Stellantis, union negotiators agree to terms of the deal

UAW members gather outside Stellantis’ Ram 1500 plant in Sterling Heights, Michigan after the union called a strike at the plant on October 23, 2023.

Michael Wayland/CNBC

DETROIT — Negotiators with the United Auto Workers union and Stellantis have agreed in principle to tentative deal terms after nearly six weeks of U.S. labor strikes targeted by the union, according to sources familiar with the talks.

The terms of the deal must still be approved by UAW leadership before the union plans to formally brief local union leaders and then publicly announce the tentative agreement on Saturday, according to three sources who agreed to speak on the condition of anonymity because the talks are private.

The tentative agreement, which still needs to be approved by union leaders and ratified by members, is modeled on a 4 1/2-year agreement reached between the union and Ford Motor Company on Wednesday, sources previously told CNBC.

UAW President Shawn Fain was with Stellantis in extensive talks Thursday and Friday before he turned his attention to GM. The UAW and GM are expected to resume talks at midday Saturday in hopes of also reaching an agreement, according to a source familiar with the talks.

The UAW plans to hold a meeting early Saturday afternoon with local Stellantis union leaders after the two sides agree in principle to the terms of the deal.

Bloomberg News Reported for the first time The company on Saturday made additional concessions to the UAW and the union aims to announce a tentative agreement this afternoon that includes new product for an idled assembly plant in Illinois.

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The deal comes after the union reached an agreement on Wednesday with Ford. This agreement still needs to be approved by union leaders and ratified by members.

The tentative agreement is expected to end six weeks of labor strikes targeted by the union after the two sides failed to reach new deals for 146,000 UAW members before a September 14 deadline. The union summoned more than 16,000 striking workers at Ford after reaching a preliminary agreement with the automaker.

Ford’s deal included 25% pay increases over the term of the agreement, including an initial 11% increase. Cumulatively, the raises and benefits bring top pay to more than $40 per hour, including a 68% increase to starting wages to more than $28 per hour.

It also restored cost-of-living adjustments, reduced the eight-year path to top wages to three years, and allowed the right to strike against factory closures, among other significantly enhanced benefits.

The strikes collectively cost GM, Ford, and Stellantis billions of dollars in production losses. Ford said Thursday that the union’s strike had cost it $1.3 billion, and that the agreement, if ratified by members, would increase labor costs by about $850 to $900 for each vehicle produced.

GM said on Tuesday that the strike had cost it about $800 million.

The proposed agreements constitute a record for the Union, which was more confrontational and strategic during the talks than it has been in modern history.

The union began negotiations with the three automakers simultaneously, breaking with recent history when UAW leaders would negotiate with each automaker individually, select a lead company to focus efforts on and then design the remaining deals through a preliminary lead agreement.

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It’s not immediately clear how much the labor deals will raise labor costs for the companies, which have said that capitulating to all of the union’s demands would affect their competitiveness and even their long-term viability.

Deutsche Bank recently estimated the total increase in the cost of the agreement with Ford at approximately $6.2 billion over the duration of the agreement. $7.2 billion at General Motors; And $6.4 billion in Stellantis.

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