Stellantis to give big raises, invest billions in UAW deal

 (Reuters) - Chrysler-parent Stellantis (STLAM.MI) has agreed to build a new $3.2 billion battery plant and invest $1.5 billion in a new mid-size truck factory in Illinois under its tentative labor agreement, the United Auto Workers union said on Thursday.

UAW President Shawn Fain disclosed new details of the labor deal that includes a 25% pay hike, better retirement benefits, and other significant improvements and runs through April 2028 after union leaders agreed earlier on Thursday to send the deal to members for a ratification vote that will take about two weeks.

Stellantis will also offer hourly employees a company-subsidized lease program that will make it more affordable to drive a new vehicle, similar to programs U.S. automakers offer for white-collar employees, the UAW said.

Stellantis declined to comment, saying it would wait for workers to vote first before discussing the deal.

Ford (F.N) production workers are getting a $1,500 voucher they can use toward the purchase of a new vehicle.

The UAW detailed many of Stellanti's investment plans, the biggest of which was convincing the company to reopen the Belvidere, Illinois assembly plant that shuttered operations in February.

Belvidere will begin producing 80,000 to 100,000 mid-size trucks annually in 2027 and the $3.2 billion battery plant with a yet-to-be-named joint venture partner will open in 2028.

The new investments include $1.5 billion in its Toledo Jeep operations, including building an EV Jeep Wrangler in 2028.

Stellantis will invest $3.5 billion in three Michigan assembly plants, including $1.5 billion in a Detroit plant to update versions of the Dodge Durango and Jeep Grand Cherokee, including electric versions of those in 2026 and 2027.

In North America, Stellantis is focusing its investments on trucks and SUVs, and covering its bets on both gas-powered and EV versions through 2028.

Stellantis will also offer $50,000 buyouts in 2024 and 2026 to UAW production workers, allowing it to cut costs by hiring fresh workers who start at lower wages.

The UAW said the Stellantis investment commitments total about $19 billion, but that includes some previously announced plans.

Stellantis has slightly longer than rival Ford to convert current temporary workers to permanent employees. Within the first year, 3,200 temporary workers will be converted to full time and after that, they will automatically get full-time status after nine months of service.

A source confirmed the UAW tentative agreements with Stellantis, General Motors (GM.N) and Ford include an additional ratification bonus of around $110 per day for employees who were on strike or laid off during the work stoppage that began in mid-September.

That is on top of the $5,000 bonus hourly workers will get on ratification along with an 11% immediate pay hike.

The union representing more than 6,000 pilots at FedEx (FDX.N) on Thursday said it is scheduled to restart contract talks with new leadership next week.

The FedEx Master Executive Council, the governing body of the delivery firm's unit in the Air Line Pilots Association (ALPA), said on Monday it had elected Billy Wilson as its new chair after union members rejected a tentative contract with the company in July.

The National Mediation Board affirmed its offer to convene an initial bargaining session between ALPA and FedEx management in Memphis on Nov. 6-7, the union told Reuters in an email.

FedEx did not immediately respond to a request for comment.

The tentative FedEx deal rejected by pilots included a 30% pay rise over four and a half years and a 30% increase to their legacy pensions, according to ALPA.

Wilson has called for compensation that is commensurate with pilots at other airlines, where commercial pilots have won significant raises, reflecting their bargaining power in an era of staff shortages.

American Airlines (AAL.O) pilots, represented by the Allied Pilots Association (APA), in August ratified a deal that raises their compensation by more than 46% over the four-year duration of their contract.

Meanwhile, FedEx rival United Parcel Service (UPS.N) is offering early retirement to pilots amid slumping demand for the industry's fastest, air-based delivery services.

- The United Auto Workers on Thursday signaled the next step in the union's campaign to capitalize on its success in bargaining with the Detroit Three: launching organizing drives at Toyota (7203.T), Tesla (TSLA.O), and other nonunion U.S. auto factories.

UAW President Shawn Fain began his video comments on the Stellantis (STLAM.MI) contract with an appeal to workers at Toyota, which on Wednesday offered pay and benefit increases after the Detroit Three contract talks concluded.

