DETROIT (Reuters) – Negotiators from the United Auto Workers union and Ford Motor Co (FN) were able to narrow their differences on wage increases after a new offer from the automaker amid “really active” talks, people familiar with bargaining between the three automakers in Detroit. The automakers and the union said Wednesday.
UAW President Sean Fine intends to update the union’s 150,000 members at Ford, General Motors (GM.N) and Chrysler parent Stellantis (STLAM.MI) on Friday, a person familiar with the union’s plans said. It is not clear whether Fine will order a new round of strikes, or announce enough progress to delay strikes at additional plants.
In addition to Ford, talks with Chrysler’s parent company Stellantis, other automakers and the UAW have been active in recent days, sources said. Stellantis declined to comment.
Ford said on Tuesday it had made a new “comprehensive” offer that includes “an overall pay increase of more than 20%, not compounded” with a double-digit raise in the first year. Ford did not elaborate on the details. However, this proposal, when combined with cost-of-living adjustments the automaker has previously offered, could bring the total wage increase offer closer to 30% over the life of the contract, people familiar with the situation said.
However, the UAW and Ford have not announced agreements on other important issues, including wages and union representation at future battery plants, and the union’s push to return to retirement plans that guarantee a set level of benefits.
Ford Chief Financial Officer John Lawler said Friday that the automaker’s retirement offer will ensure UAW workers can retire with $1 million in savings.
But in a sign that Detroit automakers are still bracing for a long struggle, General Motors on Wednesday secured a new $6 billion line of credit, estimating the cost of the United Auto Workers strike at about $200 million during the third quarter, a company spokesman said.
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 that the credit line was “prudent” given statements by some UAW officials “that they intend to postpone this matter for several 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 struck two General Motors assembly plants and 20 spare parts distribution centers.
The cost of the GM strike reflects a 16-day halt in production at one assembly plant in Wentzville, Missouri, for pickup trucks and midsize trucks. It also reflects the strike at GM parts facilities and indirect impacts including a production halt at GM’s Kansas auto plant due to parts shortages.
GM’s cited average cost of $12.5 million per day since its filing Wednesday could rise sharply if the UAW shuts down more vehicle production in the coming weeks.
Against this backdrop, GM said in a securities filing that it has secured a new $6 billion line of credit through October 2024. JPMorgan (JPM.N) and Citibank (CN) are listed as joint lead arrangers for the deal.
Ford took out a $4 billion line of credit in August, before the UAW contract expired on September 14.
GM’s new line of credit will bolster its balance sheet in the face of a prolonged strike that could expand to cut production of its most profitable vehicles: Chevrolet and GMC’s large pickup trucks and large SUVs like the GMC Yukon and Cadillac Escalade. GM shares closed down about 1% Wednesday afternoon.
The additional funds will require GM to 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 impose limits on other new debt.
The UAW said Monday it has submitted a new contract offer to General Motors. GM, in turn, said that despite the offer, “significant gaps remain.” The automaker was forced to lay off 2,100 workers at five factories in four states.
Ford said Wednesday it would lay off another 400 workers in Michigan starting Thursday because of the strike after previously laying off 930 workers and 370 workers at Stellantis in Ohio and Indiana because of the strike.
Meanwhile, nearly 30% of auto parts makers surveyed by an industry trade group said they had laid off some workers because of UAW strikes. The Automotive Equipment Manufacturers Association said another 60% expect more layoffs by mid-October if strikes continue.
Joe White reports in Detroit. Writing by David Shepardson. Edited by Matthew Lewis, Anna Driver, and Chris Rees
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