Automakers face a labor showdown as the EV era looms
By Neal E. Boudette
Detroit may be headed for a tumultuous labor showdown.
The United Auto Workers union has made a bold opening bid in negotiations for new four-year collective bargaining agreements with General Motors, Ford Motor Co. and Stellantis. Its new president, Shawn Fain, has declared that the 150,000 hourly workers employed by the companies are prepared to strike to achieve the union’s goals.
The UAW presented the automakers with a list of demands, including a 40% wage increase — premised on the compensation gains the union says the companies’ CEOs have made over the four years since the last contract talks.
And with the pivot to electric vehicles, the union wants guarantees that workers hired at the automakers’ new EV battery plants will be covered by the UAW national contracts, or at least given contracts with comparable wage and safety terms.
“I know these demands sound ambitious, but the Big Three are making record profits, so I also know they can easily afford it,” Fain said in an interview. “We have to be a lot more aggressive to negotiate better agreements, to set a standard that raises people up to a middle-class life.”
In addition to higher pay, the demands include regular cost-of-living wage increases, pension plans for a greater number of workers and a job security plan for workers when plants are shuttered. The UAW also hopes to push Stellantis to reopen a plant in Belvidere, Illinois, that was idled this year, putting 1,350 people out of work.
And it wants a workweek comprising four eight-hour days on the assembly line and a fifth day with eight hours of paid time off — essentially a 32-hour week. Fain said many workers typically worked 50 or 60 hours a week, leaving little time for family activities or rest.
In a statement, GM said it expected a new contract to provide increased wages, and that it was “important to protect U.S. manufacturing and jobs in an industry that is dominated by nonunionized competition.” But the UAW’s demands, the company added, “would threaten our ability to do what’s right for the long-term benefit of the team.”
Ford said it aimed to work with the UAW on “creative solutions,” without elaborating. Stellantis said it intended to “fairly reward” its workers but warned that any agreement must not “jeopardize our ability to continue investing” in new vehicles and technologies.
The automakers are investing tens of billions of dollars in electric vehicles but have yet to see significant sales or profits from them. The union is concerned that the move to EVs could cost thousands of jobs because electric vehicles generally require fewer workers to produce than traditional gasoline-powered cars and trucks.
Erik Gordon, a University of Michigan business professor who follows the auto industry, said he expected the union would score some gains — up to a point. “I think there will be substantial wage increases, and I think the companies can afford higher wages,” he said.
But he said the automakers were likely to resist other union demands, like the shorter workweek, company-paid health care for retirees or the ability to strike over plant closings. “The companies can’t afford anything that puts them in a straitjacket,” Gordon said. “With the EV transition, they are going to need flexibility to adjust plants and maybe even close plants.”
Fain, an insurgent who upset the incumbent president in an election this year on a vow to bring a tougher approach to negotiations, shrugged off the notion that the union’s demands would put the companies at a cost disadvantage against rivals like Toyota, Honda and Tesla, which operate nonunion plants in the United States.
“These companies are very competitive,” he said of the Detroit manufacturers, noting that each had reported substantial profits over the past 10 years, and that most of their profits come from North America. In the first half of the year, Stellantis made a record 10.9 billion euros, about $12 billion. GM generated $5 billion in profit in same period.
Union officials frequently note that for many years before the companies’ renaissance, the UAW agreed to lower pay, less costly retirement provisions for new hires and other concessions that helped the automakers regain their competitive edge after falling into dire straits and even — for GM and for Stellantis’ predecessor, Chrysler — bankruptcy.
The current agreements, which lapse Sept. 14, were reached in 2019 only after a six-week strike at GM — the company that the union designated in that cycle as its negotiating target. This time, Fain says all three companies are targets.
His supporters say it may be difficult to achieve some of the union’s main goals without walking out again, especially the demand that workers at EV battery plants are entitled to the same pay, benefits and safety standards as UAW members at other factories.
Under President Joe Biden’s Inflation Reduction Act, the federal government is providing loans to ease the cost of building the battery plants, as well as tax credits to lower the cost of the battery packs they will make.
Fain said the government should require recipients of these loans and credits to provide middle-class wages for workers. At $16.50 an hour, some workers at an EV battery plant operated by GM in Ohio “are scraping by and working two jobs,” he said. (The plant’s starting wage is $16.50, rising to about $20 after seven years. Under GM’s national contract, the wage is $17 for new hires and increases to $32 after eight years.)
Union officials argue that failing to bring battery workers up to the standards of the national agreements will eventually undermine the UAW by allowing automakers to circumvent the union.