DETROIT (AP) — A 46% pay raise. A 32-hour week with 40 hours of pay. A restoration of traditional pensions.
The demands that a more combative United Auto Workers union has made to General Motors, Stellantis and Ford – demands that even the UAW president calls “daring” – move them closer to a strike when their contract expires on September 14th expires.
The automakers that make billions in profits rejected the UAW’s wish list. They argue his demands are unrealistic at a time of fierce competition from Tesla and lower-wage foreign automakers as the world shifts from internal combustion engines to electric vehicles. The wide divide between the parties could mean a strike against one or more of the automakers, which could drive already inflated vehicle prices even higher.
A possible strike by 146,000 UAW members comes against a backdrop of increasingly emboldened U.S. unions of all kinds. The number of strikes and threatened strikes is increasing, involving Hollywood actors and writers, major settlements with railroads and major concessions from corporate giants like UPS.
Shawn Fain, who won the UAW chairmanship in the UAW members’ first direct election this spring, has set high expectations and assured union members that they can achieve significant gains if they are willing to walk the picket line.
In a speech to a Labor Day parade in Detroit on Monday, Fain said that if the companies do not present a fair contract, “starting September 14th, we will take action to enforce it by any means necessary.”
Fain described the contract negotiations with Detroit automakers as a form of war between billionaires and ordinary middle-class workers. Last month, in an act of display during a Facebook Live event, Fain condemned a contract proposal from Stellantis as “garbage” – and threw a copy of it in the trash “where it belongs,” he said.
Over the last decade, the Detroit Three have developed into robust profit generators. They have had a combined net profit of $164 billion over the last decade, including $20 billion this year. The CEOs of all three major automakers earn millions in annual compensation.
Fain spoke to Ford workers at a plant in Louisville, Kentucky, last month and complained about one standard for the corporate class and another for rank-and-file workers.
“They’re getting salaries that are out of control,” he said. “They get pensions that they don’t even need. You receive first-class healthcare. They work whenever they want. The majority of our members do not receive a pension these days. It’s crazy. We receive substandard healthcare. We can’t work remotely.”
UAW members voted overwhelmingly to call on their leaders to strike. This also applies to Canadian autoworkers whose contracts expire four days later and who have identified Ford as their destination.
The UAW has not said whether it will select a target automaker. All three could go on strike, although this could result in the union’s strike fund being depleted in less than three months.
On the other hand, if a strike lasted just ten days, it would cost the three automakers almost a billion dollars, the Anderson Economic Group has calculated. During a 40-day UAW strike in 2019, GM alone lost $3.6 billion.
Last week, the union filed unfair labor practice charges against Stellantis and GM, which it said have not yet made counter-proposals. As for Ford, Fain claimed that its response by rejecting most of the union’s demands “insults our true worth.”
All three automakers have responded that the union’s allegations are unfounded and that they are seeking a fair deal that would allow them to invest in the future.
Marick Masters, an economics professor at Wayne State University in Detroit, said the strong U.S. labor market and companies’ outsized profits gave Fain leverage in the negotiations. In addition, automakers are ready to launch a number of new electric vehicles, which would be delayed by a strike. And they only have a limited supply of vehicles to withstand a prolonged strike.
“They’re vulnerable,” Masters said.
“The question really is,” he said, “are the parties willing to move forward on some of these things at the negotiating table?” That wasn’t clear yet.”
Even Fain called the union’s proposals “bold” as they called for restoring traditional defined benefit pensions for new hires; an end to wage tiering; pension increases for pensioners; and – perhaps the boldest of all – a 32-hour week for 40 hours of pay.
Currently, UAW employees hired after 2007 do not receive defined benefit pensions. Their health benefits are also less generous. For years, the union foregone across-the-board wage increases and passed up 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 that ranged from $9,716 at Ford to $14,760 at Stellantis.
At the Labor Day parade in Detroit, workers said a strike was now likely.
Jason Craig, a worker at a Stellantis parts warehouse near Detroit, said his company appears to be the most likely target of the strike, but he said the union could turn to Ford because it appears to be more family-oriented. Fain reiterated on Monday that all three companies remain strike targets.
Perhaps the biggest issue blocking a contract agreement is union representation at the 10 electric vehicle battery plants the companies have proposed. Most of these plants are joint ventures with South Korean battery makers who want to pay less.
“These battery workers deserve the same wage and salary standards that generations of auto workers have fought for,” Fain told members.
The union fears that electric vehicles will require fewer workers to assemble because they are easier to build and have fewer moving parts. Additionally, workers in internal combustion engine and transmission factories will likely lose jobs as a result of the transition; They will need a place to go.
Fain, a 54-year-old electrician who comes from a Chrysler factory in Kokomo, Indiana, is among several union leaders across the economy who are stepping up their demands and flexing their muscles. There have been 247 strikes so far this year, involving 341,000 workers – the most since Cornell University began tracking strikes in 2021, although still well below numbers in the 1970s and 1980s.
Masters suggested that automakers would not be able to quickly replace striking workers. The tight labor market, reduced interest in manufacturing jobs and comparatively modest wages would make it difficult to hire enough workers.
Some auto workers are looking to the UPS contract, with a top wage of $49 an hour for experienced drivers, as a benchmark for their negotiations. Others say they just hope to get close to that number.
But automakers say a generous agreement would leave them with costs far higher than their rivals once they start producing more electric vehicles. The inability to integrate Hyundai-Kia, Nissan, Volkswagen, Honda and Toyota factories into the union weakened the UAW’s influence, said Harry Katz, a labor professor at Cornell University.
When factoring in the value of their benefits, workers at the Detroit 3 automakers are paid about $60 an hour. The equivalent amount for foreign-based automakers with U.S. factories is just $40 to $45, Katz said. A large part of the inequality is due to pensions and health care.
If Detroit companies end up with higher labor costs, they will pass them on to consumers, making vehicles more expensive, said Sam Fiorani, an analyst at AutoForecast Solutions, a consulting firm.
“More than half of the vehicles built in the United States are manufactured in non-union plants,” he said. “So if you increase the price of building a union vehicle, you could price yourself out from competing with vehicles already built in North America.”
A strike lasting more than a few weeks would reduce the still-scarce vehicle inventories on automakers’ dealer lots in Detroit. As demand continues to be strong, prices will rise.
UAW members “remind management that management cannot operate these factories without an agreement,” Katz said.
Masters and Katz say there is still time to reach an agreement without a strike. Katz predicts a deal lower than the UPS numbers, perhaps with 3% across-the-board salary increases plus cost-of-living adjustments, higher company contributions to 401(k) accounts for newer workers and quicker transitions to top wages.
Still, Katz suggested, Fain needed to back up his harsh statement: “He has to prove himself.”
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AP writers Bruce Schreiner in Louisville, Kentucky, and Christopher Rugaber in Washington contributed to this report.