Earlier this month, the UAW labor union ratified its new contract with GM, officially ending a drawn-out negotiating process that lasted months and resulted in a six-week strike. The new contract includes substantial financial gains for UAW members, including wage increases, paid leave, and retirement contributions. Now, General Motors is estimating how the new UAW contract will impact vehicle production costs.
In a recent presentation, General Motors estimates that the average vehicle production cost impact of the new UAW contract will be an increase of roughly $500 per vehicle in 2024, rising to roughly $575 per vehicle through the life of the contract. To note, this cost increase is also the result of GM’s new contract with Unifor, the labor union which represents GM’s Canadian employees.
General Motors did not indicate if the increased production costs would be handed over to the consumer.
GM estimates that the six-week strike resulted in a $1.1 billion hit, while the new wage increases, signing bonus, and benefits will result in a $200 million hit through 2023. The total incremental cost of the new contract over the life of the agreement will amount to $9.3 billion, estimated at $1.5 billion in 2024, $1.8 billion in 2025, $2.1 billion in 2026, $2.5 billion in 2027, and $1.1 billion in 2028.
Highlights of the new UAW contract include a 25-percent wage increase over the life of the contract, as well as cost of living adjustments (COLA) that will increase the wage boost to 30 percent by the end of the contract. General Motors will also provide UAW members with a 3.6-percent increase in company-paid 401K retirement contributions with no employee contribution required, a $5,000 lump-sum signing bonus payable to all seniority employees and active temp employees with 90 days of service, and up to 20 paid holidays per year with two weeks of paid parental leave.
The UAW represents 46,000 General Motors workers, as well as roughly 146,000 workers across all three of the Big Detroit automakers (General Motors, Ford, and Stellantis).