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Auto strike looms that threatens to shut down Detroit’s Big Three

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Auto strike looms that threatens to shut down Detroit’s Big Three

The United Auto Workers union and Detroit’s three automakers have less than two weeks to negotiate a new labor contract, and some kind of strike seems increasingly likely.

Union president Shawn Fain has groomed rank-and-file members to be prepared to leave the job if the union’s long list of demands for improved wages and benefits are not met.

A strike against one of the companies, especially a prolonged stoppage, could cause an economic shock in several Midwestern states and affect the profits of General Motors, Ford Motor or Stellantis. GM workers went on strike for 40 days in 2019 before reaching an agreement.

A strike against all three – a step the union has never taken but one that Fain has said he is willing to call this year – could have a notable impact on the broader US economy.

“If that happens, even a short strike would hurt the economies of Michigan and the entire country,” said Patrick Anderson, chief executive of the Anderson Economic Group in East Lansing, Michigan.

The talks come as automakers are spending tens of billions of dollars to transition to electric vehicles, which require fewer workers to assemble than traditional gasoline-powered cars and trucks. The terms of the new contract will determine how both autoworkers and businesses in an industry focused on electric vehicles fare.

At the same time, significant wage and benefit increases could provide a tailwind for a union movement that has been gaining strength in various industries.

There are also political risks. President Biden has declared that “the UAW deserves a contract that sustains the middle class” and has appointed a White House liaison to the union and automakers. But the UAW has refused to endorse his re-election bid so far, in part out of concern about the union’s involvement in electric vehicle-related jobs created with federal subsidies.

It is still possible to reach an agreement before the contracts expire on September 14, and talks could continue beyond that date without a strike. But Fain has repeatedly said that he sees September 14 as a deadline: the day a strike could start. He was elected president of the UAW last year as an insurgent, ousting the incumbent on a promise to take a more combative and confrontational approach to talks than his recent predecessors.

“President Fain has declared war, and that usually means there’s going to be a battle, and that battle would be a strike,” said Sam Fiorani, vice president of global vehicle forecasting at Auto Forecast Solutions, a market researcher. “The UAW leadership is now in a position where they have to show their members that they are fighting for them, so it’s pretty unlikely that there won’t be a strike.”

The auto industry as a whole, including foreign-owned companies with operations in the United States, accounts for about 3 percent of the country’s gross domestic product. A 10-day strike against the three Detroit automakers would result in total wage losses of $859 million and manufacturer losses of $989 million, according to estimates by Mr. Anderson’s firm.

In August, Fain sent each company a list of demands, including higher wages, better benefits, the resumption of regular cost-of-living wage increases to guard against the impact of inflation, and an end to a wage structure that leaves new hires earning a third less than veteran workers. Fain suggested a pay increase of up to 40 percent, noting that the compensation packages for the chief executives of each of the companies have increased substantially over the past four years.

He also called for contract provisions requiring automakers to pay workers to perform community service if their plant closes, describing it as a way to discourage companies from closing factories and protect cities and local economies from being devastated. for the loss of a major employer.

“Manufacturers can absolutely afford some of those demands, but the more they get, the less competitive the companies will be,” Fiorani said.

However, in a video message posted on Facebook on Thursday, Fain said the union and automakers remained estranged. Ford, he said, offered wage increases and other provisions that were “insulting” to the UAW.

In a statement, Ford said it had offered a 9 percent pay raise and one-time payments that, combined, would increase a worker’s earnings by 15 percent over the four-year contract. Fain said the lump sum payments helped but did not improve a worker’s earnings over a long period.

The UAW and Ford also disagree on profit-sharing bonuses, the use of temporary workers, cost-of-living wage increases, retiree health care and various other issues.

Fain said that GM and Stellantis had not countered the union’s proposals and that the UAW had filed a complaint with the National Labor Relations Board alleging that the two companies were not bargaining in good faith.

“I know this update is infuriating and believe me when I say I’m fed up,” he said. “Our objective is not to go on strike. Our goal is to negotiate a fair contract, but if we have to strike for economic and social justice, we will.”

GM said it was “shocked and strongly refutes” the charges in the NLRB’s complaint. “We have been very focused on dealing directly and in good faith with the UAW and are making progress,” Gerald Johnson, GM’s vice president of global manufacturing, said in a statement.

Stellantis was “disappointed to learn that Mr. Fain is more focused on filing frivolous legal charges than actual negotiations,” the company said in a statement. “We will vigorously defend this allegation when the time comes, but right now we are more focused on continuing to negotiate a new deal in good faith.”

In recent weeks, workers have organized several dozen rallies and other gatherings to prepare for the pickets. “I think the members are full of energy,” said Christine Bostic, a battery tester at a GM electric vehicle plant in Detroit. “The facts are on our side. If it’s a strike, I’m prepared for it.”

To soften the impact of a walkout, the union has amassed a strike fund of $825 million. He plans to pay the striking workers $500 a week and cover their health insurance premiums while they are unemployed.

In recent days, Fain has joined union bargaining teams in their talks with each of the automakers, an unusual step. Normally, the UAW president does not assume a direct role until the last days or hours of the negotiations.

On Wednesday he participated in talks with Stellantis, where tensions between the two parties have been high. When Stellantis responded to Fain’s demands with a list of cost concessions he wanted from the union, Fain took to Facebook to denounce them, trashing the document.

Decades ago, when the UAW had more than a million members and the Big Three (GM, Ford and Chrysler, now part of Stellantis) had almost no foreign competition, a union strike could shut down a significant part of the US economy. . .

Today, the union is much smaller. GM, Ford and Stellantis employ some 150,000 UAW workers, and those companies make just over 40 percent of the cars and trucks sold in the US market.

But the union entered this year’s talks in a much stronger bargaining position than in years. In the past, Detroit companies fought hard against foreign rivals that operated non-union plants in the South, such as Toyota and Honda, and had a significant cost advantage. In most of the past few contracts, GM, Ford and Stellantis have had to make concessions on wages and benefits to survive.

Yet over the past 10 years, all three companies have made record profits, thanks in part to concessions they won from the union, as well as shifting consumer preferences toward high-margin pickup trucks and large sport utility vehicles.

In the first half of this year, Ford earned $3.7 billion and GM earned $5 billion. Stellantis posted profits of 11 billion euros (about $11.9 billion).

In the past, the UAW has chosen one company (it was GM four years ago) as the “target” to focus on in talks. Fain has said the union could target all three companies this time, but many analysts believe the union will eventually pick Stellantis. In addition to company-union tensions, their talks involve a plant in Belvidere, Illinois, that Stellantis has idled and that the union wants the company to reopen.

Getting Stellantis to reopen the plant is a critical task for Fain. Four years ago, GM closed a plant in Ohio and the UAW failed in its efforts to pressure the company to reopen it. In his campaign for the presidency, Fain promised members that his toughest approach would succeed this time.

The union could lend a hand in this federal government battle. On Thursday, the Energy Department said it had made $2 billion in grants and $10 billion in loans available to auto companies to convert existing factories that build gasoline-powered cars and trucks into plants that produce hybrid and electric vehicles. .

Stellantis, like GM and Ford, plans to introduce several more electric models in the coming years and will likely have to restructure some plants to make them. It is already building a battery plant in Indiana to power electric vehicles.

Fiorani suggested that Stellantis might decide to revamp the Belvidere plant to make electric models. “Stellantis could find a product that works there,” he said. “However, for the UAW to really gain anything, they have to be electric vehicles that Stellantis would plan to build for several years.”

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