In a major breakthrough for both Ford Motor and the United Auto Workers (UAW) union, a tentative agreement has been reached, bringing an end to a nearly six-week-long labor strike that has affected the automaker. The announcement came Wednesday night, marking a significant turning point in the ongoing negotiations.
The tentative agreement, which was initially reported by CNBC, carries a range of favorable provisions for autoworkers. This includes a substantial 25% pay increase over the terms of the agreement, the reinstatement of cost-of-living adjustments, and the introduction of other significantly enhanced benefits for Ford’s 57,000 union-represented workers.
UAW President Shawn Fain expressed his satisfaction with the agreement in a video posted online, stating, “We told Ford to pony up, and they did. We won things nobody thought were possible.” Fain further highlighted that the value of Ford’s offer had increased by 50% compared to the terms in place when the targeted strikes began on September 15.
However, the deal’s full realization hinges on a multi-step approval process. First, it must be approved by local UAW leaders, and then it will be subject to ratification by a simple majority vote of the union’s 57,000 members employed by Ford.
During the announcement, UAW Vice President Chuck Browning emphasized the strategic nature of the agreement, saying, “Like everything we’ve done during this ‘stand-up’ strike, this is a strategic move to get the best deal possible. We’re going back to work at Ford to keep the pressure on Stellantis and GM. The last thing they want is for Ford to get back to full capacity while they mess around and lag behind.”
In response to the positive news, Ford’s shares surged by approximately 2% during after-hours trading. The company’s stock had closed Wednesday at $11.54 per share, marking a 1.3% increase. Notably, Ford’s shares have seen a decrease of less than 1% for the year.
The resolution of the labor strike was the result of intense negotiations that occurred over two days this week. It represented a concerted effort to finalize a landmark deal that has been in the making for several weeks, according to insider sources.
The talks between Ford and the UAW centered on a proposal for wage increases of at least 25% over the duration of the agreement, in addition to other improved benefits that had previously been outlined by both the union and the automaker.
The UAW’s negotiations with Ford, General Motors, and Stellantis have primarily revolved around the economic aspects of the deals since the parties failed to reach new contracts covering 146,000 autoworkers by the September 14 deadline.
In a departure from the customary negotiation process, the UAW initiated discussions with all three automakers simultaneously, moving away from previous practices where they would bargain with each company individually and select a lead company to focus their efforts on. The objective was to create a tentative agreement with a lead company and then use it as a template for subsequent deals.
Ford is scheduled to report its third-quarter results after the markets close on Thursday, with many eyes now turned towards how this tentative agreement may impact the automaker’s financial outlook and its ability to ramp up production following the protracted labor dispute.