"They could have just as easily raised wages a month ago or a year ago," Fain said of Toyota. "They did it now because the company knows we're coming for 'em."

He said the UAW's new contracts were so good they had even led to nonunion auto workers getting raises.

"Terrified auto executives across the country are rushing to give their own employees raises in the hopes of fending off the UAW," Fain added. "Toyota's future won't be determined in the boardrooms. It'll be determined on the plant floor."

The UAW has tried and failed for years to organize nonunion U.S. auto factories, most of them built by Asian and European legacy automakers in southern U.S. states where so-called "right to work" labor laws make it optional for workers to pay union dues.

Other foreign automakers are reviewing recent auto sector wage hikes. Honda (7267.T) told Reuters it was evaluating the recent UAW deals with the Detroit Three automakers and would remain competitive.

Before Fain spoke, Toyota said working together with its plant workers had provided a history of stable employment and income for its employees.

"The decision to unionize is ultimately made by our employees," the Japanese automaker said in a statement.

Fain has used recent video addresses to telegraph the union's determination to organize workers at nonunion automakers after record wage increases won in tentative agreements with Stellantis, General Motors (GM.N), and Ford (F.N).

"One of our biggest goals coming out of this historic contract victory is to organize like we’ve never organized before," Fain said on Sunday. "When we return to the bargaining table in 2028, it won’t just be with the Big Three, but with the Big Five or Big Six."

UAW Region 8 director Tim Smith, whose territory covers many nonunion auto factories in the southern United States, said workers at those plants have been reaching out to the UAW.

"If (Toyota workers) come calling, which they have, we're going to educate them and be there for them," Smith told Reuters.

UAW staff are keeping track of the calls, many from Toyota's sprawling assembly operation in Georgetown, Kentucky. The Toyota complex is not far from one of the UAW's largest local unions, which represents Ford's Kentucky Truck and Louisville Assembly plants.

Smith said it was important for workers to consider the total wages and benefits and not just the wage rate.

Recently, the union tried and failed to win enough support from workers at Tesla's Fremont, California, factory to hold an organizing vote. Tesla's Fremont plant was once a UAW shop when it was jointly owned by GM and Toyota and known as NUMMI.

"Nothing stopping the Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues & give up stock options for nothing?" Tesla CEO Elon Musk tweeted in 2018.

The UAW filed a complaint with the National Labor Relations Board over that tweet, and the NLRB ruled the tweet violated laws prohibiting management threats against workers for supporting unionization. A U.S. appeals court this year upheld the NLRB ruling.


The UAW's organizing efforts from 2015 through 2020 were hindered by a federal investigation of corruption in the UAW's top ranks.

Fain won the UAW presidency this year by vowing wide-ranging reform.

Toyota's move earlier this week to raise wages is in line with the strategy the Japanese automaker and other nonunion automakers have used to keep UAW organizers at bay.

Nonunion automakers have kept hourly wages close to the UAW rates at the Detroit Three. But they have lower labor costs overall because they pay less for health and retirement benefits than the unionized automakers. They also use more temporary workers, who are paid less.

The result is that average hourly labor costs in total at foreign automakers are $55 an hour, compared with $64 an hour under the old UAW contract, Ford sources estimated ahead of the new contract agreements. U.S. hourly labor costs at Tesla are estimated at $45 to $50.

The gaps will get wider, assuming UAW workers at the Detroit Three ratify agreements that call for increasing pay for veteran workers by 25%, restoring cost-of-living allowances, and boosting pay for temporary workers by as much as 150%.

Some 35,000 Las Vegas hospitality workers are ready to walk off the job on Nov. 10 in a strike against casino and resort operators MGM Resorts International (MGM.N), Caesars Entertainment (CZR.O), and Wynn Resorts (WYNN.O) if they do not have a labor contract by then, their unions said on Thursday.

The Culinary Workers and Bartenders Unions have been negotiating for about seven months, and 95% of their members voted at the end of September to authorize a citywide strike.

The strike would be the first for the unions since 1991 and mirrors activity in the entertainment and auto industries where employees are seeking better compensation and benefits to deal with the higher cost of living and a tight labor market, and comes as companies report record profits.

