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Transportation equipment industry

Ford and UAW Reach Tentative Agreement, Avoiding Nationwide Strike

Strategic Insights

— 1 min read

The United Auto Workers and Ford reached a tentative agreement over the weekend, averted a US carmaker's first national strike since 1976, as officials negotiated around the clock, passing through the UAW's strike deadline of midnight Friday. The deal includes UAW backing for Ford's potential spin-off of its Visteon Automotive Systems parts unit in exchange for job and benefits guarantees. The agreement is believed to mirror four-year contracts negotiated with DaimlerChrysler and General Motors, including 3% pay rises and a signing bonus. The pact will be put to a vote by Ford's 100,000 UAW membership. Ford's relationship with the UAW was seen as the best among the US motor industry, enabling the company to close the gap with General Motors.

Key Takeaways:

  • The United Auto Workers (UAW) and Ford reached a tentative agreement, averting the US carmaker's first national strike since 1976.
  • The agreement includes UAW backing for Ford's potential spin-off of its Visteon Automotive Systems parts unit in exchange for job and benefits guarantees.
  • The pact is likely to mirror four-year contracts negotiated with DaimlerChrysler and General Motors, including 3% pay rises and a signing bonus.
  • Ford's relationship with the UAW was seen as the best among the US motor industry, enabling the company to close the gap with General Motors.
  • The UAW feared a Visteon spin-off would lead to job cuts, lower wages, and plant closures, but the agreement ensures any new employees would have a Visteon contract that mirrors Ford's, and current workers would be Ford employees.
  • GM has already managed a spin-off of its parts division, Delphi Automotive Systems.

Statistics:

  • Ford's revenues in 1999: $144.4bn (or £87.3bn)
  • Number of UAW workers employed by Visteon: 23,500
  • Potential value of Ford's Visteon unit: $18bn
  • Signing bonus for workers in DaimlerChrysler and General Motors agreements: $1,350
  • Proposed pay rise for workers: 3%

Sources:

  • Financial Times Limited, 1999.

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