Expanding UAW Strikes and Ongoing Negotiations: A Comprehensive Overview
The United Auto Workers union expanded strikes against Detroit automakers Friday, ordering 7,000 more workers to walk off the job in Illinois and Michigan to put more pressure on the companies to improve their offers.
It was the second time the union has widened the walkouts, which started two weeks ago at three assembly plants before the most recent addition of a Ford plant in Chicago and a General Motors factory near Lansing.
Union President Shawn Fain explained in a video message that the strikes were escalated because Ford and GM were unwilling to make significant progress in contract negotiations. Notably, Jeep manufacturer Stellantis was not included in the third round of strikes.
In response, Ford and GM engaged in a heated exchange with the union. Ford accused the UAW of obstructing a deal, primarily related to union representation at electric vehicle battery plants, many of which are collaborative ventures with a Korean manufacturer.
Ford CEO Jim Farley emphasized that there is still an opportunity to reach an agreement and prevent a serious crisis. The company also expressed concerns about the impact of the work stoppages on vulnerable companies that supply parts to the struck factories.
GM’s head of manufacturing criticized the union’s actions, suggesting that they were calling for more strikes primarily to garner attention rather than making genuine progress.
The GM plant in Delta Township, located near Lansing, is responsible for producing large crossover SUVs such as the Chevrolet Traverse and Buick Enclave. It’s worth noting that a nearby metal parts stamping plant will remain operational, as confirmed by Fain.
In contrast, the Chicago Ford plant is responsible for manufacturing vehicles like the Ford Explorer, Explorer Police Interceptors, and the Lincoln Aviator SUV.
Fain expressed optimism that union negotiators were still in discussions with the companies and believed that they could eventually reach agreements.
Regarding Stellantis, Fain noted significant progress on Friday, including the agreement on unspecified cost-of-living raises, the right for workers not to cross picket lines, and the right to strike in case of plant closures.
Raneal Edwards, a long-serving GM employee at the Lansing-area factory, expressed surprise and satisfaction upon learning that her plant would be joining the strike.
Concerns Beyond Wages
Raneal Edwards expressed her viewpoint, stating, “I feel like they don’t understand that this is about more than just wages; it’s about ensuring job security.”
She affirmed her support for the UAW’s incremental plant addition strategy, saying, “I appreciate it because it keeps us alert, as no one can predict what will come next.”
However, in a communication to workers on Friday, Edwards’ superior, GM manufacturing chief Gerald Johnson, mentioned that the company had not yet received a counteroffer from union leaders in response to the economic proposal made on September 21.
Automakers have consistently expressed their willingness to offer wage increases but are concerned that an expensive contract might make their vehicles costlier compared to those produced in nonunion U.S. facilities run by foreign automakers.
Ford’s CEO, Jim Farley, accused the union of using union representation of battery plant workers as leverage in negotiations. During a conference call with industry analysts, he argued that high wages at battery plants could drive up the prices of Ford’s electric vehicles, potentially surpassing those of competitors like Tesla.
Balancing Priorities
Jim Farley, Ford’s CEO, emphasized their stance, stating, “A landmark contract? That’s not an issue. But jeopardizing our future? That’s a significant concern. We won’t allow it.”
Farley clarified that Ford’s battery plants had not yet been constructed and hadn’t undergone UAW organization since the workers for these plants wouldn’t be hired for several years.
In response, Shawn Fain accused Farley of providing misleading information about the negotiations, asserting that the union had presented a counteroffer to Ford on Monday, yet they had not received a response. Fain highlighted significant disparities in economic matters with Ford, such as the defined-benefit pension for workers hired after 2007 and health insurance for retirees, as newer employees receive a 401(k)-style retirement plan.
Nevertheless, Fain underscored the ongoing concern for “job security in the EV transition.”
The union continued to argue that labor expenses account for only a small fraction (four to five percent) of a vehicle’s overall cost, asserting that the automakers are highly profitable and can afford substantial wage increases.
Wedbush analyst Dan Ives observed that the expanded strikes indicated both sides were preparing for a potentially protracted battle. He noted that President Joe Biden’s administration was closely monitoring the situation, with Biden showing support for the union’s cause by visiting the Detroit area and participating in a GM parts warehouse walkout.
On the other side, Republican front-runner Donald Trump also visited the Detroit area, attending a rally at a nonunion parts manufacturer.
The proposed offers from the automakers could raise the cost of an average electric vehicle by $3,000 to $5,000, potentially affecting consumers, as per Ives’ analysis.
The issue of electric vehicle battery plants holds significant importance for the union’s future. Some industry executives, including Farley, believe that EV production requires up to 40% fewer workers due to the simplified manufacturing process. Consequently, the union is striving to organize battery plants and secure higher wages for displaced workers, particularly those with experience in traditional combustion engines.
Contrary to these views, other industry officials, including GM CEO Mary Barra, argue that there will be sufficient job opportunities as the industry transitions away from gasoline vehicles.
The last known wage offers from the automakers were approximately 20% over the course of a four-year contract, falling just over half of what the union had demanded. Additional contract enhancements, such as cost of living adjustments, reinstatement of defined-benefit pensions for newly hired workers, and the elimination of wage tiers within the union, are also under consideration.
The strike began on September 15, initially targeting one assembly plant from each company. Subsequently, it expanded to include 38 parts distribution centers managed by GM and Stellantis. Ford was exempt from this expansion due to progressing negotiations with the union.
The union has strategically structured its strikes to allow the companies to continue producing their top-selling and most profitable vehicles, primarily large pickup trucks and SUVs. In contrast, previous strikes had shut down assembly plants producing midsize pickup trucks, commercial vans, and midsize SUVs, which were less profitable than their larger counterparts.
The latest strikes against GM and Ford are focused on crossover SUVs, which are substantial profit generators for both companies.
This year, Shawn Fain introduced a novel strategy targeting a limited number of facilities at all three automakers, departing from the traditional approach of selecting a single company for negotiations.
Presently, approximately 25,000 workers, roughly 17% of the union’s total of 146,000 workers across the three automakers, are participating in the strike.