Three Detroit automakers and the United Auto Workers have begun negotiations on perhaps the most controversial new labor contract in half a century.
The talks, which officially kicked off on Thursday, show that General Motors, Ford Motor and Stellantis have enjoyed a long run of high profits in North America, and that the UAW will regain many of its wage and benefits concessions. It was done in response to the election of a pledged chairman. Unions have been abandoned in the last 20 years.
Outsider candidate Sean Fain won an upset election victory over the incumbent UAW president this year, largely by promising to take a more belligerent approach to contract negotiations than his recent predecessors. He has since said he was prepared to close the factory to meet union goals representing 150,000 hourly workers employed by three Detroit companies.
Fain, 54, said Wednesday as he greeted workers leaving a GM electric vehicle plant in Detroit, “If the Big Three don’t give us their fair share, they’re choosing to strike themselves. I will be there,” he said. “We are not afraid to take action. Our union is united. We cannot be afraid to stand up and fight.”
The next day, Fain broke with tradition and emphasized his views by refusing to participate in the usual opening ceremony. In the past, UAW presidents have shook hands with automaker chief executives as a sign of harmony for photographers and photographers. Television cameras came in before the two sides entered into negotiations.
“I’m not going to shake hands with any CEO until they do the right thing and fix the broken status quo,” Fain said.
The negotiations are taking place at a time when the labor movement in the United States is showing renewed strength. A strike by Hollywood writers against film and TV producers is just in its third month. Hollywood actors went on strike on Friday. Graduate teachers, some represented by the UAW, have been on strike at universities across the country since April. Los Angeles hotel workers took three days off work in June.
Over the past few years, more than 300 Starbucks stores, as well as some Trader Joe’s stores, Chipotle restaurants, and an Amazon warehouse in New York have formed labor unions. The Teamsters union has threatened to strike against UPS in August if the two companies cannot agree on a new contract.
“We’re seeing renewed interest in unions and the willingness to strike in a very diverse workplace,” said Harley Scheiken, professor emeritus at the University of California, Berkeley, who has followed the labor movement for more than 30 years. “What we don’t yet know is how big this movement will be and how far it will spread.”
The negotiations coincide with the start of the 2024 presidential campaign. The UAW has traditionally backed Democratic candidates, but unions have withheld their support for President Biden to encourage the White House to expand its support for the unions.
In Detroit, contract negotiations are underway amid a significant transition to electric vehicles. GM, Ford and Stellantis are investing billions in new technology and battery factories, but have so far introduced only a handful of new EVs, although sales of these vehicles are growing. At low levels, none of the three automakers has turned a profit yet. Off EV
The transition is a cause for concern for unions because EVs have far fewer parts than traditional cars, have no exhaust systems, transmissions or fuel systems, and require fewer workers to produce. GM, Ford and Stellatis have started building battery plants with joint venture partners, which are not automatically covered by UAW labor contracts.
The union has organized a GM battery plant in Ohio, where workers must negotiate wage rates and terms outside of the UAW’s main agreement.
GM chairman Earl Fuller Jr. of Local 160 in Warren, Michigan, said: “Electrification is a problem. We’re seeing jobs being lost and we need to address that.” .
While automakers are investing heavily in electric vehicles, they are still making big profits selling pickup trucks and sport utility vehicles, aided by record new-car prices. Over the past decade, GM and Ford have typically generated between $7 billion and $11 billion in annual pre-tax profits in North America. Stellantis, the smallest of the three, has more than $13 billion in pre-tax earnings in the region in 2021 and 2022, but typically has slightly lower profits.
Sheiken said unions have considerable leverage in negotiations. “This shift to EVs is a very big bet for automakers,” he said. “Strikes can be very costly for businesses.”
He estimates that a strike is likely, but not certain.
Automakers argue that it is unfavorable in terms of labor costs. According to Ford, the hourly cost of UAW labor costs is $64, which is $9 higher than the labor costs of foreign automakers with ununionized factories in the U.S., which they use as well. We estimate it to be $14 to $19 more than Tesla’s. non-union workers;
In the past, GM, Ford and Stellatis have often suffered losses or little profits. Each needed concessions from the union to survive, and the union steadily agreed to many of the automakers’ demands in a series of contracts that began in 2003.
Medical expenses for UAW retirees have been transferred from automakers to the union trust fund. Unions agreed to allow manufacturers to start hiring new workers at about half the $32 an hour wages of veteran workers. A new worker gets her 401(k) account as a retirement benefit in lieu of a guaranteed pension. Manufacturers pay hefty profit-sharing bonuses (sometimes more than $10,000 per worker), but the UAW does not implement cost-of-living adjustments that have protected workers from inflation in the past.
In contract negotiations four years ago, the union sought to regain its position on these issues. Automakers agreed to raise hourly wages and share profits, improve conditions for temporary workers, and change wage tiers, but not enough to abolish wage levels to a single wage.
GM workers also went on strike for 40 days, demanding that the company roll back plans to close its Rosetown, Ohio plant, but eventually ratified a deal that allowed the plant to close.
The 2019 contract included a provision for GM to invest $3 billion in the Detroit plant, which also specified a possible closure. The funding was used to transform the site into GM’s flagship EV plant, now called Factory Zero, where the electric Cadillac SUV and the electric GMC Hummer are produced.
Margaret Hudgins Washington, 56, a battery operator at the plant, was one of dozens who stopped to talk to Fain on Wednesday. She’s been working there for about a year, her hourly wage is about $16, and she hopes to put an end to the two-tier wage structure.
“Our workers are set back by inflation,” she said. “So I think we need a better salary.”
She and many others uniformly supported Fain’s tougher approach.
“I think he’s doing the right thing. Now is the time,” said Kevin Winston, an electrician and father of five in Brownstown, Michigan. I am 100 percent ready to strike and have never heard anyone say they shouldn’t. “
