UAW strike feels more likely as tensions rise against Big Three: What we know

2 Sep 2023

The head honcho of the United Auto Workers stated on Thursday that grievances were lodged against General Motors and Stellantis, as both companies are alleged to have disregarded union requests during the ongoing contract talks this year.

The possibility of a strike is becoming increasingly probable as the UAW and Detroit's leading automakers remain in disagreement with just a few weeks left until their contract deadline. Shawn Fain, the newly appointed UAW President, stated on Thursday, August 31st that the union presented its financial requirements to GM, Stellantis, and Ford Motor Company over a month ago, but has received a response only from Ford at present.

In the previous month, Fain, who regularly updates his members about the negotiation progress, mentioned that the discussions taking place every four years were advancing at a slow pace and achieving minimal results. As the contract deadline of September 14 draws near, Fain is blaming the three major car manufacturers for intentionally prolonging the process and violating the law.

Fain stated that GM and Stellantis, as per his knowledge, have not presented any alternative suggestions or contractual propositions in response to the union's requests. To prompt some response, Fain mentioned that the UAW has taken the step of submitting charges of unfair labor practices against GM and Stellantis to the National Labor Relations Board on Thursday.

"Fain expressed in a Facebook Live update that GM and Stellantis' deliberate avoidance of fair negotiation not only shows disrespect and hinders progress, but it is also against the law."

Representatives from both GM and Stellantis expressed their astonishment and dismissed the allegations made against them to the NLRB as baseless. Read their complete statements below.

The UAW has received a response from Ford, according to Fain, but he emphasized that the union is completely unsatisfied with Ford's alternative offer.

Instead of the UAW's request for a 46% rise in wages, Ford suggested a 9% overall wage hike along with a "reduction in actual wages caused by inflation," Fain stated. Ford apparently turned down other UAW requirements including the removal of wage levels, incorporating adjustments for the cost of living, and setting a limit on the employment of temporary staff.

Fain stated on Thursday that Ford's salary offers not only do not fulfill our requirements, but they also demean our inherent value.

In spite of the evident disagreement voiced by Fain, the fresh president has asserted that the union’s objective is not to initiate industrial action in the coming autumn. Presenting a ray of hope from the union's perspective, Fain expressed on Thursday that he remains optimistic about the possibility of reaching an agreement and bypassing a strike. However, he emphasized that this can only be achieved if both parties actively participate and come prepared to negotiate.

Even though the union doesn't necessarily plan for a strike, there is a high chance of it happening. According to officials, 97% of UAW auto workers recently voted in favor of allowing a strike. If a strike does occur, it is unclear which of the three major car manufacturers will be the focus, or specifically, the initial target. Unlike in past instances, Fain has not indicated a specific company as the primary target for a potential strike.

The UAW might go on strike against either one of the Big Three or against all of them, although some specialists suggest that a collective strike targeting Ford, GM, and Stellantis concurrently is improbable.

Under Fain's leadership following the union's initial direct leadership election, the union is adopting a more assertive strategy to obtain improved wages and working circumstances amidst continuous inflation and anxieties regarding job stability as electric vehicles become more prominent. The union president asserts that all three automotive companies have achieved unprecedented profits in recent years, yet these profits have not been adequately translated into fair compensation or perks for automobile workers.

Car Manufacturers' Statements

We are taken aback and vehemently disagree with the accusation made by the International UAW, which we find baseless and disrespectful towards our negotiating teams. Our main priority has been to engage in direct and honest negotiations with the UAW, and we have been making steady progress. The pace of our negotiations depends on the timely resolution of the extensive list of nearly 1,000 UAW demands, more than 90 of which were presented this week. Our objective remains unchanged - to reach an agreement that benefits our team members and safeguards the future of the entire GM team, all while avoiding any disruptions.

Stellantis hasn't received the document, but we are surprised by Mr. Fain's allegations that we haven't negotiated honestly. These claims are completely unfounded, and it's disappointing to discover that Mr. Fain is prioritizing pointless legal accusations instead of genuine negotiations. When the time comes, we will vigorously dispute these charges, but currently, our main focus is on maintaining sincere negotiations for a new agreement. We won't let Mr. Fain's tactics divert our attention from the crucial task of securing our employees' future.

Ford employs the largest number of United Auto Workers (UAW) members and stands out as the preeminent American car manufacturer in terms of both domestically assembled vehicles and vehicles exported from the United States. We have made these decisions based on our unwavering belief in the capabilities and dedication of American workers, our strong bond with the UAW, and our commitment to contribute to the betterment of American communities.

Ford has gone above and beyond its promises to increase employment and make financial investments throughout the previous three agreements. Just recently, they have managed to establish or preserve an astonishing 5,600 more jobs that fall under the representation of UAW, surpassing the previous commitment of 8,500 jobs. Additionally, Ford has invested a remarkable $1.4 billion above the initial commitment of $6 billion outlined in the 2019 contract.

Following extensive discussions, Ford has unveiled a gratifying proposition concerning the forthcoming agreement, which entails a secure 15% increment in combined remuneration for our hourly workforce, along with bonus payments, and enhanced perks throughout the duration of the contract.

Salaries (inclusive of extra working hours) and fixed payment rewards for Ford's UAW-affiliated hourly employees will observe a raise from an average of $78,000 in 2022 to $92,000 during the initial period of the agreement.

In addition to their salary and extra payments totaling $92,000, employees would be provided with healthcare valued at $17,500 and more benefits worth an extra $20,500 during the initial year. The healthcare plan for permanent UAW-represented workers on an hourly basis would still be amongst the most affordable ones, placing it in the superior 1% of all employer-provided medical plans regarding the minimal cost shared by employees.

