There is only so much time before the UAW and Big 3 automakers’ contract deadline

The UAW’s “stand-up strike”: Making it the Big Three’s problem, or How the Automakers Aren’t

It’s still possible to compromise before the deadline, the companies say. The union’s strike plan is an unusual one, at that.

In a Facebook Live event on Wednesday night, UAW president Shawn Fain put up a chart comparing Big 3 profits – up 65% over four years – to autoworker pay, which increased just 6%.

He said while what the automakers are offering in response to union demands has improved, it still doesn’t reflect the sacrifices of the autoworkers that made the companies’ success possible.

“They could double our wages and not raise car prices and still make billions of dollars in profit,” he said. “They want to scare the American people into thinking the autoworkers are the problem. We’re not the problem. Corporate greed is the problem. And come tomorrow night, if they force us, we’re about to make it the Big Three’s problem.”

Normally, over the course of a negotiation, two sides start far apart and trade offers to work toward somewhere in the middle. At least one company says the union isn’t holding up its side.

This time, it threatened to strike all three at once if they didn’t each make a satisfactory offer. The union also provided regular updates about what both sides had offered, atypical for a process often shrouded in secrecy.

The strike plan the union has put together is very similar to the talks. “We’re inventing a whole new way to strike,” Fain said in his Wednesday live-stream. The “stand-up strike” was a reference to the “sit-down strikes” of 1937.

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Ford CEO Jim Farley, with clear frustration, said his company had presented four increasingly generous offers without any substantive counter proposal from the union.

At the Detroit Auto Show, Farley told reporters that the first time he discovered that Shawn Fain had seen the latest offer was on Facebook Live. “We’re here. We are ready to negotiate. It’s hard to negotiate a contract when there is no one to talk to.

He said that they wanted to make a deal. “If there is a strike, it won’t be because we didn’t put a great deal in front of them, because we have – four times.”

In statements on Wednesday, GM simply said it was continuing to bargain “directly and in good faith” with the union. But Stellantis said it was still waiting on a counter proposal to the offer it made on Tuesday.

Over the past several months, workers across industries have been fighting to get around 50% wage increases over the next four to five years as they call out years of stagnant wages and robust company profits.

But the union notes that all three automakers have pulled in record profits in recent years — a combined $21 billion in just the first six months of 2023, according to UAW — and the workers now want their fair share.

The companies are agreeing to make Juneteenth a holiday, and Ford has offered 2 weeks of parental leave, but otherwise, there has been no major movement on paid time off.

The companies do not consider this a “tier” system, since the pay is eventually equal, and they’re offering to reduce the timeline to bridge the gap to four years. But the union views the requirement to work for years before getting maximum wages – along with the fact that people hired since 2007 don’t get pensions or retiree benefits – as a form of a “tier.”

Back then, a “second-tier’ employee would never earn as much as a “first-tier” one. But that changed in 2019. Now a new hire can work their way up to the same pay as their colleagues, over the course of eight years.

The Fate of the Autoworkers: Remnants of the Ford Employees’ Unfair Treatment of Labor and Pensions: The Case of GM and Tesla

The companies did not budge on pensions and benefits for retired workers. Some workers prefer 401(k)s to pensions because they can be taken with them if they change jobs, as automotive makers argue that they are too expensive. The union wants the guaranteed payments of a pension.

The union has also been pushing for another benefit that’s a blast from the past: job security guarantees that would continue to pay workers even if a plant is shut down. That, too, has gotten no traction. A similar program to pay workers not to work was an infamous burden on automakers up until the late 2000s, and hurt the public reputation of the union.

The people are angry with Brandon Szcesniak, a union member at Ford’s Wayne plant. “It’s like a revolving door. it’s not a career anymore, it’s a job. They want us to buy Fords, but how can we buy a Ford on this pay?”

The UAW has been unable to find a toehold at the plant as it is a factory with nonunion labor. The company is accused of violating labor law by barring workers from talking about their pay and working conditions. And there have been many OSHA (Occupational Safety and Health Administration) complaints filed against Tesla over the years.

“This is a nightmare situation for GM and Ford as both are in the early stages of a massive EV transformation path for the next decade that will define future success,” said Dan Ives at Wedbush, in a statement. He said that the winner was… Musk and Tesla with champagne now on ice.”

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“This is more of a symbolic strike than an actual damaging one,” Sam Fiorani, a production forecaster at AutoForecast Solutions, told Reuters. Everyone was not in agreement.

Analysts were split on the economic impact of the strike, with some calling it symbolic and others devastating. The most profitable models for the automakers are the Ford Bronco, Jeep Wrangler, and Chevy Colorado pickup.

