Ford and UAW reach quick deal to avoid a strike
Posted October 31, 2019 1:08 a.m. EDT
CNN — There apparently will be no repeat of the painful and expensive six-week strike by General Motors workers at rival automaker Ford.
Less than a week after members of the United Auto Workers union returned to work at GM, negotiators for the UAW and Ford announced late Wednesday they had reached a tentative agreement.
While there had been some preliminary talks between the union and Ford before and even during the GM strike, Ford negotiations only moved to the front burner for the union on Monday.
The deal still needs to be ratified by the 55,000 union members at Ford before it can go into effect. Neither the union nor company would disclose any details of the agreement.
But the quick settlement was a striking contrast with the contentious talks at GM. Nearly 50,000 GM workers were on strike from Sept. 16 until members there ratified a new deal and started returning to work this past Saturday. GM disclosed this week that it expects the strike cost it $2.9 billion.
The auto industry is facing a slowdown in sales and the risk of further declines if the US economy continues to slow. It is also facing the need to spend billions to develop the next generation of vehicles, electric and self-driving cars that may not be profitable for years.
Ford has said it plans to spend $11 billion in the coming few years to restructure its business globally to free up funds to develop electric and autonomous vehicles. But while it is profitable, it recently lowered its profit forecast for the rest of this year. And the cost of its restructuring plans was a major factor in having its credit rating recently reduced to junk bond status.
"It appears both parties took a sane approach, and avoided a painful strike that would have benefited neither of them," said Patrick Anderson, CEO of Anderson Economic Group, a Michigan research firm that follows the auto industry.
A successful ratification vote is by no means assured. Four years ago only 51% of the union members at Ford voted in favor of a deal that included their first pay raises in more than a decade.
But it always seemed unlikely that the Ford workers would follow GM workers out on strike. There has not been a work stoppage at Ford since 1976.
And the biggest point of contention at GM -- the automaker's decision to close three US plants where work was halted earlier this year -- was not present at Ford, where no US plant closings are planned.
The union had vowed to make GM shift work back from Mexico to try to revive the plants. While GM agreed to build an electric truck planned at a date yet to be determined at a fourth plant slated for closure, it would not shift work back from Mexico to save any of the other three plants.
The workers at Ford will likely get many of the same terms as found in the GM contract. Once the union reaches a deal with one US automaker, it strives to get the other two unionized companies to follow that pattern.
Under the deal at GM, hourly workers get an $11,000 signing bonus, a 6% raise over the four-year life of the contract, an agreement to allow many temporary workers to be hired on a permanent basis, and the health care coverage left essentially unchanged despite the company's desire to have workers assume a much greater share of the cost.
If Ford workers agree to a new contract that includes those provisions, they will benefit from not losing six weeks of pay in order to receive those gains.
Once the Ford ratification vote is complete, likely in the next couple of weeks, the union will turn to the third unionized US automaker, Fiat Chrysler. Contract talks there could be complicated by the potential announcement of a merger with French automaker PSA, the owner of Peugeot.
-- CNN Business' Vanessa Yurkevich contributed to this story