Strike fever is about to sweep through the nation’s auto industry, with the United Auto Workers preparing to walk off the job on September 14th if the “Big Three” automakers — Ford, General Motors, and Chrysler’s parent company, Stellantis — don’t agree to the union’s demands for pay increases, shorter working days, and stronger pensions.
A simultaneous strike of all three major automakers has never happened, but it has been brewing since at least the Great Recession of 2008 when union workers agreed to major concessions in their contract to help keep the car companies from filing Chapter 11. Still, a strike could significantly impact the US economy and could trigger a rise in car prices. The union says the cost of not doing a strike could be much higher.
A simultaneous strike of all three major automakers has never happened
Simmering at the center of contract negotiations between the union and the automakers are lingering questions around the industry’s massive, multibillion-dollar shift to electrification. Autoworkers have expressed deep concerns about EVs, as they are assumed to need fewer workers to assemble.
Meanwhile, the Big Three are pumping billions of dollars into EVs in a race to catch up with Tesla, which employs a nonunion workforce. These investments are being subsidized by the Biden administration, which has put EVs at the center of its efforts to fight climate change.
So what’s going to happen? How will it all turn out? Let’s answer some basic questions first.
How likely is a strike?
Pretty likely! According to analysts at Evercore ISI and Wedbush Securities, there’s about 85 percent of a strike at all three companies. The union’s most recent proposal was a 36 percent wage increase, down from 40 percent, which suggests talks are still ongoing. But the two sides still seem far apart on most issues.
But it could also be a lot more narrow than previously thought. Shawn Fain, president of UAW, has been making the rounds on cable news outlining the union’s plan to implement “targeted strikes” at specific Ford, GM, and Stellantis plants, according to CNBC. That would mean only certain factories could face work stoppages rather than a national walkout, which is what GM faced back in 2019.
What is the union demanding?
Simply put, better pay, shorter working hours, a shift back to traditional pension, the elimination of compensation tiers, and a restoration of cost-of-living adjustments. The UAW points out that its members have made huge concessions over the last two decades, as the auto industry was roiled by foreign competition and economic downturn.
Fain was elected president of UAW in March (the first time a UAW president was picked through a democratic vote by the union’s membership) on a promise of “no corruption, no concessions, no tiers,” according to Labor Notes, which likened his election to the shakeup at the Teamsters. Fain has said he has a mandate to fight for his membership, and that means taking his union in a more militant direction.
What are the automakers saying?
Their main issue is the cost gap that exists between themselves and nonunion factories in the South owned by foreign automakers like Nissan and Toyota. They say this puts them at a major disadvantage competitively because it means they’re spending roughly $64-$67 an hour on total labor costs, including benefits, while their rivals only spend around $55 an hour.
Meanwhile, Tesla incurs labor costs of $45 to $50 per hour for its nonunion workforce. The Big Three argue this is why they’ve struggled to keep up with Tesla, which still commands around 60 percent of the EV market in the US.
What about the auto industry’s record profits?
Good question! This is one of the major arguments put forward by the union. They claim that in years past, they’ve been willing to come to the table to make major concessions to ensure the Big Three stay afloat. Now they say the script is flipped, and at a time when the industry is posting record profits — a combined $21 billion in just the first six months of 2023, according to UAW — the companies are unwilling to share the success with the workforce.
“Record profits mean record contracts,” Fain has said.
Where do EVs fit in to all this?
EVs are not the main source of contention between the union and the Big Three, but they are certainly a supporting player. Fain wants autoworkers who work on EVs to enjoy the same pay and benefits as UAW members.
Most of the EV factories coming online in the US are not unionized, though there are signs that is starting to shift. Last December, workers at a GM joint venture battery plant in Ohio overwhelmingly voted in favor of unionizing under the UAW.
EVs require fewer parts and, thus, fewer workers on the assembly line. Union leadership is concerned that a wholesale shift to electric would dramatically hurt its membership, which has been declining over the decades.
Privately, Fain has been more skeptical about the shift to EVs, calling it a “race to the bottom” in an internal memo, according to The New York Times.
How would a strike affect the Big Three’s EV plans?
Analysts warn of a “potential nightmare situation” for GM and Ford, especially, which have set the stage for a massive EV transformation over the next decade that will likely define their future success.
In the short term, a strike could have an effect on car prices. A strike means fewer cars are produced, and as we learned in 2021, that can lead to a steep rise in prices.
“Hopefully this gets resolved before it gets to that point,” @CarDealershipGuy, independent dealership owner and pseudonymous Twitter user, wrote the other day. “But tbh, I highly doubt it.”
How much would a strike cost?
Often, the cost of a strike is portrayed in terms of its effect on a state or nation’s economic output. For example, Bloomberg reports that a 10-day strike would “reduce US gross domestic product by $5.6 billion and likely push the Michigan economy into a recession.”
But the union insists the cost of doing nothing is actually much higher. “Corporations want us to believe there’s nothing we can do to stop our race to the bottom,” Fain said in a Facebook Live video on September 8th. “Never forget that when our labor isn’t valued, we have the power to withhold it. We have the fundamental power of a strike. The cost of a strike might be high, but the cost of doing nothing is much higher.”