Union Threatens Automakers With Strike

UAW strike
Workers hold UAW Labor Strike signs | Image by Ringo Chiu/Shutterstock

Labor negotiations between the United Auto Workers and the “Big Three” U.S. car manufacturers could boil over into a full-blown strike if a collective bargaining agreement isn’t reached by Thursday night.

The United Auto Workers (UAW), which represents about 146,000 auto workers in the U.S., will strike against General Motors, Ford, and Stellantis –- the parent company of Jeep and Chrysler –- if a fair labor contract fails to materialize by midnight on September 15.

“Our intent is not to strike. Our intent is to get a fair agreement,” UAW President Shawn Fain said to a crowd over Labor Day weekend, the Detroit Free Press reported.

The Big Three car manufacturers have already submitted separate proposals to the UAW, but the union has yet to accept any of the offers, preferring instead to hold out until a best and final offer for members is on the table.

“After refusing to bargain in good faith for the past six weeks, only after having federal labor board charges filed against them, GM has come to the table with an insulting proposal that doesn’t come close to an equitable agreement for America’s autoworkers,” Fain declared in a statement following GM’s submission.

“GM either doesn’t care or isn’t listening when we say we need economic justice at GM by 11:59 p.m. on September 14th. The clock is ticking. Stop wasting our members’ time. Tick tock.”

Fain and UAW had filed charges of unfair labor practices with the National Labor Relations Board (NLRB) at the end of August, accusing GM and Stellantis of refusing to bargain in a timely or fair manner.

The two automakers firmly disputed the accusation that they had not negotiated in good faith.

“This is a claim with no basis in fact, and we are disappointed to learn that Mr. Fain is more focused on filing frivolous legal charges than on actual bargaining,” Stellantis said in an emailed statement to CNBC. “We will vigorously defend this charge when the time comes, but right now we are more focused on continuing to bargain in good faith for a new agreement. We will not allow Mr. Fain’s tactics to distract us from that important work to secure the future for our employees.”

GM said in a similar statement: “We are surprised by and strongly refute the NLRB charge filed by the International UAW. We believe it has no merit and is an insult to the bargaining committees. We have been hyper-focused on negotiating directly and in good faith with the UAW and are making progress,” said Gerald Johnson, GM executive vice president of global manufacturing.”

While Ford submitted its counteroffer more promptly, UAW rejected it, with Fain claiming, “Ford’s wage proposals not only failed to meet our needs, it insults our very worth.”

Still, in a statement afterward, Ford’s CEO Jim Farley defended the proposal, arguing:

“This would be an important deal for our workers, and it would allow for the continuation of Ford’s unique position as the most American automaker — and give us the flexibility we need within our manufacturing footprint to respond to customer demand as the industry transforms. This offer would also allow Ford to compete, invest in new products, grow and share that future success with our employees through profit sharing.”

As part of the ongoing labor negotiations, UAW and its nearly 150,000 autoworkers are demanding a 40% (46% compounded) wage increase over four years, a reduced work schedule from 40 to 32 hours per week, and the restoration of certain benefits lost during the Great Recession.

The automakers have claimed that the proposed wage increase would cut into investments needed to transition to manufacturing electric vehicles (EV), NBC News reported.

The union claims otherwise, arguing that, between 2018 and 2022, executive pay at GM rose by more than 32% compared to a median 2.8% increase seen for UAW members. At Ford Motor Company, executive pay reportedly jumped 18% in that same period compared to the 16.1% for rank-and-file workers.

Workers are also said to be making about $10 per hour less than they would have if wage growth stayed on pace with inflation after 2007, The Washington Post reported.

If a new labor contract agreement isn’t reached before midnight on Friday, UAW members stand ready to strike outside the automotive manufacturing facilities. The union is holding negotiations with all three of the top automakers and has raised the possibility of simultaneously striking against all three companies, per The Washington Post.

It is unclear how long UAW members plan to strike, but a recent estimate by the Anderson Economic Group places the potential financial loss of a 10-day strike at around $5 billion.

Additional estimates by Goldman Sachs Equity Research suggest that GM and Ford will lose between $2.5 and $3 billion in revenue each week the strike lasts. Estimates were not provided for Stellantis.

If GM and Ford did agree to a 40% wage increase, it would cost GM around $4.5 billion over a four-year contract, and it would cost Ford about $5.5 billion. If the UAW initiates a strike on Friday, IHS analysts estimate that output by GM and Ford would plummet by about 55,000 to 65,000 vehicles a week.

If the strike causes vehicle production to shut down, it will lead to more competition and higher prices, according to Pat Ryan, CEO of CoPilot, a firm that tracks dealers’ inventory and pricing.

“Selection is going to get worse, and prices are going to get higher if there is a strike,” he said, per The Washington Post. However, “… it’s going to be focused on the most popular brands and models. It’s not going to be everywhere,” Ryan said.

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