President Joe Biden speaks next to Shawn Fain, president of the United Auto Workers, as he joins striking union members on the picket line outside GM’s Willow Run distribution center in Bellville, Michigan, on September 26, 2023.
Evelyn Hockstein | Reuters
DETROIT — A tentative agreement reached Monday between the United Auto Workers and General engines ended contentious negotiations and about six weeks of strikes against Detroit automakers.
UAW President Shawn Fain warned of a more combative union heading into negotiations, but few, if any, expected the union to strategically outmaneuver companies as it did , leading to record deals for 146,000 UAW members with GM, Ford engine And Stellantis.
Although full details of the finalized agreements are still to come, they set compound increases of 25% on the 4 1/2-year agreements, including an 11% increase upon ratification; reinstatement of cost-of-living adjustments; increased corporate 401(k) contributions; and enhanced profit-sharing bonuses.
UAW members must still vote to ratify the tentative agreements. In the cases of GM and Stellantis, local union leaders must also approve the agreements before members vote.
Fain and the union are clear winners at the end of the negotiations, but others like You’re here and President Joe Biden could also emerge victorious. Among the losers are therefore the car manufacturers, but also potentially their investors – and their ambitions in terms of electric vehicles.
“There are a lot of winners in this. So the first ones, of course, are the UAW members,” said Art Wheaton, a labor professor at the Worker Institute at Cornell University. “It was way more than I expected and what I thought was possible…It’s a home run.”
Winner: Shawn Fain
Fain became the face of the UAW during the negotiations, using wide-ranging talking points such as fighting billionaires, workers’ rights, and rebuilding the middle class to successfully bring national attention to the negotiations. union with Detroit automakers.
Through his harsh rhetoric and frequent live updates throughout the process, Fain is also the face of victory.
Loser: the big three
Detroit’s “Big Three” automakers underestimated Fain and the union’s strategy, which involved unprecedented targeted strikes that kept the automakers on their toes and helped give the union influence over the companies.
The result was record contracts for union employees, which placed more pressure on companies than many had anticipated before the negotiations.
Potential Winner: UAW Organization
Fain said Sunday that the UAW plans to use the record deals to help in its organizing efforts, including with automakers outside of the Detroit Three automakers, citing discussions with the “big five or six ” Car manufacturers.
Can the UAW organize foreign automakers into the United States, also known as transplants, or electric vehicle companies such as You’re here Or Rivienwill be determined in the years to come.
“They have the best chance now that they’ve had more than 40 years to organize transplants and, perhaps, non-union electric vehicle companies,” said Marick Masters, a business professor at Wayne State University in Detroit. . “But it remains an uphill and difficult battle.”
Since the targeted strikes began on September 15, Ford shares have fallen 23%, GM shares have fallen about 19%, and Stellantis shares, which has not yet released the expected costs of the strike, have fallen by about 19%. ‘around 4%.
It is unclear how much these agreements will increase labor costs for companies, which had argued that giving in to all of the union’s demands would affect their competitiveness and even their long-term viability.
Deutsche Bank recently estimated the overall cost increase for the deal at Ford at $6.2 billion over the life of the deal, $7.2 billion at GM and $6.4 billion at Stellantis.
Ford said the UAW deal, if ratified by members, would increase costs per assembled vehicle by $850 to $900. Chief Financial Officer John Lawler said last week that Ford would work to “find productivity, efficiency and cost reductions across the company” to achieve previously announced profitability targets. .
Winners, losers: UAW members
Generally speaking, UAW members covered by the new agreements are winning, but not all have faced the financial consequences of the union’s strikes against Detroit automakers.
The union gradually added factory strikes as part of its targeted strike, or “mobilization,” strategy. This means that members who were part of the initial strikes or who were laid off due to work stoppages received no more than $500 in weekly strike pay for almost six weeks, while others did not. have never been called to stop working.
Under the Ford deal, workers will be paid retroactively for hours worked starting October 23.
Potential loser: non-union plants
Non-union factories of automakers ranging from Tesla and Rivian to Toyota And Hyundai may be rethinking their pay structures for factory workers.
With the UAW’s record victories, these companies risk losing workers to the factories of their Detroit rivals. They may also be the target of increased unionizing efforts by members seeking better wages like those of UAW members.
“By allowing the UAW to make huge gains in their factories, non-union companies now have a choice: Either increase your wages and benefits to keep up with the current UAW rate, or you run the risk having a union organizer and drive your projects,” Wheaton said.
Loser: electric vehicles
To offset rising labor costs and meet slower-than-expected demand for electric vehicles, Ford and GM have each announced production delays or investments in electric vehicles.
GM said it would delay at least three models in addition to increasing electric truck production for at least a year in Michigan through the end of 2025, while Ford said last week it would delay $12 billion of dollars in planned spending on new electric vehicle manufacturing capacity.
Stellantis, which has invested heavily in plug-in hybrid electric vehicles for the United States, has not announced any significant changes to its electric vehicle plans.
“Obviously the union came out on top,” Masters said. “Companies will be able to survive the strike and rising labor costs. But I’m not sure whether or not they will be able to win the competition for electric vehicles.”
Potential winner: Tesla
The slower rollout of some electric vehicles could give Tesla more time to compete in the market with its current and upcoming products.
Electric vehicle leader Tesla’s market share has declined in recent quarters amid increased competition, particularly in luxury vehicles, and Detroit automakers were expected to increase competition on cheaper models.
“It remains to be seen whether or not (Detroit automakers) will be able to enter the fray with profitable vehicles, electric vehicles, in time to beat the competition and remain profitable at a scale that will allow them to persist. — only entities do it,” Masters said.
In a historic move, Biden decided to show his support for UAW members and support his self-proclamation of being the “most pro-union president in American history.”
Although the UAW has so far refused to re-endorse Biden, this support could prompt the union to eventually do so. It could also influence critical blue-collar voters in the Midwest ahead of the 2024 presidential election.
Biden applauded the UAW’s deals with Detroit automakers after speaking with Fain on Monday.
“These record deals reward autoworkers who sacrificed so much to keep the industry running during the financial crisis more than a decade ago,” Biden said at the White House. “These agreements ensure that the Big Three can continue to lead the world in quality and innovation.”