The United Auto Workers’ strike against the Detroit Three automakers isn’t over yet, but the union has made a major breakthrough.
On Friday, General Motors (ticker: GM) agreed to include its electric vehicle battery factories in the framework agreement governing UAW workers at GM, it said Union President Shawn Fain.
GM did not immediately respond to a request for comment.
Workers in battery factories will now be essentially the same as workers in engine and transmission factories. It was a sticking point for automakers. A surrender most likely means that the strike will soon end and that the UAW will make some important concessions.
“We were on the verge of closing GM’s biggest moneymaker, Arilington, Texas [truck plant]” Fain said in a scheduled presentation to members that began around 2 p.m. Eastern time. “And it is precisely this threat that has brought about a transformation.”
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In mid-September, Fain ordered union members to stop work at one Detroit Three plant each and he expanded the promotion in later weeks.
GM said it made another counteroffer ahead of Fain’s speech on Friday to prevent the walkouts from escalating.
This is a win for GM. There was no escalation of strike activity. Ford Motor (F) and Stellantis (STLA) plants were also spared from the escalation.
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About 25,000 of the automakers’ approximately 145,000 UAW workers are on strike. About 4,400 additional workers have been laid off as other parts of the production system become unoccupied with some plants not producing.
Fain, speaking at an Economic Policy Institute conference earlier Friday, said the union had been “complacent for my entire 29 years” and had been a major source of frustration for him.
“This strike is about righting the wrongs of the past and achieving justice for all of our members,” Fain added. “Strikes and the threat of strikes through a unified membership is what helps.”
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GM declined to provide details about its sixth proposal, but investors are aware of some of the proposals on offer. The company is offering large immediate pay increases to offset inflation, with hourly rates increasing between 16% and 40% depending on pay grade. They also provide inflation protection: If annual wage increases fall short of inflation, workers essentially receive the inflation rate as a raise.
Fain said The total wage increases offered by GM on Friday averaged about 20% over the life of the contract, slightly below the 23% offered by Ford.
Ford made seven offers to the union. In addition to wage increases, Ford is also offering to eliminate pay scales that have been in place for more than a decade. The tiers essentially limit the maximum wage rate newer workers can achieve. They were formed in response to automakers’ struggles during the 2008–2009 financial crisis, as well as competition from foreign automakers with nonunion workforces in primarily southern U.S. states.
Stellantis
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wouldn’t say how many offers it has made. Larger wage increases will be offered upon ratification, with total wages increasing on average by more than 20% over the life of the agreement. In addition, the company offers inflation protection as there are no wage scales in the parts business.
“We continue to have good momentum at the negotiating table and have worked diligently with the UAW over the last week to build on it,” Stellantis said in an emailed statement. “We are making progress, but there are still gaps that need to be filled.”
The strike is not over yet. There are no preliminary agreements with any of the three companies. But there are positive impulses.
According to FactSet, GM shares rose 2.6% to $31.10 in Friday trading after plunging 2.4% on Thursday, closing at $30.31, their lowest since $29.59 on March 30 September 2020. Thursday’s decline was accelerated by news that GM may have to recall up to 20 million vehicles to replace an airbag part, sending shares lower.
Ford shares were up 1.1%. Stellantis shares had gained 3.3%.
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Entering Friday trading, GM shares had lost about 22% since early July, when a strike became likely, while the S&P 500 had lost about 3%. Ford shares fell 21%. Stellantis shares rose about 8%.
Stellantis is a more global company and less affected by the UAW strike than the other two. Stellantis shares are also cheaper, trading for less than four times estimated 2024 earnings. GM and Ford shares trade at less than five and seven times, respectively.
Write to Rupert Steiner at [email protected] and Al Root at [email protected]