The Las Vegas unions, considered among the most powerful in the country, are demanding higher wages, stronger protections against new technology that may threaten jobs, a reduction in steep quotas for housekeepers, and improved safety for workers.

The union said it has some agreements in place with the casinos. "Economically, the companies have made some movement but we are millions of dollars apart," Ted Pappageorge, Culinary Union Secretary-Treasurer told reporters on a call.

MGM and Caesars did not immediately respond to requests for comment. Wynn declined to comment on the strike deadline.

"When we reach an agreement on the contract, it's going to be the largest increase that our employees have seen in the four decades since we started interacting with the Culinary Union," Caesars Entertainment CEO Thomas Reeg told investors on an earnings call on Tuesday.

The city is gearing up for major events in November including the Formula 1 Las Vegas Grand Prix which is expected to bring more than 100,000 tourists to the city.

Reeg said he could not say whether a new contract was "going to happen next week, a couple of weeks from now, or a month from now. But we are in dialogue constantly with the union and have further meetings this week."

The union said no additional big table negotiations are currently scheduled with the three casino operators, including Caesars.

Apple (AAPL.O) said on Thursday that demand for its iPhones in China was strong, trying to reassure investors who are worried it is losing ground to a newly resurgent Huawei Technologies (HWT.UL) and other local smartphone makers.

"In mainland China, we set a quarterly record for the September quarter for iPhone," Chief Executive Tim Cook told Reuters in an interview. "We had four out of the top five best-selling smartphones in urban China."

Apple appeared to have gained market share in China in the July-September period, even if the overall smartphone market may have contracted, he said on a conference call with analysts.

The company expects to sell more iPhones in the holiday quarter despite this year's quarter having one fewer week of sales than the prior year's, Cook said.

Research firm Canalys estimated that overall smartphone sales in China fell 3% in July-September from a year earlier as consumers bought fewer smartphones as an economic recovery was choppy.

That was a slower pace of decline than previous quarters, a sign that a slump in the market had eased. Sales of iPhones in China fell 6%, Canalys said.

On the other hand, analysts estimate that Huawei's China smartphone sales grew strongly in the quarter. Its Mate 60 Pro phone has grabbed headlines for using an advanced China-made chip despite being squeezed for years by debilitating U.S. sanctions.

Apple said on Thursday that its overall sales in China dipped 2.5% but it blamed tough Mac computer and iPad sales for that. Cook said sales there grew after accounting for foreign exchange rates.

Apple's sales in China have fallen in three of the four quarters in its 2023 fiscal year, which ended Sept. 30.

Analysts said they remained optimistic about Apple's demand outlook in China through the fourth quarter as there were signs that a rebound in the broader smartphone market was gathering pace.

Aggressive discounting on the iPhone 15 series in the run-up to the annual Singles Day shopping festival by major Chinese online retailers is also encouraging demand.

Although Apple occasionally allows partner vendors in China to offer discounts to spur demand, these retailers have also been locked in a "value for money" battle to win customers.

Over the past two weeks, platforms including (9618. HK), Pinduoduo (PDD.O), and Alibaba's (9988. HK) Taobao have offered major deals on iPhone 15 models, marking down prices by up to 1,501 yuan ($205.14) below retail.

"While the latest iPhone series had underperformed in China in the launch quarter due to a shorter pre-holiday shopping period coupled with supply mismatches on the Pro Max, it could see improvement in the year-ending quarter with a strong 11.11 sales event performance," research consultancy Counterpoint wrote in a note on Friday.

Apple's comments followed optimistic commentary from its chip supplier Qualcomm (QCOM.O) on Wednesday, which signaled that a two-year-long slump in the smartphone market was easing, led by a recovery in China.

Qorvo (QRVO.O), another wireless connectivity chip supplier to Apple, also said inventory levels at their China customers were slowly falling and that the company had recorded its largest bookings quarter in more than two years.

Qualcomm is also facing new competition from Huawei's chips but said on Wednesday it does not expect Huawei's re-entry into the market to affect its relationship with Chinese smartphone companies.

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