Ford’s (F) Contract Offer Falls Short of UAW Expectations

Ford F presented a contract offer to the United Auto Workers (UAW) after the union called Detroit Three automakers to come up with counter-proposals.

The offer includes 15% guaranteed combined wage increases and lump-sums, and enhanced benefits over the life of the contract. For UAW-represented hourly workers, Ford decided to increase wages and lump-sum bonuses to $92,000 in the first year of the contract, up from $78,000 in 2022.

Apart from an increase in wages and bonuses, workers would also receive health care coverage and other benefits worth $17,500 and $20,500, respectively. In the first year alone, full-time permanent employees at the top wage rate could make up to $98,000 from wages, bonuses, profit sharing and overtime, per the company’s press release.

Per Ford, its offer is significantly better than other automakers’ offers operating in the United States.

In the last three contracts, the legacy automaker has outperformed its commitment by creating or retaining 5,600 additional UAW-represented jobs and investing $1.4 billion beyond its commitment.

Ford has discarded wage tiers from the contract offer to help all employees achieve industry-leading wages.

However, the offer did not go down well with Shawn Fain, the president of UAW. During a live presentation on Aug 31, 2023, Fain discarded Ford’s proposal, deeming it both inadequate and offensive. He said that the union will accept nothing short of consistent wages that will rise in tandem with the economy.

Per Ford’s press release, the automaker will not make a deal that limits its ability to invest, grow and share profits with its employees. F currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Meanwhile, UAW has filed unfair labor charges against General Motors GM and Stellantis N.V. STLA with the National Labor Relations Board (“NLRB”). Fain said that these two companies have refused to work with the union to reach a fair contract. General Motors and Stellantis have called the claim made by Fain baseless.

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