When autoworkers went on strike in September, executives at major U.S. automakers warned that union demands could seriously undermine competitiveness in a rapidly changing industry. Ford Motor Co.’s CEO said the company may have to stop investing in electric vehicles.
Now that Ford and the United Auto Workers have reached a tentative agreement, the future doesn’t seem so bleak. The agreement is likely to be a template for the agreements the union eventually strikes with General Motors, Ram, Jeep and automaker Stellantis. Chrysler.
Ford’s costs will rise under the terms of the new deal, which includes 25% raises over four and a half years, improved severance benefits and other provisions. But analysts say the increase should be manageable. More important to the company’s prospects is how innovative and efficient it is at designing and producing cars and technology that can compete with Tesla’s products, which dominate the auto industry’s fastest-growing sector: electric vehicles. A raft, they said.
“They haven’t agreed to anything that would hurt their competitiveness,” said Joshua Murray, an assistant professor at Vanderbilt University. Murray is co-author of a book examining how U.S. automakers lost out to Japanese and European rivals. If anything, he said, the deal will help Ford, in part because the four-year agreement guarantees there will be no labor disputes during the intense stages of the transition to electric vehicles. said.
“They don’t get into labor disputes while they deal with technological change,” Murray said.
Wall Street appears to agree. Ford shares fell slightly Thursday afternoon, a sign that investors view the labor deal as expected. Barclays analysts estimate that the annual cost of raises, improved severance benefits and other measures could amount to $1 billion to $2 billion a year, or about 1% of sales, by the end of the four-year deal. There is.
During the contentious negotiations, Ford complained that big raises for workers would put it further behind Tesla in the electric vehicle market. Sales of Ford’s two major battery-powered models, the F-150 Lightning truck and the Mustang Mach-E sport utility vehicle, have been disappointing this year, and the company recently scaled back plans to increase production of the Lightning.
But Tesla and other automakers with non-union factories in the U.S., such as Toyota, Nissan and Honda, will face pressure to raise wages going forward, eroding their previous cost advantages. there is a possibility.
The UAW has announced its intention to organize these factories. The pay deal with Ford is by far the largest pay increase won by unions in recent decades and is likely to serve as a powerful advertisement for collective bargaining. Automakers without union members in the U.S., including Tesla, BMW, Mercedes-Benz and Volkswagen, could decide to preemptively raise wages to keep labor groups at bay.
“One strategy to discourage unionization is to raise wages,” said Rebecca Collins Givan, an associate professor of labor studies and employment relations at Rutgers University.
Jiban and others said the deciding factor in the electric vehicle market will be whether Ford, GM and Stellantis can produce innovative products. That is the responsibility of the management, not the assembly line workers.
“It’s clear that these companies have work to do in the electric vehicle market,” Jivan said. “There is nothing in this agreement that creates any restrictions.”