© Reuters. File photo: A general view of Stellantis’ Belvidere Assembly Plant, in Belvidere, Illinois, U.S., June 27, 2023. REUTERS/Bianca Flowers/File photo
By David Shepardson and Joseph White
(Reuters) -United Auto Workers reached a tentative agreement with Stellantis (NYSE:) on Saturday, a deal that is pending approval from the union’s top leaders and includes reopening the automaker’s Illinois plant, two people familiar with the matter said.
The proposed accord is likely to follow a template set just days ago by the UAW and Ford (NYSE:), including a 25% wage hike over the 4-1/2-year contract, starting with an initial increase of 11%.
No public deal announcement is expected until later Saturday afternoon or early evening, the sources said. Strikes have entered week seven.
Stellantis shuttered its assembly plant in Belvidere, Illinois, early this year, leaving 1,300 workers without jobs.
UAW President Shawn Fain vowed to reverse the decision, and the union criticized Stellantis management over the issue in a lengthy video. The Biden administration and the state of Illinois have offered subsidies that could help re-tool the factory. Illinois acquired 170 acres of land adjacent to the assembly plant.
UAW is expected to unveil details of the tentative deal later on Saturday, which will have provisions on the use of temporary workers, the sources said, adding Stellantis has agreed to significant product commitment and investment.
Fain and other senior union leaders are expected to have a video conference with local UAW officials who will explain the contract terms to workers, the sources said.
The deal to reopen the Belvidere plant is contingent on expected state and local tax incentives, they said.
The deal is expected to include investments in other U.S. plants, including the Trenton engine plant, sources said. The plant, south of Detroit, is a 71-year old facility that builds six cylinder engines.
Talks with General Motors (NYSE:) were ongoing. Negotiators for company and the union were expected to re-convene around noon after working into the early hours of Saturday morning, the sources said.
Some 45,000 workers out of nearly 150,000 union members at the Detroit Three eventually joined the strike, which has cost billions of dollars to the industry.
Talks with GM and Stellantis have been protracted because of issues such as pension and how fast temporary workers would get permanent work, sources have said.
Fain repeatedly accused the Detroit Three automakers of enriching executives and investors, while neglecting workers and said the UAW’s success would help blue collar workers throughout the country.
The Detroit automakers argued that the UAW’s demands would significantly raise costs and put them at a disadvantage compared with EV leader Tesla (NASDAQ:) and foreign brands such as Toyota Motor (NYSE:), which are nonunionized.
Ford expects the new contract will add $850 to $900 in labor cost per vehicle. Tesla already had a labor cost advantage of roughly $20 per hour before the UAW and the Detroit Three automakers began their bargaining, analysts have said.
The UAW has said the Ford deal would amount to total pay hikes of more than 33% when compounding and cost-of-living are factored in.
The strike which began at relatively unimportant plants spread to the biggest money-makers, producing pickup trucks and SUVs, ratcheting up the pain.
The UAW eventually struck against eight plants, most recently GM’s Arlington, Texas, assembly plant, which makes the Chevy Tahoe and Suburban, Ford’s Kentucky Truck heavy-duty pickup factory and Stellantis’ Ram pickup plant in Sterling Heights, Michigan.
The UAW’s initial demands had included 40% pay increases, cost-of-living adjustments pegged to inflation, job or pay guarantees, an end to lower wages for lower seniority workers and defined benefit pensions.
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