What UAW negotiations could cost GM, Ford and Stellantis
What UAW negotiations could cost GM, Ford and Stellantis

Members of the United Auto Workers union picket outside General Motors’ Detroit-Hamtramck assembly plant in Detroit, Sept. 25, 2019.

Michael Whelan/CNBC

DETROIT — The Oracle of Omaha is cutting investment in the U.S. auto industry amid union talks — and probably for good reason.

Warren Buffett’s Berkshire Hathaway said this week it nearly halved its stake General Motors in the second quarter. While the company did not disclose its reasons, the U.S. auto industry is expected to end the year with a challenging sales outlook, dogged by contentious contract talks between the UAW and GM. Ford and star

The talks, which involve nearly 150,000 U.S. auto workers, could cost the automaker billions in additional labor costs, downtime costs, or, in the worst case, both.

The new UAW leadership team called the talks a “defining moment” for the union. President Shawn Fain has delivered a stern message and some drama, including throwing Strandis’ contract proposal in the trash, and there’s been little talk of “give and take” or “win-win” trade.

“If there’s no deal, they’re ready to strike,” said Melissa Atkins, Obermeyer’s labor and employment partner. As far as history goes, there could be strikes.”

The union’s aggressive efforts are a boon for organized labor and the embattled UAW after a year-long federal corruption probe sent several top leaders to jail for bribery, embezzlement and other crimes , the UAW is trying to regain its footing — but not for the company or its shareholders. .

Here’s what investors should know ahead of the expiration date of the current contract between the Detroit automaker and the UAW at 11:59pm ET on Sept. 14.

$80 billion

The UAW’s current contract proposals would add more than $80 billion in labor costs to major U.S. automakers over the life of the contract, according to Bloomberg News. first reported early this month.

“One might think of these UAW contracts as a set of three large purchase orders designed to secure the labor required to assemble future vehicles, parts and assemblies – worth a total of approximately $7 billion to $80 billion over the next four years, Kristin Dziczek, an auto policy advisor at the Detroit Federal Reserve Bank of Chicago, wrote in a note. Wednesday’s blog post.

UAW President Shawn Fain greets workers at the Stellantis Sterling Heights Assembly Plant in Sterling Heights, Mich., U.S., July 12, 2023, marking the start of contract negotiations.

Rebecca Cook | Reuters

These demands include a 46% increase in wages, a return to traditional pensions, an increase in the cost of living, a reduction in the working week from 40 to 32 hours and increased benefits for retirees.

If the UAW meets those requirements, without any changes to other benefits, the automaker’s hourly labor costs would more than double, from at least $64 an hour to more than $150 an hour, according to media reports.

That would represent a significant increase over wage increases during the previous four-year agreement, according to estimates from the Center for Automotive Research. The 2019 deal is expected to add $11 to then-Fiat Chrysler (now Stellantis) average hourly labor costs per worker over the life of the contract, compared with $8 per worker at GM and Ford.

Under the current compensation structure, UAW members start at about $18 an hour and can top out at more than $30 an hour after a four-year “growth” period.

$5 billion

$825 million

The UAW’s strike fund holds more than $825 million to pay eligible strike members. The strike pay for each member is $500 a week, up from $275 in 2022.

Then-presidential candidate President Joe Biden speaks against a backdrop of American-made vehicles and UAW logos as he speaks about new proposals to protect American jobs during a campaign event in Warren, Mich., Sept. 9, 2020.

Leah Millis | Reuters

1.5 million

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