Ford avoids a strike, while GM’s suppliers still trying to recover
Bloomberg News
Ford Motor managed to avoid a strike when it reached a tentative agreement with the United Auto Workers on a U.S. labor contract Wednesday, but suppliers to General Motors are still suffering from the sixweek walkout that halted production at more than 30 American factories.
Auto- par ts makers’ shares are sliding after reporting lower sales and cutting profit forecasts following the strike at GM that ended Oct. 25 when more than 48,000 workers ratified a new four-year contract.
While Ford’s new UAW pact came together after just three days of talks on economics, the negotiations will be more fraught at Fiat Chrysler Automobiles NV after it agreed to merge with Peugeot-maker PSA Group, creating the world’s fourth largest automaker. Talks were already viewed as more tricky with Fiat Chrysler because it has more younger and temporary workers, whose improved compensation from the GM deal will be costly.
At Ford, the accord includes $6 billion of product investment in U. S. facilities and the creation or retention of more than 8,500 jobs, according to a statement released late Wednesday. The union will meet in Detroit on Friday with hundreds of local leaders to go over the details of the deal. If they approve it, the deal will be put to a vote of Ford’s 55,000 U.S. workers.
The Ford package is expected to follow the basic pattern set in the GM contract, which included lumpsum payments and annual pay increases that lift production wages to $32.32 an hour by 2023. As part of the proposed agreement, the automaker also will close an engine factory that employs 600 workers, according to people familiar with details of the deal who asked not to be identified. Supplier Impact The longest national strike in nearly a half century at GM will lower that automaker’s earnings this year by about $2.9 billion. Its suppliers are feeling the pain as well.
Auto-parts maker Aptiv Plc on Wednesday reported a $30 million hit to operating income in the third quarter from the GM strike and said it expects to shave $135 million off earnings this year. AK Steel Holding Corp. also cut its profit forecast due in part to the walkout, sending its stock plunging as much as 10% Thursday.