Multiple media reports indicate that a tentative deal has been reached between Ford Motor Company and the United Auto Workers (UAW) labor union.

The announcement comes amid the sixth week of this ongoing industry disruption involving U.S. based automakers Ford, General Motors and Stellantis. The latter two automakers are now under pressure to come to an agreement with the labor union.

Three of Ford’s highest profile production facilities had been targeted with work stoppages involving upwards of 20,000 UAW workers, with cascading layoffs and furloughs involving various other supply network production and support facilities.

Ford and the UAW now indicate that striking Ford workers at various facilities will return to work while they consider the terms of this tentative agreement.

The deal reportedly calls for upwards of a 25 percent base wage increase over the length of a new four year contract with Ford. Additional provisions reportedly include cost-of-living adjustments that will boost the top hourly wage to more than $40 per hour and the end of the contract along with added retirement benefits. Other provisions eliminate existing wage tiers that caused new workers to be hired at a lower wage tier.

Probably the most noteworthy aspect of this tentative agreement in a noted concession from Ford that allows workers to strike over plant closures,  which has likely applicability to the industry’s ongoing transformation to EV or hybrid vehicles which likely require less overall production workers.

In a statement, Ford CEO Jim Farley indicated that the company was pleased with reaching an agreement and is “proud to assemble the most vehicles in America and employ the most hourly workers.”


Additional Thoughts

With the announced Ford tentative agreement as a de facto framework, this ongoing labor disruption now turns to GM and Stellantis for reaching agreement.

The one takeaway theme thus far is the highly acrimonious nature of the contract negotiations. The labor union’s strategy in targeting all three auto makers simultaneously with strike actions aimed at the most vulnerable production and supply network of each of these U.S. automakers, coupled with combative language, will likely remain an after taste of this series of ongoing developments.

At the point where all three of the targeted auto makers achieve a new contract with union workers will be the reality of a possible cost disadvantage with foreign based auto brands with manufacturing and supply network facilities across the U.S. in mainly right-to-work states.

From our lens, this will require UAW leadership and respective union workers to instill a more collaborative and less acrimonious perspective with each of these targeted U.S. automakers in the ability to retrain worker skills for production involving different technical skills and higher productivity and quality measures in order to ensure industry competitiveness and continuous product and supply chain process innovation.

Bob Ferrari

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