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 prepared members for the possibility of a strike if their demands for improved wages and benefits are not met.
A strike against one of the companies, particularly if it lasts for a long period, could have negative economic consequences for several Midwestern states and impact the profits of General Motors, Ford Motor, or Stellantis. In 2019, G.M. workers went on strike for 40 days before reaching an agreement.
While the union has never called for a strike against all three companies simultaneously, Fain has stated that he is open to the idea this year, which could have significant implications for the broader U.S. economy.
According to Patrick Anderson, CEO of the Anderson Economic Group, “If that happens, even a short strike would impact economies throughout Michigan and across the nation.” The negotiations come at a time when automakers are investing billions of dollars in transitioning to electric vehicles, which require fewer workers. The terms of the new contract will play a crucial role in determining the future of both autoworkers and the companies in an EV-centric industry.
Significant wage and benefit gains could also strengthen the union movement across various industries.
There are political implications as well. President Biden has expressed support for the U.A.W. and their desire for a contract that sustains the middle class. However, the union has not yet endorsed Biden’s re-election bid, partly due to concerns over EV-related jobs created with federal subsidies.
While an agreement before the September 14 deadline is still possible, Fain has consistently viewed that date as a deadline for a potential strike. Fain, who took a more combative approach to negotiations, was elected U.A.W. president last year.
Sam Fiorani, vice president of global vehicle forecasting at Auto Forecast Solutions, stated, “President Fain has declared war, and that usually means there’s going to be a battle, and that battle would be a strike. The U.A.W. 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 accounts for about 3 percent of the country’s GDP, including foreign-owned companies with operations in the United States. Estimates suggest that a 10-day strike against the three Detroit automakers would result in significant wage losses and manufacturers’ losses.
Fain has presented demands to the companies, including higher wages, improved benefits, a resumption of regular cost-of-living wage increases, and the elimination of a wage structure that disadvantages newer hires. He also called for contract provisions that would require automakers to pay workers to do community service if their plant closes, as a way to discourage factory closures and protect local economies.
In response, Ford offered a 9 percent wage increase and one-time lump-sum payments. However, Fain deemed these offers “insulting” and felt they did not effectively address the long-term income of workers.
The U.A.W. and Ford are also in disagreement over profit-sharing bonuses, the use of temporary workers, cost-of-living wage increases, retiree healthcare, and other matters.
G.M. and Stellantis have not provided counteroffers to the union’s proposals, leading the U.A.W. to file a complaint with the National Labor Relations Board, claiming that the companies are not negotiating in good faith.
While the goal is to negotiate a fair contract, Fain has made it clear that the union is prepared to strike if necessary. G.M. and Ford have refuted the charges of bargaining in bad faith and are focused on reaching an agreement.
The possibility of a strike has prompted workers to organize rallies and preparations for picketing. The union has set aside a strike fund of $825 million to support striking workers.
Fain has taken an active role in the negotiations, joining the union’s negotiating teams in discussions with each automaker. This move is unusual, as presidents typically get involved in the final stages of negotiations.
The U.A.W. represents a smaller workforce compared to previous years. G.M., Ford, and Stellantis employ about 150,000 U.A.W. workers and manufacture only approximately 40% of the vehicles sold in the U.S. market.
However, the union has entered the negotiations in a stronger position than in the past, with the Detroit companies enjoying record profits over the last decade. The shift in consumer preference towards high-margin trucks and SUVs has contributed to their success.
In previous negotiations, the U.A.W. targeted a single company, such as G.M. However, this time around, the union may choose to target all three companies, with Stellantis being a likely choice due to tensions and demands related to a previously idled plant in Illinois.
The outcome of the negotiations holds significance for the U.A.W., as reopening the Belvidere plant would demonstrate the union’s success in protecting jobs. The federal government could also play a role, with the Energy Department making grants and loans available to auto companies for the transition to hybrid and electric vehicle production.
As the negotiations unfold, the potential strike action not only poses economic challenges but also has broader implications for the future of the U.S. auto industry and the role of unions in shaping worker benefits and rights.
