Every three years Detroit’s auto industry faces the “Auto Talks.” The Big Three and the United Auto Workers (UAW) will re-negotiate their contracts that are set to expire this September 14th. This event not only impacts General Motors, Ford, and Stellantis NV but also impacts the suppliers and vendors that support auto production.
There is always talk about “What if there is a strike?” In 2019 General Motors workers went on strike for 40 days before the current contract was ratified. It has been estimated this cost GM billions in revenue.
What makes this negotiation different, at least in regard to the UAW, is they have new leadership who were just voted in this year. UAW’s new president, Shawn Fain is leader of a UAW reform group that ended 70 years of rule by the UAW’s Administration Caucus within the union. If you recall, the reform group, UAW Member United, ended up winning five seats on the UAW’s International Executive Board late last year. This followed the infamous corruption scandal that rocked the UAW and resulted in jail time for two former UAW Presidents. From there the new president won a runoff election against the incumbent, Ray Curry. Ray Curry was appointed UAW President by union leaders back in 2021.
Fain quickly announced a more militant approach to bargaining as well as a more activist approach in politics as well. As one would expect, the UAW has supported Governor Whitmer and the Democrats in Michigan and it can probably be expected that Whitmer and the Democrats will support the UAW in its negotiation and strike threat this time around as much as it can. This will follow the UAW increasing their strike pay up to $500/week. They currently report having an $825 million dollar strike fund to back them up.
Fain and his leadership ran on a promise of “No corruption. No concessions. No Tiers.”
The challenges in this round of negotiations are big. Auto workers will be impacted by the industry’s transition to electric vehicles (EV) in the coming years. The impact this will have on job security is expected to be huge. Electric vehicles have less parts, so this requires fewer assemblers. The advent of EV production just exacerbates the turnover in jobs driven by technology and the automation of production that has cost the UAW members for decades now. Reskilling and retraining programs will be a priority in negotiations due to the change in those jobs. Negotiations are also expected to focus on investment in electric vehicle production facilities and battery technology to note a few issues these negotiations will address.
Wages are always front and center at the end of the negotiation day. Since the last contract, the U.S. and the world has experienced inflation running at a rate not seen since the late 1970’s and early 1980’s. In addition to wage increases, the UAW would like to close out the two-tier wage system that creates a significant disparity in pay between more senior employees and the ones that are entry-level. It takes eight years for a worker to go from lower starting pay to the maximum pay in a classification.
Though not much has been reported around employee benefits so far, the car companies are always looking to save money through adjustments that will lower the cost for worker group insurances. Health insurance costs alone add a significant cost to each vehicle. Also on the table, are cost of living adjustments or COLA – a pay adjustment driven by increases in the consumer price index that are made more frequently than annually.
Other major issues that the auto companies will need to fight for are room to adjust for fair trade practices in the global market, trade, and protectionist measures.
As we have done for the last several decades, ASE will monitor negotiations and host an Auto Talks Briefing when the contracts are settled. We hope this will happen without a strike or disruption to Detroit’s all important auto industry, but fasten your seatbelt this time around.
Sources:
Foley and Lardner LLP Upcoming Labor Contract Negotiations Between the UAW and The Big Three Create Auto Industry Uncertainty. Mark Neuberger 5/22/2023
Law 360 Challenger’s Wins In UAW Vote Signal New Direction At Union. Tim Ryan 12/8/22
Historic UAW Election Picks Reform Leader Who Vows More Aggressive Approach to Auto Negotiations Michael Wayland 3/25/2023
UAW to Big Three: Reinstate Cost of Living, Improve Job Protections and No Concessions UPI News 6/1/2023