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(Reuters) -Ford Motor and the negotiators of the United Auto Workers (UAW) union have reached a tentative labor deal, three sources familiar with the matter said on Wednesday, a 4-1/2-year contract that would provide a record pay boost.
The deal, which needs approval by union leaders and members, would be the first settlement of strikes against Ford (NYSE:F), General Motors (NYSE:GM) and Chrysler-parent Stellantis (NYSE:STLA).
The deal is expected to provide a 25% wage hike over the life of the contract, including 11% to start, one of the sources said. Including compounding and cost of living, workers will get more than 30% under the tentative deal.
UAW President Shawn Fain had not issued a statement confirming an agreement.
Getting the deal ratified will be up to Fain and UAW leaders, and it is not assured. UAW workers at Mack Truck earlier this month rejected a proposed contract that Fain agreed to. UAW workers at the company now called Stellantis rejected a proposal endorsed by UAW leaders in 2015.
More than 45,000 union members working at the Detroit Three automakers have joined walkouts that began on Sept. 15.
The UAW’s most recent move was to strike against each company’s most profitable plants – GM’s Arlington, Texas assembly plant, Ford’s Kentucky Truck heavy-duty pickup factory and Stellantis’ Ram pickup plant in Sterling Heights, Michigan.
Total economic losses from the UAW strike have reached $9.3 billon, the Anderson Economic Group said earlier this week.
If the contract is ratified by Ford-UAW workers, it would set the standard for bargaining at General Motors and Stellantis and expire on April 30, 2028.
The Ford contract would give UAW workers a record boost in pay and reverse concessions the union agreed to in a series of contracts since 2007, when GM and the former Chrysler were skidding toward bankruptcy, and Ford was mortgaging its assets to stay afloat.
“This lays the groundwork for the next two contracts and they should fall in line fairly quickly because all three were within a narrow gap of each other,” Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions.
“The strike so far has been painful for everybody and knowing what it takes to get a signed contract should bring them to the table much quicker,” he said.
The three companies had no immediate comment.
The union has waged an unusual campaign of simultaneous strikes against the Detroit Three automakers, demanding a 40% wage hike, including a 20% immediate increase, improvements in benefits, as well as covering EV battery plant workers under union agreements.
The automakers have argued that the UAW’s demands will significantly raise costs and hobble their electric vehicle ambitions, putting them at a disadvantage when compared to EV leader Tesla (NASDAQ:TSLA) and foreign brands such as Toyota (NYSE:TM), who are non-unionized.
Rather than the hammer blow of a mass walkout it has wielded historically, the UAW has played the companies against each other, using reprieves from expansion of work stoppages as encouragement.
CNBC earlier reported the tentative deal.
