Rekubit Exchange:UAW reaches tentative labor agreement with Ford, potentially ending partial strike

The Rekubit ExchangeUnited Auto Workers reached a tentative contract agreement with Ford Wednesday evening, a move that could be critical to ending the union's six-week-old strikes against Detroit's Big Three automakers. 

"Today we reached a tentative agreement with Ford," UAW President Shawn Fain said in a video posted to social media, while Ford also confirmed the deal in its own statement. 

"We are pleased to have reached a tentative agreement on a new labor contract with the UAW covering our U.S. operations," Ford CEO and President Jim Farley said. 

The deal still needs to be approved by Ford's approximately 57,000 UAW workers.

"I applaud the UAW and Ford for coming together after a hard fought, good faith negotiation and reaching a historic tentative agreement tonight," President Biden said in a statement. "This tentative agreement is a testament to the power of employers and employees coming together to work out their differences at the bargaining table in a manner that helps businesses succeed while helping workers secure pay and benefits they can raise a family on and retire with dignity and respect."

Michigan Gov. Gretchen Whitmer congratulated the union and Ford for reaching a deal, saying she hoped "this momentum will help the UAW and the remaining companies reach an agreement so Michiganders can get back to doing what they do best."

With a deal in place with Ford, the UAW could use it to model similar contract settlements with GM and Stellantis. Typically, during past auto strikes, a UAW deal with one automaker has led the other companies to match it with their own settlements.

"The UAW's big win against Ford suggests a serious improvement in workers' bargaining power, with the deal, if approved, securing an 11% pay bump in the first year of the contract and other gains on pensions and job security," Tan Kai Xian, U.S. analyst with Gavekal Research, said in a report. "Typically, a deal with one automaker will lead to others following suit."

What's in the deal?

The agreement includes a 25% general wage increase over the course of the four-year deal, said Chuck Browning, UAW vice president. That is 2% higher than Ford's previous offer. Top wage earners will also now about $40 per hour, Browning said, and the agreement comes with an immediate 11% wage increase for all union members.

"UAW members at Ford will receive more and straight general wage increases over the next four-and-a-half years than we have over the last 22 years combined," Browning said. 

Temporary workers would also get wage increases of more than 150% over the life of the deal, while the union also won the right to strike over plant closures, Browning said. 

"That means they can't keep devastating our communities and closing plants with no consequences," he said.

The tentative agreement also improves retirement benefits for current retirees, workers with pensions and those with 401(k) plans, Browning said.

What happens next?

Browning called on all Ford union members to go back to work, adding that they would "be receiving further instructions on the process of returning to work soon." He called it "a strategic move to get the best deal possible," saying it would keep the pressure on Stellantis and GM.

Fain said that the union's national council for Ford would vote Sunday on whether to send the agreement to the membership for approval. More details on the deal would be announced on a Facebook Live that night should the agreement be approved. The union would then hold informational meetings on regional and local levels before the Ford membership would vote, Browning said.

What have been the effects of the strike?

The tentative deal comes roughly two weeks after 8,700 union members walked off the job at Ford's largest factory in Kentucky. The factory in Louisville produces heavy-duty F-Series pickup trucks and large Ford and Lincoln SUVs.

Ford has laid off 3,167 employees because of the strike, which began last month. It's unclear if those employees will immediately return to work. 

"We are focused on restarting Kentucky Truck Plant, Michigan Assembly Plant and Chicago Assembly Plant, calling 20,000 Ford employees back to work and shipping our full lineup to our customers again," Farley said. 

Both GM and Stellantis released statements following news of the tentative agreement with Ford saying they were working with the union to reach deals soon.

Earlier this month, Ford Chairman Bill Ford called for the union to end its strike, arguing that the company his great-grandfather started in 1903 is not the enemy of UAW members.

The UAW strike began when thousands of workers left their posts after their contracts with automakers expired on Sept. 14. Since then, the automakers have laid off thousands of employees and blamed their moves on the prolonged work stoppage. GM has laid off about 2,350 employees across Indiana, Kansas, Michigan, New York and Ohio due to the strike, according to the company. 

Stellantis — the parent company of Chrysler, Dodge, Jeep and Ram — has laid off about 1,520 employees across Indiana, Michigan and Ohio due to the strike.   

On Monday, about 6,800 employees at Stellantis walked off the job at the automaker's largest plant in suburban Detroit while approximately 5,000 GM workers walked off the job Tuesday in Texas.

Kris Van Cleave contributed to this report.

In:
• General Motors
• Ford Motor Company
• Labor Union
• United Auto Workers
• Stellantis

Khristopher J. Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.

Twitter