UAW President Shawn Fain chairs the 2023 Special Elections Collective Bargaining Convention in Detroit, March 27, 2023.
Rebecca Cook | Reuters
DETROIT — United Auto Workers President Shawn Fain promised union members he’d do things differently during contract talks with the Detroit automakers this year. Thus far, he has delivered.
Fain has propelled the UAW into the national spotlight with politically savvy strategies, resonant social media messaging and confidence that the embattled union can ride a national wave of support for organized labor to win a “war” against “corporate greed” and multibillion-dollar corporations General Motors, Ford Motor and Stellantis.
related investing news
“This is our defining moment, as a union as working people. And we’re taking a different approach every step of the way,” Fain said Tuesday night during a Facebook Live event with members.
The consensus among past bargainers and several people involved with prior negotiations is that this year’s bargaining, which formally kicks off Wednesday, will be “different.”
It will also be “confrontational,” “costly,” “critical,” “unprecedented” and a “s—show,” some said.
The negotiations feature new top bargainers on nearly all sides attempting to prove themselves, a belief among union membership that concessions are not an option, and significant concerns about the industry’s transition to electric vehicles eliminating jobs and deteriorating wages.
The negotiations also are taking place at the same time as contract talks with Canadian union Unifor, which represents 18,000 employees with the Detroit automakers whose contracts expire in September. While the American and Canadian unions have expressed unity with each other, it is expected to add even more complexity and competition for investments and jobs.
Instead of a customary handshake between the two sides to signal the start to bargaining, the union is opting for a “members’ handshake” Wednesday between international UAW leaders and plant workers. No officials from the companies are expected to attend the events, however the union will begin meeting in private with company officials during the next week.
Former UAW President Gary Jones, left, and Bill Ford, executive chairman of Ford Motor, shake hands at Ford World Headquarters to begin negotiations for a new contract, July 15, 2019.
Fain acknowledged Tuesday the start to negotiations marked a “break with tradition” and said, “I’m not shaking hands with any CEOs until they do right by our members and we fix the broken status quo with the Big Three.”
Public disagreements between the UAW and automakers have already begun — unexpectedly early, in the past two weeks — with local Detroit newspaper editorials from both Ford CEO Jim Farley and UAW Vice President Chuck Browning, who leads the union’s Ford department.
Playing hard ball
“We’re in the process of changing the culture of this union from a reactionary, defensive union, to an aggressive and offensive-minded union,” Fain said last month during a Facebook livestream. “We’ve also made big changes in how we do politics. … We’re going to be organizing elected officials rather than being organized by them.”
Most notably, Fain decided to withhold the organization’s reelection endorsement of President Joe Biden, a longtime union ally, until he addresses UAW concerns involving the industry’s transition to EVs. Fain has also consistently talked about doing “whatever it takes” to get members their “fair share,” including utilizing work stoppages, or strikes, if needed.
“Mr. Fain’s powertrain roots and commentary since being sworn in indicate the risk of tough negotiations is high, and we expect there could be a strike when the current UAW Master Agreement expires in mid-September,” Bank of America Securities analyst John Murphy said in a June 22 investor note.
BofA estimates such a work stoppage would cost hundreds of millions of dollars per week in earnings before interest and taxes for the companies, potentially amounting to billions of dollars in losses for automakers.
Estimated weekly effect of a union strike, per automaker
- General Motors: $770 million, or 46 cents in adjusted earnings per share
- Ford Motor: $620 million, or 11 cents in adjusted EPS
- Stellantis: $470 million, or 12 cents in adjusted EPS
According to BofA Securities estimates.
During the last round of bargaining in 2019, a breakdown in negotiations between the Detroit automakers and UAW led to a national 40-day strike against GM. The automaker said the strike cost it about $3.6 billion that year.
Negotiations with Stellantis will formally begin Thursday, with Ford on Friday and GM on July 18. The current contracts are set to expire Sept. 14. The deals cover roughly 150,000 UAW members who work for the automakers.
In previous negotiations, after such initial meetings, the union would select a target company out of the three to focus its early efforts on, tabling the other negotiations and extending their contracts. However, Fain has not committed to such a process.
Many expect Jeep-parent Stellantis, formerly Fiat Chrysler, to be the leading company in the talks, after an Illinois assembly plant was idled indefinitely for potential closure in February. Fain and several newly elected UAW leaders also rose through the ranks of the union through Stellantis.
