Threats of a strike heating up even before UAW begins negotiations with automakers

Jul 10, 2023, 6:27 PM

New vehicles sit in a parking lot waiting for transport at the former Fiat Chrysler Auto Plant, now...

New vehicles sit in a parking lot waiting for transport at the former Fiat Chrysler Auto Plant, now owned by Stellantis, Monday, July 10, 2023, in Belvidere. Ill. Contract talks begin this week between the United Auto Workers and automakers. UAW President Shawn Fain wants to halt any plant closings in the wake of Stellantis' plan to shutter the factory in Belvidere, (AP Photo/Charles Rex Arbogast)

(AP Photo/Charles Rex Arbogast)

DETROIT (AP) — Whenever the United Auto Workers union begins negotiating a new contract with Detroit’s three automakers, threats of a strike are typically heard on the floor of the old Chrysler transmission plant in Kokomo, Indiana.

This year, the talk is a little louder.

Besides the usual haggling over wages, pensions and health care, the union has set its sights on a more consequential goal: It is determined to secure a foothold in the joint-venture plants that will manufacture electric vehicle batteries in the years and likely decades ahead.

As the industry undergoes a historic transition from internal combustion engines to EVs, the automakers will likely need many thousands of workers to staff electric-battery plants. The UAW, representing 146,000 employees of the automakers, sees this year’s contract as a crucial opportunity to ensure representation in the industry’s jobs of the future.

“I’ve got almost 30 years in, and this contract seems a little different,” said Michael Hunter, a tool inspector who fixes gauges on the Kokomo plant’s equipment. “I think it’s a very strong possibility of a strike.”

Contract talks will begin this week between the union and two of the automakers, Ford and Stellantis, a company that was formed from the 2021 merger of Fiat Chrysler and PSA Peugeot. Negotiations with the largest U.S. automaker, General Motors, will start next week.

At the union’s behest, gone is the traditional friendly handshake between UAW bargainers and auto executives, a sign that the talks will be even more contentious than usual. Four-year contracts between the union and the companies will expire at 11:59 p.m. on Sept. 14.

The negotiations will be the first big test for Shawn Fain, who took office this year as the first UAW president to be chosen by a direct vote of members. Fain, who himself began his career in Kokomo — as an electrician at a Chrysler metal casting plant — has laid the groundwork for the union’s position: He has said the UAW will seek general pay raises, the elimination of wage tiers and the restoration of cost-of-living pay and pensions for new hires that were eliminated years ago when the automakers were struggling financially.

He also wants to halt any plant closings in the wake of Stellantis’ plan to shutter a factory in Belvidere, Illinois, to cut costs. But paramount to Fain is getting a foot in the door at battery plants and then securing wages that exceed the top assembly-line wage of $32 an hour now paid at UAW-represented plants.

“A new industry is being born,” Fain said in a video message to UAW members. “This is our defining moment. Our communities and our country deserve good, safe, living-wage union jobs.”

All three automakers have announced plans to build joint-venture factories with battery companies, in Indiana, Michigan, Kentucky and Tennessee. Once gas-powered vehicles are phased out, the union sees these plants as places where the automakers will move thousands of workers who now make engines and transmissions. Industry analysts expect EV sales to surge from 7% of U.S. new-vehicle sales to about 40% by 2030.

Workers who now assemble vehicles may also need other places to work, and some might lose their jobs altogether. Because EVs are simpler to build, it takes as many as 40% fewer workers to produce them.

Harley Shaiken, a professor emeritus specializing in labor at the University of California Berkeley, suggested that the industry is undergoing a seismic shift akin to the introduction of the moving assembly line, with new competitors and huge capital outlays for electric vehicles.

The companies, he noted, are investing billions while initially losing money on EVs. At the same time, the continuing work on combustion engines is paying the bills. Though the automakers clearly don’t want a strike, Shaiken said, they’re determined to contain battery costs, including wages, to remain competitive with nonunion companies.

“They are likely to take a hard line on key issues like the battery plants and the other issues like getting rid of second-tier wages,” he said.

Already, workers have voted to join the union at GM’s Ultium Cells plant near Warren, Ohio, a joint venture with LG Energy Solution. But the union says the plant is paying just $16.50 per hour to start, with a top wage of about $20 after seven years. That’s far lower than UAW production workers make. Contract negotiations at the plant are already under way.

“That is a race to the bottom,” Fain said of the pay. “These should be higher wages than our production standards, not lower.”

Ahead of the talks, Fain’s messaging has been much more combative than in years past, when union leaders generally avoided speculating about strikes. Seeking to place the burden on the automakers Fain has argued that any strike would ultimately be caused by the companies themselves, which collectively generated net income of more than $164 billion over the past decade. Last month, Fain suggested that workers were in a position to score major gains “but only if our members get organized and are ready to strike.”

The companies generally contend that their wages, profit sharing, health care and other benefits are the best in the industry. In addition, executives have argued that they’re under huge financial pressure to develop electric vehicles and to pay billions for EV and battery factories.

“What the companies are not going to want to do is to, in the electrification facilities that they’re developing, have to pay labor costs that are uncompetitive,” said Marick Masters, a business professor at Wayne State University in Detroit.

Masters suggested that Fain will have to navigate a lot of “cross-currents” in the union after having been elected in March in the aftermath of a federal bribery and embezzlement scandal that ensnared multiple union leaders. Workers in some other industries have won big contracts, at times rejecting agreements negotiated by their leaders.

“I think that regardless of who was at the helm at this round of negotiations, there is a distinct probability of a strike just simply given the difficulty of resolving the issues in dispute,” Masters said.

Given the expectations of UAW members, Fain will be under pressure to deliver on the issues he has raised. Yet the companies won’t give in to everything, Masters said.

“What might be possible is to grant some of them and do what you can do to protect job security and the internal combustion part of the companies’ operations at the present time so that the transition to electrification is less painful,” he said.

Some workers say they fear that Fain might have over-promised. If so, Masters says that could cost him when he’s up for re-election in three years.

In Kokomo, Hunter argues that what Fain wants is reasonable because workers gave up so much to keep the companies afloat in 2009, after the financial crisis nearly flattened the industry and forced the government to bail out GM and Chrysler.

Andrea Repasky, who works in the body shop of GM’s pickup truck plant in Fort Wayne, Indiana, noted that wages haven’t risen much in the past decade. She doesn’t think the union will get everything back in one contract. But she’s hoping for a significant raise, cost-of-living increases and an end to the wage tiers.

“I would probably say that they’re going to have to maybe meet us halfway,” she said of GM. “Because we really gave up a lot to keep the company afloat.”

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Threats of a strike heating up even before UAW begins negotiations with automakers