12/12/2019 | 1 MINUTE READ

UAW Ratifies 4-Year Labor Deal with FCA

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This year’s contentious round of U.S. auto industry labor talks is over. Not so clear is whether it’s also the last hurrah for the United Auto Workers union.

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This year’s round of U.S. auto industry labor contract negotiations is over, giving workers four-year deals that will deliver more pay, continued levels of low-cost healthcare coverage and a faster path to full employment for temporary staffers.

In exchange, General Motors, Ford and Fiat Chrysler Automobiles get more flexibility about what vehicles they produce, and where.

Rocky Road

The talks began on a rocky note with a 40-day strike at GM that cost the company about $4 billion in lost production. But, as has been the custom in U.S. labor for decades, the eventual contract became a pattern for subsequent talks at Ford and FCA.

Ford and the UAW avoided a walkout, with workers ratifying a deal by a 56% margin only six days after the GM agreement was approved. Now FCA has followed suit, with union workers confirming a contract by a two-to-one margin yesterday.

In all cases, workers receive hefty signing bonuses and a combination of wage increases and/or lump-sum payments. All three carmakers backed away from hopes of convincing workers to shoulder more of their own healthcare insurance costs.

The new contracts define the labor landscape for Detroit’s Big Three carmakers through September 2023. That’s a period in which analysts predict that annual car sales in the U.S. will plateau and then slowly decline.

Where Do We Go From Here?

What isn’t so clear is what will happen later in the decade. In the past, boom times always gave way to a slump when buyers became satiated with new cars. Then the cycle repeated as those new cars got old.

But predicting the future this time around will be far more difficult. That’s because consumer buying habits are being swayed by an array of entirely new factors. The big ones are the industry’s like-it-or-not push into electric cars, pending fleets of self-driving shuttles and the rise in ride-on-demand alternatives to car ownership.

Nobody knows yet exactly how any of those trends will impact the retail end of the auto industry. But all three trends represent threats to future production volumes—and the size of the workforce needed to meet them.

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