Auto strike looms, threatening to shut Detroit’s big 3
By Neal E. Boudette
The United Auto Workers union and the three Detroit automakers have less than two weeks to negotiate a new labor contract, and a strike of some sort seems increasingly likely.
The union’s president, Shawn Fain, has primed rank-and-file members to be prepared to walk off the job if the union’s long list of demands for improved wages and benefits are not met.
A strike against one of the companies, especially a prolonged stoppage, could send an economic jolt through several Midwestern states and crimp the profits of General Motors, Ford Motor or Stellantis. GM workers walked out for 40 days in 2019 before reaching an agreement.
A strike against all three — a step the union has never taken but one Fain has said he is willing to call for this year — could have a noticeable impact on the broader U.S. economy.
“If that happens, even a short strike would impact economies throughout Michigan and across the nation,” said Patrick Anderson, the CEO of the Anderson Economic Group in East Lansing, Michigan.
The talks are playing out as automakers are spending tens of billions of dollars to transition to electric vehicles, which require fewer workers to assemble than traditional gasoline-powered cars and trucks. The terms of the new contract will determine how both autoworkers and the companies fare in an EV-centric industry.
An agreement before the contracts expire Sept. 14 is still possible, and talks could continue beyond that date without a walkout. But Fain has repeatedly said he views Sept. 14 as a deadline — the day a strike could begin. He was elected to the UAW presidency last year as an insurgent, ousting the incumbent on a vow to take a more combative and confrontational approach in the talks than his recent predecessors.
“President Fain has declared war, and that usually means there’s going to be a battle, and that battle would be a strike,” said Sam Fiorani, the vice president of global vehicle forecasting at Auto Forecast Solutions, a market researcher. “The UAW leadership is in a position now where they have to prove to the members that they are fighting for them, so it’s pretty unlikely there won’t be a strike.”
The auto industry as a whole, including foreign-owned companies with operations in the United States, makes up about 3% of the country’s gross domestic product. A 10-day strike against the three Detroit automakers would result in total wage losses of $859 million and manufacturers’ losses of $989 million, according to estimates by Anderson’s firm.
In August, Fain sent each company a list of demands, including higher wages, improved benefits, a resumption of regular cost-of-living wage bumps to ward off the impact of inflation and an end to a wage structure that leaves newer hires making one-third less than veteran workers. Fain suggested as much as a 40% wage increase, noting that the CEOs of each of the companies had their compensation packages rise substantially in the last four years.
He also called for contract provisions that would require the automakers to pay workers to do community service if their plant closes, describing it as a way to deter the companies from shuttering factories and to protect towns and local economies from being ravaged by the loss of a major employer.
“The manufacturers can absolutely afford some of those demands, but the more they get, the less competitive the companies are going to be,” Fiorani said.
In a video message streamed on Facebook on Thursday, however, Fain said the union and the automakers remained far apart. Ford, he said, offered wage increases and other provisions that were “insulting” to the UAW.
In a statement, Ford said it had offered a 9% wage increase and one-time lump-sum payments that, combined, would increase a worker’s income by 15% over the four-year contract. Fain said lump-sum payments helped but did not improve a worker’s income over a long period.
The UAW and Ford are also at odds over profit-sharing bonuses, the use of temporary workers, cost-of-living wage increases, retiree health care and several other matters.
Fain said that GM and Stellantis had not provided counteroffers to the union’s proposals and that the UAW had filed a complaint with the National Labor Relations Board contending that the two companies were not negotiating in good faith.
“I know this update is infuriating, and believe me when I say I’m fed up,” he said. “Our goal is not to strike. Our goal is to bargain a fair contract, but if we have to strike to win economic and social justice, we will.”
GM said it was “surprised by and strongly refutes” the charges in the NLRB complaint. “We have been hyper-focused on negotiating directly and in good faith with the U.A.W. and are making progress,” Gerald Johnson, GM’s vice president of global manufacturing, said in a statement.
Stellantis was “disappointed to learn that Mr. Fain is more focused on filing frivolous legal charges than on actual bargaining,” the company said in a statement. “We will vigorously defend this charge when the time comes, but right now, we are more focused on continuing to bargain in good faith for a new agreement.”
In recent weeks, workers have organized several dozen rallies and other gatherings to prepare for picketing. “I think the membership is energized,” said Christine Bostic, a battery tester at a GM electric vehicle plant in Detroit. “The facts are on our side. If it comes to a strike, I’m ready for that.”
To soften the impact of a stoppage, the union has amassed a strike fund of $825 million. It plans to pay striking workers $500 a week and cover their health insurance premiums while they are out of work.
In recent days, Fain joined the union’s negotiating teams in their talks with each of the automakers, an unusual step. Normally, the UAW president does not take a direct role until the final days or hours of negotiations.
On Wednesday, he took part in discussions with Stellantis, where tensions between the two sides have been high. When Stellantis responded to Fain’s demands with a list of cost concessions it wanted from the union, Fain took to Facebook to denounce them, dropping the document into a wastebasket.
Decades ago, when the UAW had more than 1 million members and the Big Three — GM, Ford and Chrysler, now part of Stellantis — had almost no foreign competition, a strike by the union could shut down a significant portion of the U.S. economy.
Today, the union is much smaller. GM, Ford and Stellantis employ about 150,000 UAW workers, and those companies make only a little more than 40% of the cars and trucks sold in the U.S. market.
But the union entered this year’s talks in a much stronger negotiating position than it had in years. In the past, the Detroit companies were struggling badly against foreign rivals that operate nonunion plants in the South, like Toyota and Honda, and had a significant cost advantage. In most of the last several contracts, GM, Ford and Stellantis had to get concessions on wages and benefits to survive.
Over the last 10 years, however, all three companies have rung up record profits, thanks in part to the concessions they won from the union as well as the shift in consumer preferences to high-margin trucks and large SUVs.
In the first half of this year, Ford made $3.7 billion and GM made $5 billion. Stellantis reported profits of 11 billion euros (about $11.9 billion).