Why GM's deal with the UAW matters to Ford and Fiat Chrysler

General Motors and the United Auto Workers are closer to finalizing a deal than they've been since the union called a strike in mid-September, and GM's fellow Detroit automakers Ford and Fiat Chrysler are prepping for their own bargaining with the UAW.

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The UAW uses pattern bargaining with the three companies, meaning they take the core economics of the first deal struck with a company and take it to the other two to craft a deal largely patterned on those core principles.

"It's meant so companies don't compete against each other with the wages and benefits they pay their workers. It benefits both unions and companies," Kristin Dziczek of the Center for Automotive Research told FOX Business.

TickerSecurityLastChangeChange %
GMGENERAL MOTORS COMPANY36.38-0.24-0.66%
FFORD MOTOR COMPANY8.90-0.05-0.56%
FCAUFIAT CHRYSLER AUTOMOBILES N.V.15.58-0.07-0.45%

Union members nationwide have until Friday to vote on the tentative agreement reached by GM and the UAW last week. Neither Dziczek nor Morningstar industry analyst David Whiston think it's a done deal that UAW rank-and-file members will ratify the tentative agreement.

"It's not a sure thing GM gets ratified but if it does, I'd expect agreements at the other two firms fast. Ford seemed to be nearly done other than waiting for resolution with GM," Whiston told FOX Business.

In this Monday, Sept. 30, 2019, photo United Auto Workers members picket during a strike at General Motors Orion Assembly plant in Orion Township, Mich. (AP Photo/Paul Sancya)

Early estimates show members voting for ratification, although a major GM plant in Spring Hill, Tennessee, narrowly voted it down.

"I doubt either automaker will fight whatever comes out of GM too hard, but there may be slight differences on wage rate increases," Whiston continued. "Ford in particular has long sought to reduce its health care costs, but that won't happen in 2019 without a fight."

Just like with GM, UAW bargaining committees dealing with Fiat Chysler and Ford already have strike authorization, Dziczek pointed out.

"What's interesting to me is that the big win GM got at the table was the ability to close the three manufacturing plants and parts depot," she said. "I don't know if other companies have that as a goal. If that was one of GM's big wins, it's going to save them billions. What are Ford and FCA going to get in place of that?"

Whiston echoed that question, adding that the wage increases GM agreed to will be hard to match for Ford, which has more hourly UAW-represented workers.

Some Ford workers view GM's $11,000 ratification bonus laid out in the tentative agreement as a reason to consider striking so that they could benefit from a similar deal.

"I am a 'no' vote if they do not offer me the same ratification bonus of $11,000. If the company is going to pay me $3,000 more because I go on strike ... then out on strike I will go," Kurt Kromm, a Kentucky Ford autoworker, said according to The Detroit Free Press' Phoebe Wall Howard.

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