When autoworkers went on strike in September, executives at major U.S. automakers warned that the union’s demands could significantly weaken their ability to compete in a rapidly changing industry. The chief executive of Ford Motor said that the company may have to end its investment in electric vehicles.
Now the future doesn’t look so bleak as Ford and the United Automobile Workers union have reached a tentative agreement that is likely to serve as a template for the deals the union eventually strikes with General Motors and the maker of Ram, Jeep and Stellantis. Arrives with. chrysler.
Ford’s costs will increase under the terms of the new contract, which includes a 25 percent raise over four and a half years, better retirement benefits and other provisions. But analysts say this increase should be manageable. He said what matters more for the company’s prospects is how innovative and efficient the company is at designing and producing cars and technology that can compete with offerings from Tesla, which is the auto industry’s hottest The fastest growing segment is dominated by electric vehicles.
“They haven’t agreed to anything that would take away their competitiveness,” said Joshua Murray, an assistant professor at Vanderbilt University who co-authored a book. Book It examined how American automakers lost out to Japanese and European rivals. If anything, he said, the deal will help Ford in part because the four-year contract ensures there will be no labor conflicts during the intensive phase of the transition to electric vehicles.
“They’re not going to get involved in a labor struggle when they’re dealing with technological change,” Mr Murray said.
Wall Street appeared to agree. Ford shares fell slightly Thursday afternoon, a sign that investors view the labor agreement as meeting expectations. Barclays analysts estimate the annual cost of wage increases, improved retirement benefits and other measures will be $1 billion to $2 billion annually by the end of the four-year contract, or about 1 percent of sales.
During contentious negotiations, Ford complained that a big raise for workers would put it behind Tesla in the electric vehicle market. Sales of Ford’s two main 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 withdrew plans to increase production of the Lightning.
But Tesla and other automakers like Toyota, Nissan and Honda, which do not have unions at factories in the United States, may now face pressure to raise wages, wiping out any cost advantages they may have had.
The UAW has declared its intention to try to organize those factories. The wage agreement with Ford, the largest increase in compensation the union has achieved in decades, is likely to serve as a powerful advertisement for collective bargaining. Tesla and other carmakers that do not have union workers in the United States, a group that includes BMW, Mercedes-Benz and Volkswagen, may decide to pass wage increases in advance to keep labor organizers at bay.
“One strategy to prevent union organizing is to raise wages,” said Rebecca Collins Givhan, an associate professor of labor studies and employment relations at Rutgers University.
Ms. Givhan and others said the decisive factor in the electric vehicle market will be the ability of Ford, GM and Stellantis to create innovative products. This is the responsibility of management, not the assembly line workers.
“It’s clear that these companies have work to do in the electric vehicle market,” Ms. Givhan said. “There is nothing in this contract that creates any barriers.”