As the UAW strike enters its 5th week, Shawn Fain, UAW President, continues to call on more plants to strike and continues to increase pressure on the Detroit Three. Last week, Fain called on Ford’s Kentucky plant’s 8700 union workers to walk off the job having received Ford’s latest proposal at a meeting that Fain took just ten minutes to leave saying, “You just lost Kentucky Truck Plant.”
So far, all three auto companies have agreed to raises between 20% and 23% over the four-year life of the contract. Ford, GM, and Stellantis agreed to re-instate cost of living adjustments (COLA) intended to mitigate inflation increases going forward. The Detroit Three have also agreed to boost the pay of temporary workers and give them a faster path to full-time and full wage status while also shortening the time it takes for a full-time worker to reach the top pay rate of their jobs.
It has also been reported that they have offered to increase contributions to the defined contribution plans in a move to address retirement benefits. One of the major impediments to reaching a settlement is the union’s demand to return to the old defined benefit plans that were eliminated back in 2008 when Stellantis and GM had to go through bankruptcy.
The union’s demand to return to these expensive retirement plans would place a huge financial burden on the Detroit Three. This is because accounting rules require the cost of fully funding the plans must be reported as a liability on the companies’ balance sheets. One might say this is just an accounting issue, but this information is what stockholders rely upon to weigh investing in the companies and financial institutions use to continue providing credit. This liability can create another bankruptcy scenario should hard times return to the auto industry.
Reportedly, the Autos may agree to purchasing annuities that would provide a fixed, predictable pension benefit. This would be a more predictable benefit payout than could possibly be achieved by 401k plans that have to invest in the stock market and are subject to its’ ups and downs. That said, annuities are expensive too.
Not much has been reported recently about the highly controversial 32-hour workweek demand. This demand asks that the auto companies reduce the workweek to 32 hours but pay the same as a 40-hour workweek and if a worker puts in over 32 hours that time in excess of 32 hours would be at time and one-half. Speculations are that this was possibly a “throw away” demand and will be given up for other better terms. Others have said it is a demand the UAW will work toward in the future, and this was just to
“tee it up.”
The other big bargaining issue that a lot of talk is happening around is what will be expected from the Detroit Three and its electric vehicle (EV) transition. Longer term, going to EV production is expected to reduce the need for production workers. The EV’s take less work to produce. This means the possibility of less auto union members to the UAW. Ford seemed to draw its line in the sand a couple of weeks ago by announcing it was pausing development of its Marshall, MI plant. The investment in this plant was Ford’s big move into the production of the batteries it will need to run the EV’s. Needless to say, Shawn Fain was not pleased about this, and it may have been a big reason he chose to strike Ford’s Kentucky plant last week.
Regardless, the autos move to EV’s and its impact on production workers will need to be addressed. This is one issue that could keep the strike going for a long time if the Detroit Three and the UAW do not come to some agreement on this.
In the meantime, other non-striking units of the Detroit Three are being impacted because there is no place to send the parts they are making. Layoffs are occurring and will continue at other auto production plants and now also at the auto suppliers that sell to the Detroit Three.
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LAYOFF RESOURCES
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Sources: Axios. UAW President Shawn Fain to Automakers: “Pony Up” (10/13/2023)
Autoblog, The UAW’s “Record Contract” Hinges on Pensions, Battery Plants (10/12/2023)