Members of the union who work for Stellantis also are among the most outspoken and unhappy. Stellantis was at the center of a multiyear federal investigation into the UAW that led to 18 convictions, including two ex-union presidents, and ongoing government oversight of the labor organization.
Fiat Chrysler Automobiles assembly workers build 2019 Ram pickup trucks at the FCA Sterling Heights Assembly Plant in Sterling Heights, Michigan, Oct. 22, 2018.
Rebecca Cook | Reuters
Stellantis, in a statement, said the company and the union have “a long history of working together, and our intent is to continue this partnership.”
“Together, we must approach these negotiations with open minds and a willingness to roll up our sleeves to find solutions that will result in a contract that is competitive in the market, provides a path to the middle class for our employees and meets the needs of our customers,” the company said.
GM and Ford released similar statements this week. The companies do not historically comment on specifics of the negotiations until they are concluded.
What’s at stake?
Automakers have spent decades attempting to remove fixed costs from their balance sheets. They continue to support variable bonuses such as profit sharing, based on the company’s operations instead of cost-of-living-adjustments that are dependent on outside factors such as inflation.
Fain has been steadfast in the reinstatement of COLA as a top issue for the union during this round of negotiations in addition to increased wages, retention of a platinum health-care package and the end of a grow-in, or tiered, pay system.
“The United Auto workers are ready to get back into the fight against corruption, against concessions, against tiers,” Fain said during a UAW bargaining convention shortly after becoming president. “The UAW is ready to get back into the fight for good jobs, for economic justice, for our families and for our communities.”
United Auto Workers members on strike picket outside General Motors’ Detroit-Hamtramck Assembly plant in Detroit, Sept. 25, 2019.
Michael Wayland / CNBC
Under the current pay structure, UAW members start at about $18 an hour and have a “grow-in” period of four years to reach a top wage of more than $30 an hour.
Following the last UAW-Detroit automaker negotiations in 2019, the Center for Automotive Research forecast average hourly labor costs would increase $11 per worker for Stellantis and $8 per worker at GM and Ford through the current contracts, which expire in September. Those hikes increase labor costs for the automaker to $66 per hour for Stellantis, $69 for Ford and $71 for GM, CAR said.
Wage hikes in this year’s negotiations could mean further labor cost increases for the Detroit automakers of between 25% and 30% over the next four years, according to BofA’s Murphy, based on recent UAW negotiations with companies outside the auto sector such as Deere & Co., Caterpillar and CNH.
In addition to pay, benefits and bonuses, the union also has the auto industry’s transition to EVs in its sights. Fain has called for a “just transition” for workers, as the government uses taxpayer money to subsidize the EV industry.
A 2018 study by the union found mass adoption of EVs could cost the UAW 35,000 jobs, however the union has more recently said that number could be less.
“The federal government is pouring billions into the electric vehicle transition, with no strings attached and no commitment to workers,” Fain said earlier this year. “The EV transition is at serious risk of becoming a race to the bottom. We want to see national leadership have our back on this before we make any commitments.”
Making matters all the more complicated, the UAW is simultaneously negotiating separate contracts with Ultium Cells LLC, a joint venture between GM and LG Energy Solution to produce batteries for the automaker’s EVs near Lordstown, Ohio, where the company closed a major assembly plant during the last round of negotiations.
In a white paper released Monday, the UAW detailed some reported safety issues and concerns at the plant by workers. The union suggested the GM national agreement, including its wages, could be a solution to fixing the problems at the site.
General Motors revealed its all-new modular platform and battery system, Ultium, on March 4, 2020 at its Tech Center campus in Warren, Michigan.
Photo by Steve Fecht for General Motors
Ultium condemned the report and the UAW’s depiction of the plant, calling the UAW’s characterization of the safety concerns “knowingly false and misleading.”
“We strongly object to the UAW whitepaper and will provide a detailed response after further review,” Ultium said in an emailed statement. “Ultium Cells is eager to resume bargaining with the UAW to discuss any specific concerns, as well as the total compensation package, for our team members.”
Ultium has said hourly workers currently make between $16 and $22 an hour with full benefits, incentives and tuition assistance. That compares to traditional hourly UAW members that can make upward of $32 an hour at GM plants.