The United Auto Workers (U.A.W.) union and the three established U.S. automakers, General Motors, Ford Motor, and Stellantis, are facing significant differences in wage and other key issues with just a week left before the expiration of contracts covering 150,000 union workers.
The automakers have made offers to increase pay by 14 percent to 16 percent over four years. These offers include lump sum payments to help with inflation impact, as well as policy changes to raise the pay of recent hires and temporary workers, who typically earn about a third less than veteran union members.
However, the union’s new president, Shawn Fain, has labeled these offers as “insulting.” Fain argues that the automakers have been making near-record profits for almost a decade and that top executives’ pay packages have increased substantially. He has been seeking pay increases of around 40 percent and has warned repeatedly that workers are prepared to strike when the current collective bargaining agreements expire on Thursday.
Fain has indicated that the union is willing to strike simultaneously at all three automakers, something they have not done before. Such a widespread strike would have a significant impact on the economies of Michigan and other states.
The negotiations are taking place during a major shift from combustion engine vehicles to electric vehicles, which require fewer parts and less labor to produce. U.A.W. leaders and members are increasingly concerned that this transition will lead to job losses and a gradual reduction in wages and benefits.
The automakers are also concerned about this transition. General Motors, Ford, and Stellantis are spending billions of dollars on building new factories and sourcing battery raw materials like lithium. Company executives argue that offering substantial raises to U.A.W. members could put them at a cost disadvantage compared to Tesla, which dominates the U.S. electric car market and employs nonunion workers.
The auto industry is the largest manufacturing sector in the U.S. and contributes approximately 3 percent to the nation’s economic output. The three Detroit automakers operate numerous plants that produce around 500,000 cars per month.
According to the Anderson Economic Group, a research firm, a 10-day strike against the three companies would reduce their profits by $1 billion and result in a $900 million wage loss for U.A.W. members and workers employed by companies that rely on the automakers.
Apart from wages, the union and the companies are far apart on various other issues. These include measures to protect jobs and prevent the closure of U.S. plants, increases in retirement benefits, and cost-of-living adjustments that were previously standard in U.A.W. contracts.
Some progress has been made in discussions with Ford. In response to Fain’s demands, Ford has offered to increase wages by about 15 percent through a combination of base wage increases and one-time lump sum payments. However, Fain rejected this offer, and negotiations are ongoing.
Conversely, talks with General Motors and Stellantis have been slower. The U.A.W. filed a complaint with the National Labor Relations Board, accusing the two manufacturers of refusing to propose counteroffers and negotiating in bad faith.
General Motors responded by offering a wage increase of about 16 percent through a combination of base wage increases and lump sum payments. However, Fain believes that this offer does not adequately compensate for the impact of inflation on workers’ take-home pay over the past decade, considering the profits GM has made.
Stellantis submitted its proposal on Friday morning, offering a 14.5 percent increase in base wages with no lump-sum payments.
Negotiations are ongoing, and the outcome will significantly impact worker wages and the industry’s competitiveness in the transition to electric vehicles.
