AM General's New Contract: A Game Changer for Defense Industry

Mishawaka, IN — UAW Local 5 members voted on Thursday, September 25th to ratify a new contract with AM General. Around 400 UAW members at the company’s Mishawaka complex build the Humvee and next generation Joint Light Tactical Vehicle for the nation’s military. This is a monumental moment for the defense industry, and you need to pay attention!

The new contract makes major gains, most notably a 12% wage increase over just three years, a large pension increase, and significant progress reversing a complicated, tiered pay system. This is a HUGE win for the workers and a potential game-changer for AM General's future.

Keith Oden, the Bargaining Chairperson, said, “We did it—together. This agreement reflects the priorities our members voiced through surveys, meetings, and conversations on the shop floor. Because of our strength and unity, we secured meaningful gains that move us forward without any concessions.” This is a testament to the power of collective bargaining and the strength of the UAW.

This contract reverses a long history of concessionary bargaining at AM General. The company had succeeded in eliminating retiree healthcare, capping profit sharing, and creating multiple wage tiers. But now, the tide has turned, and the workers are taking back what is rightfully theirs.

Dave Green, UAW Region 2B Director, said, “Our members got back to our fighting roots, as the oldest local in the UAW with a long history of negotiating world class contracts. We won a contract that not only makes no concessions to the company, but delivers incredibly strong wage and pension increases for the membership.” This is a victory for the workers and a wake-up call for the defense industry.

The new contract at AM General follows several other recent bargaining victories for the UAW at major defense companies, including GE Aerospace, General Dynamics, and Rolls-Royce. This is a trend that you need to watch closely, as it could signal a shift in the balance of power within the defense industry.

But what does this mean for AM General's competitive position within the defense industry? The wage and pension increases could enhance employee satisfaction and retention, which is crucial for maintaining a skilled workforce. This could lead to improved morale and productivity, which is a competitive advantage in the defense industry.

The reversal of a tiered pay system and the elimination of retiree healthcare and profit-sharing caps could help AM General attract and retain top talent. This is particularly important in the defense industry, where the ability to innovate and adapt to new technologies is critical. The recent bargaining victories at other major defense companies suggest that AM General is not alone in facing these challenges. This could lead to industry-wide adjustments in labor costs and pricing strategies, potentially mitigating the competitive impact on AM General.

In conclusion, the new contract at AM General has the potential to enhance its competitive position within the defense industry by improving employee satisfaction and retention, attracting top talent, and positioning the company as an employer of choice. However, the long-term effects will depend on how AM General manages the increased labor costs and operational efficiencies. The recent bargaining victories at other major defense companies suggest that these challenges are not unique to AM General and that industry-wide adjustments may occur, potentially mitigating the competitive impact. This is a story to watch closely, as it could have far-reaching implications for the defense industry as a whole.