For all the digital ink spilled about the era-defining conflict between the United Auto Workers and the Detroit Three, it didn’t look like the union’s unprecedented three plant/three company strike was having much impact.
Neither the union nor the automakers moved any closer to a deal during the week between the start of the walkouts Sept. 15 and today. Talks were on-again, off-again. UAW workers staged demonstrations outside key auto plants. Automaker executives pitched their “record” pay offers and complained that the union’s demands were untenable.
That’s changed as of this morning.
UAW President Shawn Fain, wearing a military camo shirt to address union members, surprised Wall Street by announcing that there has been substantial progress toward a new contract with Ford – including agreements to increase profit-sharing payouts, restore some form of cost-of-living adjustment (COLA), and bring parts division and temporary workers up to top assembly plant rates. (You can watch Fain’s announcement here.)
Ford and the UAW don’t have a done deal. But Ford now is in a position to set the framework for wages and benefits for the unionized Detroit Three. Ford shares rose more than 3%.
Fain had harsher words and actions for General Motors and Stellantis. He said about 5,600 workers at 38 GM and Stellantis parts distribution warehouses will walk off the job because the two automakers are still rejecting key UAW demands.
Fain added a special warning for Stellantis, telling UAW locals representing the automaker’s powertrain operations in Kokomo, IN to “stand ready.” A strike at Stellantis’ Kokomo operations – Fain’s home base – could shut down production of several vehicle lines.
Most analysts and observers (including me) had expected Fain to order walkouts at the Detroit Three’s truck and large SUV factories to strike at the wellspring of their profits.
The decision to strike parts operations accomplishes different goals. UAW picket lines will be visible in 20 states, coast to coast, potentially amplifying public (and political) awareness and support. It also means the companies will have to deal with unhappy customers forced to wait for vehicle repairs.
Here are some of the things to watch as we enter the next episode of this drama.
UAW strikers are winning public support, according to a new Reuters/Ipsos poll. That’s wind at the union’s back as Fain noted more than once during his address Friday.
The UAW is also winning political support. Both Donald Trump and Alexandria Ocasio-Cortez support their cause, as does President Joe Biden. Could the UAW cash in on this in policy debates over EVs?
Suppliers are hurting. Layoffs have begun at suppliers to the three assembly plants on strike. Things could get worse for supplier companies and their workers if the UAW decides to strike the Detroit Three truck factories after all.
UAW strikers have tough times ahead. Striking union members will get $500 a week from the union strike fund. But that’s well short of full pay. At the end of this month, the companies could cut off health coverage. The hardships of striking Hollywood writers are a preview of the challenges UAW members will face in a long strike.
Progress at Ford shows a deal can happen. Some elements of the union’s agenda are affordable for the companies. Rough math suggests the three automakers could bring wages for all UAW workers not at the top hourly rate up to that level for under $1 billion a year, combined.
But restoring defined benefit pensions as the UAW demands? That could cost billions and push future jobs away from UAW plants. Fain did not mention pensions or the 32-hour work week demand in his talk.
Productivity is the sleeper issue in the talks. Labor is going to cost the Detroit Three more. How much more will depend on revving up productivity to offset higher wages and better benefits. Tesla is setting new benchmarks in manufacturing, at wage rates 25% below present UAW levels. The Detroit automakers and the UAW will have to match Tesla, or risk losing more sales and jobs. Could the UAW organize Tesla’s U.S. factories to level the playing field? They haven’t yet.
