The United Auto Workers union has a new leader who promises a more demanding relationship with the Detroit Three automakers who employ more than 140,000 UAW members.
Incoming UAW President Shawn Fain is scheduled to address UAW leaders gathered today in Detroit to map strategy for contract talks this fall, and is expected to stick with the ideas that won a hard-fought campaign:
- Bargain for higher wages to offset inflation and reap a bigger share of profits.
- End the two-tier wage system under which new hires at the Detroit Three earn less than veterans for the same jobs.
- Restore cost of living adjustments, or COLA.
- Put a stop to U.S. plant closings.
The UAW last year negotiated a six-year contract at farm equipment maker John Deere that included a 10% wage increase in Year One and 20% over the life of the agreement, plus COLA, improved retirement benefits and stable health benefits. That deal, and the success auto workers in other countries have had in boosting pay, look like models for the upcoming Detroit Three bargaining.
Wells Fargo analyst Colin Langan last week said a 10% wage increase for UAW-Detroit Three workers is his “base case.” An auto sector deal patterned on the Deere contract could widen the Detroit Three’s cost disadvantage vs. non-union U.S. automakers to $800 a vehicle from $550, Langan wrote.
The Detroit Three have enjoyed robust profits since the last UAW contracts were negotiated in 2019. But now they are slashing staffs to offset the rising costs of electric vehicle and battery development – and brace for a possible U.S. recession.
A rich U.S. labor agreement would add to the financial challenges at GM, Ford and Stellantis North America – but the blow could be softened if the automakers and UAW can agree on ways to boost productivity. The Detroit Three would also welcome six-year deals like the one at Deere, if they can get them.
