What to know about UAW strike at GM, Ford, Stellantis

Combative UAW President Shawn Fain has threatened a strike against any of the three companies that have not reached an agreement when their contracts with the union expire at 11:59 p.m. ET on Thursday. .

The two sides began exchanging wage and benefit proposals last week. While some incremental progress appears to have been made, a final agreement may come too late to avert strikes by UAW workers at factories in multiple states. Any strike could cause significant disruption to U.S. auto production.

Here’s an overview of the issues holding up a new contract agreement, and what consumers might face if a protracted strike occurs:

What do workers want?

The union is demanding a 46 percent general wage increase over four years, an increase that would lift top assembly plant workers’ pay from the current $32 an hour to about $47 an hour. In addition, the UAW is calling for an end to different wage levels for factory jobs; a 32-hour work week with 40 hours pay; and a return to traditional defined benefit pensions for new employees, who now only receive a 401(k)-style retirement plan. ; and the return of benefits such as cost-of-living pay increases.

Perhaps most importantly for the union, it can represent workers at 10 electric vehicle battery plants, most of which are built by joint ventures between the automakers and South Korean battery makers. The union wants these plants to receive maximum UAW wages. Part of the reason is that as the auto industry increasingly shifts toward electric vehicles, workers who now make parts for internal combustion engines will need a place to work.

“Our union will not stand idly by while they replace oil barons with battery barons,” Fein said.

Currently, UAW workers hired after 2007 do not receive defined benefit pensions. Their health benefits are also less generous. For years, unions have given up on general wage increases and cost-of-living increases to help companies control costs. While top assembly workers earn $32.32 an hour, temporary workers start at just under $17. Still, full-time employees received profit-sharing checks this year, ranging from $9,716 at Ford to $14,760 at Stellantis.

Fearn himself admitted the union’s demands were “bold”. But he believes the highly profitable automakers can afford to significantly raise wages for workers to make up for the wages unions gave up to help the companies weather the 2007-2009 financial crisis and Great Recession.

Over the past decade, the Detroit Three have become powerful profit generators. Collectively, they reported net profits of $164 billion, including $20 billion this year. The CEOs of the three major automakers make millions of dollars a year.

What suggestions did the company make?

One of Ford’s contract proposals recommended cumulative salary increases of 10 percent over the four-year contract, plus several one-time payments, including $6,000 to account for inflation. General Motors is also offering a 10% incentive with a similar one-time payment. Stellantis (formerly Fiat Chrysler) has proposed a 14.5% salary increase over four years, and the salary package does not include a one-time payment. But it proposed a one-time payment to deal with inflation. All offered contract approval bonuses but rejected UAW demands for shorter work weeks.

Ford said that under its proposal, average annual wages, including overtime and one-time bonuses, would be calculated to increase from an average of $78,000 a year last year to more than $92,000 in the first year of the new contract.

The companies rejected the union’s demands as too costly. The argument for automakers is that they will absorb huge capital expenditures in the coming years to continue making internal combustion engine vehicles while designing electric vehicles and building battery and assembly plants for the future.

They also argue that the overly extravagant United Auto Workers contract would burden them with expenses that would drive up retail vehicle prices, allowing Detroit automakers to charge higher prices than rivals in Europe and Asia. Outside analysts say that if wages and benefits are included, workers at Detroit Assembly Plant 3 now earn about $60 an hour, while workers at Asian automaker plants in the United States earn $40 to $45.

Stellantis Chief Operating Officer Mark Stewart told employees in a letter on Friday that the company’s proposal to the union would make it financially feasible to hire the next generation of workers.

“It also protects the company’s future ability to continue to compete globally in an industry that is rapidly transitioning to electric vehicles,” Stewart wrote.

What happens next?

Unions and companies are continuing to make wage and benefit counter-deals and will likely continue to do so during the work week ahead of Thursday night’s strike deadline.

“Things are changing, but it’s going very slowly and we’re a long way away in four days,” Fein said during a video event on Sunday night.

On Friday, Fein said the company’s offers were insufficient and he had thrown them in the trash. But he said he visited GM and Ford on Sunday and was preparing to meet with Strantis on Monday.

On the one hand, the UAW has taken a confrontational stance. In August, its members voted 97% to authorize leaders to call a strike. The company has filed unfair labor practice charges with the federal government against Stellantis and General Motors, which the companies have denied. The union called the contract offers from the three companies “disappointing”.

Still, Fein offered some hope, saying the union doesn’t want to strike and would rather reach a contract agreement with the automaker.

Will the strike lead to higher car prices?

finally. General Motors, Ford and Stellantis continue to operate their plants around the clock to increase supply to dealers. But it also puts more money in the pockets of UAW members and strengthens their financial cushion.

As of the end of August, the three major automakers had enough vehicles in total to last 70 days. After that, they’ll be in short supply. Buyers who need a vehicle may go to non-union competitors, who can charge them more.

Cars are already scarce compared with years before the pandemic, which triggered a global shortage of computer chips and left car factories in trouble.

As of the end of July, automakers had about 1.96 million vehicles in inventory, said Sam Fiorani, an analyst at consulting firm AutoForecast Solutions. Before the pandemic, that number was as high as 4 million.

“A shutdown of three weeks or more will quickly deplete excess supply, raise vehicle prices and drive more sales toward non-union brands,” Fiorani said.

Will strikes harm the economy?

Yes, if it’s a long time, especially in the Midwest where most of the auto plants are concentrated. The auto industry accounts for about 3% of the U.S. economy’s gross domestic product (total output of goods and services), and Detroit automakers account for about half of the total U.S. auto market.

In the event of a strike, workers would receive strike pay of about $500 per week – far less than what they would have earned on the job. As a result, millions of dollars in wages will be wiped out of the economy.

Automakers will also be hurt. Anderson Economic Group calculated that if the strike against the three companies lasted only 10 days, they would lose nearly $1 billion. During the 40-day UAW strike in 2019, General Motors alone lost $3.6 billion.

Which side has the advantage?

Hard to say. These companies have plenty of cash on hand to withstand strikes. The union has an $825 million strike fund. But if all 146,000 workers strike, the funds will be exhausted in less than three months.

The union’s inability to organize U.S. plants run by foreign automakers is a disadvantage for the union because wages at those companies are lower than those at Detroit companies.

But organized labor has been flexing its muscles and winning big contract settlements at other businesses. For example, in a settlement with UPS, the Teamsters won a $49-an-hour wage for its highest-paid drivers after five years.

So far this year, there have been 247 strikes involving 341,000 workers, the most since Cornell began tracking strikes in 2021 but still well below numbers in the 1970s and 1980s.