CNN in New York —
The United Auto Workers union has a significant distance to work with the three American automakers that are not on strike, and there is little time left.
All three automakers’ contracts expire at 11:59 pm on Thursday, and UAW President Shawn Fain has stated that the union is prepared to strike any company that has not reached a tentative agreement by Friday.
Despite admitting that the union’s demands are ambitious, his position is that they merit it, given the automakers’ significant profits in recent years. The UAW notes that these union-mandated demands have been mostly unpopular among them.
The union’s demand is outlined below, along with the anticipated outcomes.
The union demands a 20% initial raise and then four additional 5% raises, which would result in doubling the hourly wage by 46% over the contract’s four-year lifespan.
The UAW reported on Friday that GM and Ford are both proposing 10% increments in the hourly wage rate over the next four years, while Stellantis is offering 14.5% increases. Fain expressed his dissatisfaction with the automakers’ substantial profits in recent years by calling them “insulting.”
The union can still achieve significant wage gains, as noted by Art Wheaton, director of labor studies at Cornell University’s School of Industrial and Labor Relations in Buffalo, despite the significant gap. He believes that eliminating a lower wage for employees hired since 2007 could lead to an agreement that members can call but not meet their current demands.
The union’s advantage is attributed to the current high demand for cars and trucks, as well as the near-record prices of new vehicles. This led to GM earning a record profit last year and Ford earning nearly the same amount in the past. However, Stellantis, which was formed through fusion only recently, experienced an increase in profits.
It is preferable for unions to engage in negotiations with financially sound companies rather than struggling ones.
Patrick Anderson, CEO of Anderson Economic Group, a Michigan research firm, stated that the wage gap between automakers and unions could be bridged.
Inflation adjustments and pensions.
It may be more challenging to come to an agreement on other matters related to the union.
Anderson stated that the differences in non-wage demands are a gap, not gulf.
The UAW is pushing for the return of traditional pension payment plans and retiree health care for all its members, but not those hired before 2007.
The union is pushing for the return of COLA to safeguard its members from inflation.
The autoworkers union renounced the pension plans and retiree health care for new hires and COLA for all members in 2007 when GM and Chrysler were on the brink of bankruptcy and federal bailouts. Anderson stated that it will be challenging for the union to persuade management to provide them to members again, regardless of how profitable the automakers have become.
The automakers face a higher risk of bankruptcy due to the unpredictability of contracts, as COLAs and defined benefit pensions raise unknown future costs in an industry that has always been cyclical and has additional vulnerabilities linked to electric car transitions.
Similarly, Wheaton is of the opinion that the union’s fight for pensions will ultimately be lost.
Wheaton expressed doubt that they could achieve the majority of their desired outcomes. He added that he would not wait for pension plans to come back, as it is becoming increasingly rare in any industry.
“You always ask for more than you want to make a deal, and never the least,” he added.
Job security and perks.
The UAW is pushing for restrictions on temporary workers and forced overtime, as well as increased vacation time options like a four-day workweek. Additionally, the union is striving to obtain worker protections, including the ability to strike during plant shutdowns.
The union may eventually be able to establish restrictions on the use of low-wage temporary workers, as suggested by Wheaton at Cornell.
The union’s membership has decreased since its peak over 50 years ago due to automation, outsourcing, and the Big Three automakers’ loss of market share in their home market. Nevertheless, this won’t compensate for the job losses it caused in recent decades. The Union has also shut down 65 US auto plants this century, including the Stellantis factory in Belvidere, Illinois, earlier this year.
The UAW struck GM in 1998 with 152,000 members, which is more than the current three automakers combined. Today, there are 46,000 members at GE, 57,000 at Ford, and approximately 42,000 at Stellantis.
The transition to EVs is justifiable.
The auto industry’s biggest transformation in nearly a century is being transitioned to electric vehicles, making the deal even more challenging.
All three automakers have declared their plans to invest in EVs, despite the fact that only a small fraction of their current sales come from purely electric vehicles. They are also expected to face growing demand and stricter environmental regulations.
However, it is also considered a route to profitability because of the lower number of moving parts in an EV compared to if gasoline-powered cars, which have complex engines and transmissions. Industry estimates suggest that assembling e vehicles requires approximately 30% less labor than gas-fueled cars.
Fain and other union leaders argue that the UAW is not against EVs, but rather supports a “just transition.” The union demands that members who work on gasoline engines and transmissions should be able to move on to jobs related to building e-car batteries and electric vehicles, and these positions should pay the same wages as those represented by UAH workers at auto plants.
The GM joint-venture plant in Ohio has granted battery workers a 20% pay raise, despite recent contract negotiations. This is significantly lower than the current pay at UAW auto plants. The other nine Big Three companies have plans to jointly operate nine joint batteries and are expected to pay less than current UAH scale for these plants as negotiated by their union members after winning this multi-year contract.
The negotiation does not directly address the wages of workers in joint ventures, but rather addresses the protections for current workers who may face job losses due to the transition.
What’s the next step in our journey?
This week, discussions will continue. The union has the potential to make significant progress in its contract negotiations, and talks may still be scheduled by Thursday night even if the two sides are miles apart today. Both union leadership and the companies have stated their desire to avoid strikes.
The automakers would face a financial burden if they went on strike. GM has estimated that the UAW’s six-week strike in 2019 will cost $2.9 billion.
A strike against all three companies would result in a $5 billion loss to the economy within 10 days, according to Anderson Economic Group.
Since the summer, the Biden administration has been closely monitoring talks, and he met with Fain at the White House. On Labor Day, BiDEN expressed confidence in the negotiations and later shared that a strike could be avoided. This view was reiterated by Wally Adeyemo during an interview with CNN on Monday.
He stated that the auto companies and unions are exerting their power from a strong position. This is reminiscent of his time in office when the financial crisis was at its peak. The current discussion centers on how profit sharing can be managed to ensure continued growth for these industries.
Despite the president’s attempts, they have little power to prevent strikes, as evidenced by their successful action against a freight railroad strike that occurred late last year. This dispute is subject to specialized labor laws that are not applicable in these negotiations.
The administration is largely convinced that a strike won’t occur. There are expectations from both sides of the negotiation, as well as industry professionals, that such sweeping actions will occur on Friday.
According to Wheaton, the probability of a strike is around 99%.
According to Gavin Strassel, the UAW archivist at Wayne State University in Detroit, a strike against three automakers would be unprecedented. The union has typically chosen one company as the target for negotiations, and even if it does end up with that decision, it would usually stay on the job at the other two companies.
Fain has affirmed that the union will not adopt this year’s playbook and is prepared to strike against all three if no agreement is reached by Thursday night.
If it occurs, it would be the biggest strike by active workers in the country for 25 years. Although there are over 170,000 actors and writers who are striking against Hollywood studios and streaming services, most of those union members were not actively working on movies or shows when the strikes began earlier this year.