The United Auto Workers union is preparing for a possible strike against one or more of the Detroit Three automakers if they fail to reach a new contract agreement by the Sept. 14 deadline. The union has made some “audacious” demands, such as a 46% pay raise, a 32-hour workweek with 40 hours of pay, and a restoration of traditional pensions, that the automakers have rejected as unrealistic and unsustainable.
UAW members vote to authorize strike
The UAW represents about 146,000 workers at General Motors, Ford Motor Company and Stellantis, the company formed by the merger of Fiat Chrysler and Peugeot. The union has been negotiating with the three companies simultaneously, instead of choosing a target company for pattern bargaining as in previous years.
The union has accused GM and Stellantis of delaying the talks by not responding to its list of demands, which were reportedly provided several weeks ago. Ford has responded, but the union is not satisfied with its counter offer. The UAW has said it will not extend the current contracts beyond the deadline and views it as a hard stop.
To show their readiness for a strike, the UAW members have voted overwhelmingly to authorize their leadership to call one if necessary. The strike authorization vote is more of a formality and was expected to pass, but it reflects the strong resolve of the workers to fight for better wages and benefits.
UAW demands reflect changing industry
The UAW’s demands are partly driven by the changing dynamics of the auto industry, which is facing fierce competition from Tesla and lower-wage foreign automakers, as well as a shift from internal combustion engines to electric vehicles. The union argues that its members deserve a fair share of the profits that the Big Three have made in recent years, especially after they agreed to concessions during the 2008-2009 financial crisis and the 2020-2021 coronavirus pandemic.
Some of the key issues that the union is pushing for include:
- A 46% pay raise for all workers, which would bring them closer to parity with Tesla workers, who earn an average of $35 per hour compared to $24 per hour for UAW workers.
- A 32-hour workweek with 40 hours of pay, which would allow workers more flexibility and work-life balance, as well as reduce overtime costs for the automakers.
- A restoration of traditional pensions for new hires, who currently have only 401(k) plans, as well as cost-of-living adjustments for retirees, who have not received them since 2009.
- A moratorium on plant closures and outsourcing, which would protect jobs and communities from the impact of automation and electrification.
- A greater investment in electric vehicle production and charging infrastructure, which would ensure the competitiveness and sustainability of the U.S. auto industry.
Automakers resist UAW demands
The automakers, on the other hand, have dismissed the UAW’s demands as unrealistic and unaffordable. They argue that they need to maintain their flexibility and profitability in order to survive in a rapidly changing and uncertain market. They also point out that they have already made significant investments in electric vehicles and worker training, as well as offered generous bonuses and profit-sharing to their employees.
Some of the main challenges that the automakers face include:
- A global shortage of semiconductors, which has disrupted production and reduced inventory levels, leading to higher prices and lower sales.
- A rising cost of raw materials, such as steel and aluminum, which has eroded their profit margins.
- A looming threat of higher taxes and stricter regulations under the Biden administration, which could affect their competitiveness and innovation.
- A growing consumer preference for SUVs and trucks over sedans and hatchbacks, which could affect their fuel efficiency and emissions targets.
- A fierce competition from Tesla and other electric vehicle makers, such as Rivian and Lucid Motors, which could challenge their market share and brand loyalty.
Potential impact of a strike
A strike by the UAW against one or more of the Big Three automakers could have a significant impact on both sides, as well as on the broader economy. A strike could send already-inflated vehicle prices even higher, affecting consumers and dealers. It could also disrupt supply chains and affect other industries that depend on auto parts and components. Moreover, it could damage the reputation and credibility of both the union and the automakers in the eyes of the public and policymakers.
The last time the UAW went on strike was in 2019, when it targeted GM for 40 days. The strike cost GM about $3 billion in lost profits and reduced its vehicle output by about 300,000 units. It also affected about 75,000 workers at GM’s suppliers and other companies. The strike ended with a new four-year contract that included an 11% pay raise, a $11,000 signing bonus, and a path to permanent status for temporary workers.
The UAW hopes to achieve similar or better results this time, but it also faces some challenges. The union has been plagued by a corruption scandal that led to the conviction of several former leaders, including two former presidents. The union has also seen its membership decline over the years, from a peak of 1.5 million in 1979 to about 400,000 today. The union has also failed to organize workers at foreign-owned plants in the South, where anti-union sentiment is strong.
The outcome of the negotiations and a possible strike will depend on several factors, such as the public opinion, the political pressure, the market conditions, and the bargaining power of both sides. The stakes are high for both the UAW and the Big Three automakers, as they try to secure their future in a changing industry.
