In a significant development for the United Auto Workers (UAW) union, new contracts have been ratified with automakers Ford and Stellantis. These agreements, along with a similar deal reached with General Motors earlier this week, will result in higher pay across the industry and mark a shift towards electric vehicles. The UAW workers at Stellantis and Ford voted in favor of the contracts by large margins, bringing an end to a contentious labor dispute that included strikes and name-calling.

The UAW workers at Stellantis, the manufacturer behind popular brands such as Jeep, Dodge, and Ram vehicles, voted in favor of the deal with a majority of 68.8%. This approval, achieved by a margin of around 10,000 votes, concludes a challenging labor disagreement and ensures significant gains in pay and benefits for the workers. At Ford, the UAW workers voted 69.3% in favor of the pact, with a margin of nearly 15,000 votes.

The new contracts, which will be in effect until April 2028, bring about several substantial changes. They will result in a significant raise in pay for assembly plant workers, with wage increases and cost-of-living adjustments that equate to a 33% increase. Top assembly plant workers will receive an immediate 11% raise and earn around $42 per hour when the contracts expire. Additionally, the automakers have agreed to eliminate multiple wage tiers and have made a preliminary commitment to unionize new electric-vehicle battery plants.

These deals have been hailed as a victory for the UAW, with industry experts pointing out that they raise the wages of all autoworkers. The contracts also hold implications beyond the automotive sector, potentially leading to higher wages in auto-part supply companies and other industries.

Foreign automakers operating in the United States swiftly responded to the UAW contracts by increasing wages for their factory workers. This move followed UAW leader Shawn Fain's promise of an aggressive effort to unionize non-union plants, including those of Honda, Toyota, Hyundai, and Tesla. The foreign automakers had argued in the past that their workers already earned comparable wages to UAW members but acknowledged the superior health care and retirement benefits enjoyed by UAW workers.

While these agreements may exert upward pressure on costs for the automakers, they come at a time when the U.S. auto market is experiencing slower growth and inflated prices, making it challenging for companies to raise prices. Analysts predict flat auto sales in the coming year, with slowing demand and rising factory output likely leading to more discounts. Furthermore, auto loans with an average interest rate of 10% are poised to slow down sales further by increasing monthly payments.

The success of the UAW in securing substantial wage gains could also provide a political boost to President Joe Biden. Biden, who has positioned himself as a champion of the working class, visited UAW workers during the strikes and obtained commitments from Stellantis to reopen a closed plant and establish an EV battery facility.

Overall, the ratified contracts with Ford and Stellantis, along with the earlier agreement with General Motors, represent a significant milestone for the UAW and are poised to reshape the auto industry as it transitions towards electric vehicles.