Members of the United Auto Workers demonstrate outside the Stellantis Ram 1500 plant in Sterling Heights, Michigan, after the union called for a strike at the plant on October 23, 2023.
Michael Wayland/CNBC
DETROIT – Negotiators with the United Auto Workers union and Stellantis have agreed in principle to the terms of a tentative agreement after the union waged about six weeks of targeted U.S. labor strikes, according to sources briefed on the talks.
The contract terms still need to be approved by UAW leadership before the union plans to formally inform local union leaders and then publicly announce the tentative agreement on Saturday, according to three sources who agreed to speak on condition of anonymity speak because the conversations are private.
The tentative agreement, which still needs to be approved by union leaders and ratified by members, is modeled on a four-and-a-half-year agreement reached Wednesday between the union and Ford Motor, sources previously told CNBC.
UAW President Shawn Fain held intensive discussions with Stellantis on Thursday and Friday before turning his attention to General Motors. According to a source familiar with the talks, the UAW and GM are expected to resume talks at noon Saturday in the hope of also reaching an agreement.
The UAW plans to hold a meeting with local Stellantis union leaders early Saturday afternoon after the sides agreed in principle to the terms of a deal.
Bloomberg News first reported Saturday that the company had made additional concessions to the UAW and that the union plans to announce a tentative agreement this afternoon that includes a new product for a shuttered assembly plant in Illinois.
The deal comes after the union reached an agreement with Ford on Wednesday. This agreement still needs to be approved by union leaders and ratified by members.
The tentative agreement seeks to end six weeks of targeted strikes by the union after the sides failed to reach new agreements for 146,000 UAW members before the Sept. 14 deadline. The union recalled more than 16,000 striking Ford workers after reaching a tentative agreement with the automaker.
The deal with Ford included a 25% salary increase over the life of the agreement, including an initial increase of 11%. The raises and benefits bring the top wage overall to more than $40 an hour, including a 68% increase in entry-level wages to more than $28 an hour.
In addition, cost of living adjustments were reintroduced, the eight-year path to top wages was shortened to three years and, among other significantly improved benefits, the right to strike during company closures was permitted.
The strikes have cost GM, Ford and Stellantis billions of dollars in lost production. Ford said Thursday that the strike cost the union $1.3 billion and that the agreement, if ratified by members, would increase labor costs by about $850 to $900 per vehicle produced.
GM said Tuesday the strike had cost the company about $800 million.
The proposed agreements are record-breaking for the union, which has been far more confrontational and strategic in the talks than in recent history.
The union began negotiations with all three automakers simultaneously, breaking from recent history when UAW leaders negotiated with each automaker individually, selected a leading company to focus their efforts on, and then negotiated the remaining contracts based on one drafted a preliminary peak agreement.
It is not immediately clear to what extent the collective agreements will increase labor costs for companies, which had argued that giving in to all the union’s demands would harm their competitiveness and even their long-term profitability.
Deutsche Bank recently estimated the total cost increase of Ford’s agreement at $6.2 billion over the life of the agreement; $7.2 billion at GM; and $6.4 billion at Stellantis.