UAW reaches deal with GM, ending strike against Detroit automakers

By David Shepardson and Joseph White

(Reuters) – General Motors (NYSE:) and the United Auto Workers (UAW) union have reached a tentative agreement, two sources familiar with the matter told Reuters on Monday, winning record pay hikes to end six weeks of a coordinated strike against the Detroit Three automakers.

The accord follows deals reached in the last few days by the union with Ford Motor (NYSE:) and Chrysler owner Stellantis (NYSE:), 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.

Details of the GM deal were not announced, but sources said the UAW won the same package of wage increases it agreed at Ford and Stellantis, which raises top pay for veteran workers by 33%.

Nearly 50,000 workers out of nearly 150,000 union members at the Detroit Three 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 over more than 40 days.

The GM workers will return to work after an official announcement of the agreement, two sources said. A GM spokesperson declined comment.

Talks at GM stalled Saturday because of issues such as pension benefits and how fast temporary workers would get permanent work and the treatment of battery plant workers, sources have said.

The three tentative deals are a win for the precedent-breaking strategy orchestrated by UAW President Shawn Fain that involved bargaining with all three automakers at the same time and using the threat of strikes at key factories to accelerate a bidding war among the companies to avoid a new walkout.

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.

Fain must now get the contracts ratified by rank-and-file UAW members. That process began on Sunday as Fain met with leaders of Ford-UAW local unions.

Shares of GM were down 0.5% in Monday trading. Ford shares fell 2.1% while Stellantis shares were down 2.5% in Milan.

‘GREAT’

U.S. President Joe Biden on Monday lauded the tentative agreement. “I think it’s great,” Biden, who has touted himself as pro-union and backed the UAW, said when asked about the reported deal.

Aides to Biden had worried that a prolonged auto strike — and drop off in production — would damage both the U.S. economy and the Democratic president’s chances of re-election in 2024.

Fain repeatedly accused the Detroit Three automakers of enriching executives and investors while neglecting workers and said the UAW’s success would help blue collar workers throughout the country.

The Detroit automakers argued that the UAW’s demands would significantly raise costs and put them at a disadvantage compared with EV leader Tesla (NASDAQ:) and foreign brands such as Toyota Motor (NYSE:), which are nonunionized.

In a sign of the higher costs placed on for the carmakers, the Ford agreement indicated that retirees who worked for 30 years could get an extra $150 a month, or $1,800 more each year. Those improvements applied to GM’s retiree ranks could cost as much as $540 million annually.

The UAW, in a series of social media posts prior to the GM announcement, 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.”

“The strike result is as likely to lead to non-union car companies doing everything they can to keep the UAW out, including voluntarily increasing benefits to their workers, as it is to lead to the UAW unionizing their plants,” University of Michigan professor Erik Gordon said.

THE UAW STRATEGY

The strike against the Detroit Three began at relatively unimportant plants, spreading to the biggest money-makers that produce pickup trucks and SUVs, ratcheting up the pain.

Momentum toward deals accelerated over the past two weeks after UAW workers walked out at three of the most profitable factories in the world: GM’s Arlington, Texas, assembly plant, which makes the Chevy Tahoe and Suburban; Ford’s Kentucky Truck heavy-duty pickup factory and Stellantis’ Ram pickup plant in Sterling Heights, Michigan.

The UAW eventually struck against nine plants, most recently GM’s Spring Hill, Tenn. manufacturing complex with makes engines for a total of nine North American assembly plants, seven of which were not already on strike.

“This is a massive relief for GM to get a UAW deal done after an agonizing 40 days,” Wedbush analyst Daniel Ives said. “The Street is glad to have this UAW nightmare in the rear view mirror with a less onerous deal than originally feared for the Detroit Big 3.”