Ford (F) and the United Auto Workers (UAW) announced a tentative labor deal is in place, potentially ending a bruising six-week-long contract negotiation.
The UAW said the tentative agreement includes a 25% base wage increase through April 2028 and will cumulatively raise the top wage by over 30% to more than $40 an hour and raise the starting wage by 68%, to over $28 an hour. The lowest-paid workers at Ford will see a raise of more than 150% over the life of the agreement, with some workers receiving an 85% increase immediately upon ratification.
The UAW also revealed COLA (cost-of-living allowance) provisions were reinstated, along with a new three-year wage progression scale (previously it was eight years), as well as the end of wage tiers. The union said it secured gains for workers with pensions and 401(k) plans but did not reveal specifics.
The deal is still subject to approval by UAW’s National Ford Council and ratification by a simple majority vote of the UAW’s 57,000 Ford workers.
"We are pleased to have reached a tentative agreement on a new labor contract with the UAW covering our US operations," Ford CEO Jim Farley said in a statement. "We are focused on restarting Kentucky Truck Plant, Michigan Assembly Plant, and Chicago Assembly Plant, calling 20,000 Ford employees back to work and shipping our full lineup to our customers again."
"We won things nobody thought possible," UAW president Shawn Fain said in a statement. "Since the strike began, Ford put 50% more on the table than when we walked out. This agreement sets us on a new path to make things right at Ford, at the Big Three, and across the auto industry."
Wall Street's reaction to the deal was positive, with shares rising in early trading.
"The UAW's big win against Ford suggests a serious improvement in workers' bargaining power, with the deal, if approved, securing an 11% pay bump in the first year of the contract and other gains on pensions and job security," Gavekal Research analyst Tan Kai Xian wrote in a note to clients. "Typically, a deal with one automaker will lead to others following suit."
Wedbush analyst Dan Ives echoed those sentiments. "The initial deal based on reports [is] a more balanced deal for Ford vs original one on the table," Ives said in a tweet following reports a deal was struck. Ives believes a deal between the union, GM, and Stellantis will likely get done over the next week.
In terms of next steps, Fain said the UAW’s national council for Ford would vote on Sunday to determine whether to send the deal to UAW membership. After informational meetings with local UAW members, the deal would then be sent for a full vote.
Last but not least, Ford will report Q3 earnings Thursday night after the bell. Ford leadership is expected to discuss more details regarding the financial impact of the agreement and any changes to its profit guidance after reaching a tentative deal with the union.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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