. “They underestimated us. They underestimated you. These corporations had no idea what was coming for them.”
The new contracts will significantly raise costs for the automakers. The companies and some analysts have said the deals will place the Detroit Three at a disadvantage compared with electric-vehicle leader Tesla Inc. and foreign brands such as Toyota Motor Corp., which are not unionized.
The UAW won from GM roughly the same package of wage increases to which it agreed with the other two automakers. This raises top pay for veteran workers by 33 per cent. The company also agreed to make US$2,500 in lump-sum payments to retirees.
Pension benefits were a key sticking point in GM’s negotiations with the UAW, sources have said. GM has more retirees than either Ford or Stellantis and increases to pension benefits for workers hired before 2007 cost GM more than its rivals.
The union officially suspended its strike against the Detroit Three, Mr. Fain said. The union’s local leaders will come to Detroit on Friday to consider the deal with GM, before the terms are taken to all union workers for ratification.
“We are looking forward to having everyone back to work across all of our operations,” said GM chief executive Mary Barra.
Nearly 50,000 workers out of nearly 150,000 union members at the Detroit automakers eventually joined a series of walkouts that began on Sept. 15. The UAW’s strategy of escalating, targeted strikes cost the Detroit Three and suppliers billions of dollars.
UAW leaders argued their contract fight was part of a larger movement to reverse decades of economic setbacks for working-class Americans and some analysts agreed.
“This is more than an auto industry story; it is a signal to the entire country that unionized workers can demand and get big wage increases,” said Patrick Anderson of the Anderson Economic Group.
The three tentative deals are a win for the strategy orchestrated by Mr. Fain. This involved simultaneous bargaining with the Detroit Three and dangling the threat of strikes at key factories to achieve results.
Mr. Fain then kept most UAW members working in order to hoard strike funds. He expanded the strike slowly, when he decided that progress in talks had stalled.
Now, Mr. Fain must get the contracts ratified by rank-and-file UAW members. That process began on Sunday as he met with leaders of Ford-UAW local unions.
U.S. President Joe Biden praised the UAW agreements with the Detroit Three.
“These record agreements reward auto workers who gave up much to keep the industry going during the financial crisis, more than a decade ago,” Mr. Biden said at a White House event. “These agreements ensure the iconic Big Three can still lead the world in quality and innovation.”
Aides to Mr. Biden had worried that a prolonged auto strike would damage both the U.S. economy and the Democratic President’s chances of re-election in 2024.
Mr. Biden, congressional Democrats and some Republicans weighed in to support the UAW as the union’s fight gained popularity with voters. Michigan will again be a crucial swing state in 2024, and Mr. Fain made active support for the union’s fight a condition of winning his endorsement. The UAW still has not formally endorsed Mr. Biden’s re-election.
The new contract will cost GM US$7-billion over 4½ years in higher labour costs, two sources told Reuters.
“Consumers will bear some of the cost burden over time … automakers will not have an easy time passing along all of the costs … and will have to seek efficiencies in other ways, or further limit production to more expensive vehicles that can absorb higher labour costs,” Cox Automotive’s chief economist, Jonathan Smoke, said.
The UAW, in a series of social-media posts, said it is committed to expanding to other carmakers, saying it wants negotiations in 2028 to be between the union and the “Big Five or Big Six.”
Momentum toward deals accelerated over the past two weeks after UAW workers walked out at three of the most profitable factories in the world, including GM’s Arlington, Tex., assembly plant that makes the Chevy Tahoe and Suburban.
The UAW eventually struck against nine plants, most recently GM’s Spring Hill, Tenn., manufacturing complex that makes engines for a total of nine North American assembly plants, seven of which were not already on strike.