It was a historic moment — never before had workers at all three companies gone on strike at the same time — that came as the automakers were in the midst of making a huge high-stakes switch to EVs.

Those plans are on hold as Ford, General GM and Stellantis workers take to the streets to demand a share of the profits generated by combustion trucks and SUVs as well as stronger job security and better retirement plans.

Ford said there was little movement from the UAW’s previous proposal, even though it got a counter proposal hours before the current contract expired.

“If implemented, the proposal would more than double Ford’s current UAW-related labor costs, which are already significantly higher than the labor costs of Tesla, Toyota and other foreign-owned automakers in the United States that utilize non-union-represented labor,” Ford said in a statement.

GM CEO Mary Barra noted that the two sides were still far apart on key issues. On CBS This Morning on Friday, she said that they still hadn’t agreed on an offer.

Analysts note that the Big Three spend roughly $64–$67 an hour on total labor costs, including benefits, while their nonunion rivals only spend around $55 an hour and Tesla spends $45–$50 an hour.

“The big issue for GM and Ford as well as investors is around if anywhere near a ~40% wage increase gets approved/agreed this will be a major headwind on the cost front and ultimately in some way be passed down to the consumer and thru EV prices,” he wrote in a research note. “The costs of EV vehicles out of Detroit is a major advantage going after mass adoption with any $3k, $5k, $7k, etc added to the slew of vehicles coming out would results in demand churn in our opinion.”

Ives, who is bullish on Tesla, predicted that a prolonged strike could push the Big Three automakers to agree to major increases in labor costs, which could then be passed along to the consumer.

Dennis Tajer, an American Airlines pilot and the union’s spokesman, said the pay bump accounts for years of stagnant wages. The last time pilots got a raise, he said, was in 2019.

“It has been a long time since there’s been any financial gain,” Tajer said. Nothing has happened since the start of the year in pay.

The trend appears to be holding up. The highest first-year pay raise in a single quarter since at least 2007) can be seen in the data from the first quarter of 2023.

The Teamsters union similarly highlighted UPS’ profits throughout the COVID-19 pandemic as they pushed for higher wages for rank-and-file union members. The package delivery giant posted a profit of more than $13 billion in 2022.

“I got paid $8 an hour in 1991,” Hancock told NPR, referring to what she earned when she was first hired at UPS. “A part-timer now would need to make in the ballpark of $25 to have the same buying power.”

The fact that they’re not replaceable contributes to the power of the pilots at major airlines. Pilots have a specialized skill-set that can’t be easily substituted; UPS is doing well enough, despite competition, that when the company raises workers’ pay and benefits, it doesn’t substantially reduce employment.

The Strike for Better Pay: Why We Shouldn’t Be Surprising That Auto Workers are Striking For a 40% Pay Increase For Ford and Stellantis

“Those two are cases where capital is not mobile — it can’t move to the non-union South and operate as many companies can. It can’t move abroad and outsource production to foreign sources of supply,” Katz said. It’s part of their special circumstance.

Katz said autoworkers on assembly lines can’t be easily replaced either, and they have some leverage from solidarity within their union’s ranks. But he said these workers face greater threats from competition in the automotive industry, including from factories with non-unionized workforces operating in the American South, which undercuts UAW’s bargaining power.

Katz predicts UAW will succeed in winning a “solid wage increase” that’s aligned with the roughly 3% base pay increase — in addition to a cost of living adjustment — that the union consistently won in negotiations until the 1980s, when concessionary bargaining began.

“We’re at a stage where worker power is more than it was in the last 20 or 30 years, but it’s not a revolution,” he said. “Management still has a lot of sources of leverage.”

“There’s great determination on the part of the union, and its rank-and-file and its leaders, to use this moment to say, now it’s time to catch up on losses due to inflation, catch up in terms of a better distribution of the profits of the company,” Kochan said.

Ford, GM, and Stellantis all raised their offers since opening bids but did not match union demands for more than 20%.

The wave of labor unrest this summer show workers are prepared to go on strike when companies refuse to meet their demands. So far this year, hundreds of thousands of workers have participated in at least 250 strikes, according to data from the Cornell University School of Industrial and Labor Relations.

The Hollywood actors and writers went on strike in Los Angeles. The city’s hotel employees have been on strike since early July in a fight for better pay.

Source: Why you shouldn’t be surprised that auto workers are asking for a 40% pay raise

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The union doesn’t yet have offers for the companies that reflect the sacrifice and contributions made by its members. “To win, we’ll likely have to take action.”

The cost of food, gas, mortgage interest rates are all going up. “A lot of people can’t rely on a safety net anymore.”