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UAW Strikes End as Detroit 3 Reach Deals

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Detroit automaker General Motors (GM) has reached a tentative labor agreement with the United Auto Workers (UAW) union, bringing an end to 6 weeks of strikes that idled tens of thousands of autoworkers across the United States.

The 4-year deal was announced Monday after marathon negotiating sessions over the weekend. It follows similar tentative agreements reached last week by the UAW with Ford Motor Co. and Fiat Chrysler Automobiles.

With contracts now in place with all Detroit Three automakers, the UAW can turn its focus to ratification votes. The agreements are expected to add hundreds of millions in new labor costs, but deliver significant gains to autoworkers who made concessions during the Great Recession to help stabilize the industry.

Key improvements include an accelerated path to top hourly wages of over $32, pay increases of 3-4% each year, cost of living adjustments, $11,000 ratification bonuses, and restored rights to strike over plant shutdowns. The deals also hold healthcare costs steady without increased worker premiums.

For the automakers, the additional labor expenses come as the industry already faces rising costs for technology investments in electric vehicles and autonomy. But the end of strikes brings relief after 6 extremely costly weeks of lost production.

Ford pegged the financial impact of the work stoppage at $1.3 billion. The company expects its new deal to increase per vehicle labor costs by $850-$900. GM lost about $2 billion according to estimates, over $1 billion of that in the United States.

The sacrifices by both sides reflect just how damaging an extended strike could have been. A 2-day strike last year cost GM an estimated $400 million alone. With U.S. auto sales plateauing, neither side could afford an extended plant shutdown.

For Wall Street, the end of uncertainty from the labor disputes will be welcomed. GM stock gained 0.75% Monday after details emerged, while Ford’s share price rose 1.2%. Investors see the short-term costs of the deals as outweighed by the benefits of resumed production and sales.

Moody’s auto analyst Bruce Clark said the deals are “credit negative but containable” for the automakers, allowing them to remain competitive. Labor peace also helps attract talent and productivity gains.

The question now is whether rank-and-file UAW members will ratify the tentative contracts. Ford and GM workers are expected to start voting within 2 weeks, once the agreements are finalized and presented to members.

UAW leaders face pressure to avoid the rejection they suffered in 2015, when Fiat Chrysler workers initially voted down a proposed deal. But the united front displayed by the UAW in pursuing coordinated strikes gives momentum.

With U.S. unemployment at historic lows, workers leveraged a tight labor market and the automakers’ need for labor stability into significant gains after years of minimal increases. For the UAW, it represents a big win and reprieve from scandal.

The new contracts set the stage for a productive new era of labor-management relations in the auto industry, vital to the American manufacturing sector. As the UAW’s most profitable bargaining partners, Detroit now aims to move beyond the strikes and shift focus to the future of transportation.

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