Thursday, July 18

U.A.W. Strikes Near an End After G.M. Reaches Tentative Deal

A six-week wave of strikes that hobbled the three largest U.S. automakers has resulted in tentative contract agreements that would give workers their biggest pay raises in decades while avoiding a protracted work stoppage that could have damaged the economy.

On Monday, General Motors and the United Automobile Workers reached a deal that mirrored agreements the union had reached in recent days with Ford Motor and Stellantis, the parent company of Ram, Jeep and Chrysler. The terms will be costly for the automakers as they undertake a switch to electric vehicles, while setting the stage for labor strife and demands for higher pay at nonunion automakers like Tesla and Toyota.

The tentative agreements, which still require ratification by union members, also appeared to be a win for President Biden, who had risked political capital by picketing with striking workers at a G.M. facility in Michigan last month.

“They have reached a historic agreement,” Mr. Biden said Monday after speaking with Shawn Fain, the U.A.W. president. The deals, the president said, “reward autoworkers who gave up much to keep the industry working and going during the global financial crisis more than a decade ago.”

The strike stretched longer than White House officials would have liked, but was resolved before causing significant shortages of new cars and trucks that might have frustrated voters already angry about inflation.

“The near-term impact of this strike will be relatively minor,” said Karl Brauer, executive analyst at iSeeCars.com, an online auto sales site.

But Mr. Brauer warned that, in the long term, Ford, G.M. and Stellantis would have to raise car prices to maintain their profits. Their competitors will follow suit to take advantage of the opportunity to earn more money, he said. “This is going to make cars more expensive,” Mr. Brauer added.

G.M.’s chief executive, Mary T. Barra, said in a statement on Monday that the tentative agreement “reflects the contributions of the team while enabling us to continue to invest in our future and provide good jobs in the U.S.”

Potentially the most far-reaching effect of the strike could be on manufacturing workers not represented by the U.A.W. The contracts the union negotiated are the latest in a series of prominent victories for organized labor, including Hollywood writers, UPS workers and even some university employees.

Mr. Fain has portrayed the tentative agreements as a signal for the union to begin organizing drives at Tesla, which dominates the fast-growing electric car business, and foreign-owned companies like Toyota, Honda and BMW that have large nonunion operations in the United States. The union will “organize like we’ve never organized before,” Mr. Fain said Sunday.

Companies without unions can expect the U.A.W. to deploy the same hardball tactics that Mr. Fain used against Ford, G.M. and Stellantis, including rhetorical attacks on multimillion-dollar executive pay and hourly wages that have failed to keep pace with high inflation.

Even if those union campaigns fail, as they often have in the past, they may prompt some employers to pre-emptively give workers raises.

“This agreement is going to have a trickle-down effect,” said Helen Rella, who specializes in employment litigation at Wilk Auslander, a New York law firm.

Ford agreed on a tentative pact on Wednesday. Stellantis followed on Saturday. Details of all the agreements had not yet been published, but they include a 25 percent pay increase over the next four and a half years and provisions to make sure the raises are not eaten up by inflation.

The top U.A.W. wage would rise to more than $40 over the life of the new contracts, from $32 an hour. That would allow employees working 40 hours a week to earn about $84,000 a year.

The agreements provide at least some protections to workers as electric vehicles replace gasoline models, and jobs at battery factories supplant jobs making components for combustion engine vehicles.

In Ford’s case, workers at battery factories that the company plans to build in Tennessee and Michigan would be covered by the terms of the union contract. (Ford suspended work at the Michigan plant in September, saying it was not sure it could manufacture batteries there at a competitive price.)

The U.A.W. said its new contract with G.M. would cover workers at Ultium Cells, a battery-making joint venture with LG Energy Solution. One Ultium factory, in Ohio, is up and running, and two others are under construction in Tennessee and Michigan.

The increases in hourly wages would add to the automakers’ costs when they already pay their workers more than Tesla and most foreign automakers. But the burden would be manageable, analysts said.

“Everybody had their pencils out, and I’m quite certain the deal wouldn’t have been signed if they weren’t confident they could remain competitive,” said Steve Patton, mobility sector leader for consulting firm EY.

The agreements appear to be victories on multiple fronts for Mr. Biden, who has yoked his economic message to his success at delivering for union workers.

Mr. Biden’s brief stint on a U.A.W. picket line last month was a first for a sitting president. He has promised that union workers would benefit from tax credits and other incentives to encourage people to buy electric vehicles. The incentives are available only for cars made in the United States, Canada or Mexico.

The biggest risk to Mr. Biden — that the contract hinders automakers’ competitiveness — is unlikely to become manifest before next year’s election.

The union’s contracts with the three automakers, covering nearly 150,000 workers, expired on Sept. 15. Since then, the union has called on more than 45,000 workers to walk off the job at factories and spare-parts warehouses across the country. In the most recent escalation on Saturday, shortly after the union reached a deal with Stellantis, the U.A.W. told workers to go on strike at G.M.’s plant in Spring Hill, Tenn., which makes several sport utility vehicle models.

The strike has halted the production of some of the companies’ most profitable vehicles, including the Cadillac Escalade S.U.V., the Ram 1500 pickup truck and the Ford Bronco S.U.V.

G.M. said last week that the strike had lowered its earnings by about $800 million, before interest and taxes, with part of the impact coming in the third quarter and most in the fourth quarter.

Ford’s deal with the U.A.W. would shave about one percentage point off the company’s profit margin, said Tom Narayan, global autos analyst at RBC Capital Markets. But he said the carmakers faced bigger challenges, like a decline in consumer’s ability to buy new vehicles and a slowdown in the growth of electric vehicle sales.

“I don’t think the U.A.W. in a vacuum is going to be the big problem,” Mr. Narayan said. “There are other problems these companies have.”

A Ford executive said last week that the new contract would raise production costs by up to $900 a vehicle. The company said it would provide more details once workers ratified the contract.

The three large U.S. automakers are investing tens of billions of dollars to develop new electric vehicles, build battery plants and retool factories in an effort to catch up to Tesla, which is based in Austin, Texas, and has factories there and in Fremont, Calif.; Sparks, Nev.; and Buffalo. In addition to lower labor costs, the electric car company’s advantages include selling cars directly to customers rather than through dealers, who take a slice of the profit from each sale of a car made by Ford, G.M. and Stellantis.

“We need to make sure we have a contract that is going to allow us to compete and win in what is a challenging market for E.V.s,” Ms. Barra said last week.

Jim Tankersley contributed reporting.