The United Automobile Workers reached an 11th-hour deal Friday with Daimler Truck in North Carolina that gave workers 25 percent raises and averted a strike that would have begun Saturday.
The union had said it was ready to walk out if it could not agree on a new contract covering 7,300 Daimler employees. The previous contract expired on Friday. The German company has four factories in North Carolina, where it builds Freightliner and Western Star trucks, and Thomas Built buses. The union also represents workers at parts distribution centers in Atlanta and Memphis.
The deal, which includes profit sharing, automatic cost-of-living increases and equalizes pay among workers at the North Carolina factories, marks a victory for the U.A.W. as it tries to expand its power in Southern states where unions have long been weak.
“When that deadline came closer, the company suddenly became ready to talk,” Shawn Fain, the U.A.W., said late Friday as he announced the agreement, which will give workers raises of at least 16 percent the first year after they ratify the contract.
A walkout would have had national political repercussions. North Carolina is a political battleground state that has a Democratic governor, but President Biden narrowly lost the state in 2020. Mr. Biden had indicated that he could step in aggressively to support the Daimler workers, possibly putting him at odds with the state’s more pro-business Democrats just months before Election Day.
The U.A.W. has been making inroads in the South. It scored a significant victory this month when workers at Volkswagen’s factory in Chattanooga, Tenn., voted to be represented by the union. Workers at a Mercedes-Benz factory in Alabama will vote on whether to unionize in mid-May.
Workers at Daimler Truck, which split from Mercedes-Benz in 2021, have been represented by the U.A.W. for several decades. The union has adopted a more assertive stance after winning the biggest pay increases in decades for workers at Ford Motor, General Motors and Stellantis, the owner of Jeep, Chrysler and Ram after strikes at the three companies last year.
The gains for workers at Daimler could add momentum to the U.A.W.’s drive to organize U.S. auto factories, including at companies like Toyota and Tesla.
Workers in North Carolina said they have been struggling to make ends meet while Daimler racked up big profits. The company, based in Stuttgart, reported net profit last year of 4 billion euros, or $4.25 billion, a 44 percent increase from a year earlier. Sales in the United States, Canada and Mexico generated more than half the profit.
The union points out that Thomas Built, whose yellow school buses are a common sight, has benefited from millions of dollars in federal subsidies for electric buses. Thomas Built workers have earned less than counterparts at other factories, but the deal will give them pay increases to make up the deficit.
“Workers who make trucks and workers who make buses will get equal pay for equal work,” Mr. Fain said.
The agreement also includes provisions designed to preserve jobs in North Carolina. Workers had sought more job security after the company moved some production to Mexico.