Ford deal a ‘stunning victory' for union; auto maker begins slow production restart

DETROIT --- Ford Motor Co. likely will take weeks to resume full production in Michigan, Illinois and Kentucky after reaching a tentative agreement with the United Auto Workers (UAW) union that ended a 41-day strike Wednesday evening.

Employees were called off picket lines shortly after the deal was reached, and many have been placed on temporary layoff as they await notification to return to work in the coming days, according to some who spoke with Automotive News.

That slow restart could add to Ford's financial losses from the strike, which J.P. Morgan estimated Thursday at slightly more than $1 billion. Ford plans to release its third-quarter results Thursday afternoon, but it's unclear whether executives will provide additional details on the tentative deal.

The UAW late Wednesday said the pact, which must be approved by union leadership and ratified by a majority of its 57,000 members at Ford, includes larger wage increases over the next four and a half years than members have received in the past 22 years combined.

Workers will receive a cumulative 25% wage increase, including 11% upon ratification. With the return of a cost-of-living adjustment, the overall increase is expected to equal 33%, the union said.

The deal also reduces the time for new hires to reach top wages to three years from eight, improves pension and 401(k) plans, and grants the right to strike over plant closures, which the union says is a first. UAW officials said temporary workers, who start at about $16 per hour, will see a 150% increase by the end of the deal, and workers at two Ford plants who receive lower wages will see raises of 85% as they are brought on the same pay scale as other assembly employees.

"The UAW tentative agreement with Ford will indeed be lucrative for many UAW members, particularly those in temporary positions or currently in progression toward the top pay bracket," Patrick Anderson, CEO of the Anderson Economic Group, said in a statement.

"It represents a stunning victory for UAW President Shawn Fain, who successfully pressured some of the world's largest companies to give them immediate wage increases, cost-of-living allowances, and work rule concessions that will be the envy of workers in other industries."

Bank of America analyst John Murphy, in a research note Thursday morning, said the contract will increase labor costs and potentially spur investment in lower-cost countries. He expects GM and Stellantis to match much of what Ford agreed to.

"In our view, the companies will be more likely to build future plants and facilities outside of the U.S.," Murphy wrote.

UAW President Shawn Fain, in announcing the tentative deal Wednesday night, said it has more than four times the gains obtained in the 2019 contracts. Since the strike started Sept. 15, Ford increased the value of its offer by 50%, he said.

"This agreement sets us on a new path to make things right at Ford, at the Big 3, and across the auto industry," Fain said. "Together, we are turning the tide for the working class in this country."

Fain said the union would call local leaders to Detroit this weekend to approve the deal, which will then go to members for ratification. He said the union would distribute detailed information to members Sunday night.

The strike, which has lasted longer than the UAW's 2019 work stoppage against General Motors, had hit Ford the hardest of the Detroit 3.

Roughly 16,600 UAW members were on strike at Ford, more than at GM and Stellantis. And Ford was forced to lay off more workers than the other automakers.

The union is continuing its strike against GM and Stellantis, with about 14,400 workers picketing at each company.

GM on Tuesday said the strike had cost it $800 million so far.

Ford on Oct. 3 offered the UAW raises totaling 23%, with workers getting a double-digit increase upon ratification and annual increases through 2027.

About a week later, the union ordered 8,700 workers at Ford's Kentucky Truck Plant, the company's most profitable assembly operation, to walk off the job. Ford COO Kumar Galhotra told reporters in subsequent days that the company had "reached our limit" on what it could offer the union without compromising its ability to remain competitive.

Bargaining between Ford and the union intensified Tuesday. Ford agreed to match the union's demand for a 25% raise, so negotiators spent much of Wednesday hammering out final details before announcing the news that evening.