[1/2]Striking United Auto Workers (UAW) members at the General Motors Lansing Delta Plant go on strike in Delta Township, Michigan, U.S., September 29, 2023. Portal/Rebecca Cook/File Photo Acquire License Rights
DETROIT, Oct 4 (Portal) – Negotiators for the United Auto Workers and Ford Motor (FN) have narrowed their differences over wage increases following a new offer from the automaker amid “really active” discussions, according to people close to the negotiations between the Detroit Three familiar automakers and union said Wednesday.
UAW President Shawn Fain plans to provide an update to the 150,000 union members at Ford, General Motors (GM.N) and Chrysler parent Stellantis (STLAM.MI) on Friday, a person briefed on the union’s plans said. It is not clear whether Fain will order a new round of strikes or declare that sufficient progress has been made to delay strikes at additional plants.
In addition to Ford, sources said there have been discussions in recent days with Chrysler parent company Stellantis (STLAM.MI) and other automakers, as well as the UAW. Stellantis declined to comment.
Ford said Tuesday it made a “comprehensive” new offer that included an “across-the-board wage increase of more than 20% without compounding” with a double-digit increase in the first year. Ford did not elaborate. However, that proposal, combined with cost-of-living adjustments previously offered by the automaker, could bring the total wage increase offer over the life of the contract to nearly 30%, people familiar with the situation said.
However, the UAW and Ford have not announced agreements on other important issues, including pay and union representation at future battery plants and the union’s demand for a return to pension plans that ensure defined benefit levels.
Ford CFO John Lawler said Friday that the automaker’s retirement offering would ensure UAW workers could retire with $1 million in savings.
But in a sign that Detroit automakers are still bracing for a long fight, General Motors on Wednesday secured a new $6 billion credit line and estimated the cost of the United Auto Workers strike in the third quarter at $200 million US dollars, said a company spokesman.
The targeted strike against the Detroit Three automakers began on September 15 and is now in its 20th day.
GM Chief Financial Officer Paul Jacobson told CNBC the credit line was “cautious” given what some UAW officials said “they want to drag this out for months.” He said GM made a record contract offer and said it needed a deal that would put it “on par with our competitors.”
The union went on strike at two GM assembly plants and 20 parts distribution centers.
GM’s strike costs reflect 16 days of halting production at a Wentzville, Missouri, assembly plant for midsize pickup trucks and vans. It also reflects the GM parts plant strike and related fallout, including a production halt at a GM auto plant in Kansas due to a parts shortage.
General Motors’ reported average cost of $12.5 million per day in Wednesday’s filing could rise sharply if the UAW halts more vehicle production in the coming weeks.
Against this backdrop, GM announced in a securities filing that it had secured the new $6 billion credit facility through October 2024. JP Morgan (JPM.N) and Citibank (CN) are listed as joint lead organizers for the deal.
Ford secured a $4 billion line of credit in August ahead of the Sept. 14 expiration of the UAW contract.
GM’s new credit line will strengthen its balance sheet against a protracted strike that could spread and halt production of its most profitable vehicles: large Chevrolet and GMC pickups, as well as large SUVs such as the GMC Yukon and Cadillac Escalade. GM shares closed down about 1% Wednesday afternoon.
For the additional funds, GM must maintain at least $4 billion in global liquidity and $2 billion in U.S. liquidity. The terms of the credit agreement also restrict GM from mergers or asset sales and limit other new debt.
The UAW said Monday it had submitted a new contract offer to GM. GM, for its part, said despite the offer that “significant gaps remain.” The automaker was forced to lay off 2,100 workers at five plants in four states.
Ford said Wednesday that it would lay off an additional 400 workers in Michigan starting Thursday because of the strike, after previously laying off 930 workers and Stellantis 370 workers in Ohio and Indiana because of the strike.
Meanwhile, nearly 30% of auto parts makers surveyed by an industry group said they have laid off some workers because of the UAW strikes. Another 60% expect more layoffs by mid-October if work stoppages continue, the Motor Equipment Manufacturers Association said.
Reporting by Joe White in Detroit, writing by David Shepardson; Edited by Matthew Lewis, Anna Driver and Chris Reese
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