Ford employees who work full-time and have permanent positions can earn up to $98,000 in their first year. This amount includes their regular wages, a bonus for adjusting to the cost of living, a bonus for ratification, profit sharing, and any additional money earned from working overtime.

In general, this deal is much superior compared to our estimation of the wages employees receive at Tesla and international car manufacturers working in the United States.

This offer holds great significance for our employees and will enable Ford to maintain its distinguished status as the foremost American automaker. Furthermore, it will grant us the necessary adaptability within our manufacturing capabilities to meet customer needs in an ever-evolving industry. Accepting this proposal would also enable Ford to effectively compete, invest in innovative products, expand, and share the resulting success with our workforce through profit sharing.

We are dedicated to providing every UAW worker at Ford with the chance to establish a successful career and become a permanent full-time employee with competitive middle-class salaries and perks. Our proposal completely eliminates different wage levels, allowing all employees to earn top wages in the industry. We also shorten the time it takes for employees to reach the highest pay rate by 25%, granting a 20% increase for temporary workers, and extending the same bonus given to permanent employees to those who are temporary. Ford's percentage of temporary employees is exceptionally low, ranging from only 2% to 3%, which is the smallest among the top three automakers.

However, we will not enter into an agreement that puts our capability to invest, expand, and distribute earnings with our staff at risk. Such a decision would jeopardize our future and negatively impact all those associated with Ford, including our highly esteemed UAW employees.

Ultimately, we hold the belief that there exists a route to achieve collective success in the current highly competitive and rapidly evolving era of the American automobile sector. Kindly refer to the information provided below for further elucidation.

How A UAW Strike May Appear

A work stoppage is a strategy employed by employees aiming to pressure their employers into meeting their requests. If the UAW were to opt for a work stoppage, both the workers and the companies would be affected.

Currently, the United Auto Workers (UAW) boasts a membership of approximately 150,000 automotive workers. Within the union, a strikingly substantial strike fund of around $825 million has been accumulated, ensuring that those engaged in picketing would receive a weekly compensation of approximately $500. Undoubtedly, for the majority of employees, this sum would represent a reduction in their regular pay. Nonetheless, it surpasses the compensation provided during the General Motors strike in 2019.

Nevertheless, analysts argue that these funds may deplete rapidly depending on the scale of workers engaging in strikes simultaneously. The UAW has the option to initiate strikes against either one, two, or all three of the motor companies located in Detroit. However, a few industry specialists doubt the possibility of workers striking against all three manufacturers.

According to the Anderson Economic Group, an economic consulting company, the strike carried out by car factory workers at GM in 2019 resulted in a reported loss of $2 billion for the company. Surprisingly, GM, as stated by the Anderson Economic Group, failed to recover from this significant setback.

Important: The consultancy firm provides services to both GM and Ford.

Upon calculating the figures for a potential labor strike in 2023, Anderson Economic Group discovered that Ford, for instance, would suffer a loss of $325 million in earnings if its employees strike for a period of 10 days. Furthermore, an estimated $341 million in direct wages would be forfeited.

If employees at the trio of car manufacturers decide to go on strike simultaneously, the company calculates that the three firms would suffer a collective earnings drop of $989 million over the course of ten days. It is anticipated that a significant portion of this loss, amounting to approximately $856 million, would be directly related to wages not being paid.

These figures might seem elevated, but the purpose of a strike is precisely to inflict financial consequences on the employers.

By contrast, the UAW estimates that the Big Three collectively generated a profit of $21 billion in the initial six months of 2023. President Fain also mentioned that over the past decade, these companies accumulated a cumulative profit of $250 billion from their operations in the United States.

Not only would a strike affect the leading three companies, but it would also create a domino effect throughout the entire distribution network, according to specialists.

According to Jeff Rightmer, a professor of global supply chain management at Wayne State University, if the strike endures for a duration similar to the one in 2019 (six weeks), it is highly probable that the lower portions of the supply chain will experience repercussions. Although the larger and more robust tier one suppliers will be able to sustain the impact for a longer period, Rightmer foresees that tier two and tier three suppliers, some of which are small enterprises, will be compelled to shut down if the strike persists.

Rightmer mentioned that establishments such as bars and restaurants located in close proximity to workplaces where strikes are taking place may also encounter negative consequences.

Car dealerships could also be negatively affected by a suspension in manufacturing due to a strike. The already limited stock at dealerships may decrease even further, resulting in dealers running out of vehicles quickly.

Aside from their aim to receive higher wages, the labor union has also expressed their wish for improved employee work-life harmony and assurance of job stability in light of the substantial investment in electric vehicles. The workforce is particularly worried about how the introduction of EV production will impact their future, as these vehicles necessitate fewer workers for manufacturing, albeit those workers should undergo more comprehensive training.

These are the requests made by the UAW, as listed on the union's official webpage:

Ensure significant salary hikes.

Bring back Price Adjustments for Cost of Living (COLA).

Universal guaranteed pension for all employees.

Restore healthcare benefits for retired individuals.

Secure the privilege to engage in strikes regarding the shutting down of industrial facilities.

Create a work registry named the working household safeguard initiative.

Convert all temporary staff to full-time employees, and impose strict constraints on the prospects of temporary workers.

Additional vacation days to spend quality time with loved ones.

Dramatically enhance pension benefits for retired individuals.

As the negotiations that happen every four years are currently taking place, the major three companies claim that they are experiencing high expenses in the process of transitioning to focus more on electric vehicles. In a recent announcement made by GM, the company expressed their commitment to reaching a suitable agreement that benefits all parties involved.