The automatic strike looms, threatening to shut down Detroit’s Big 3

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

The union’s president, Sean Fine, has conditioned the rank-and-file members to be willing to walk out if the union’s long list of demands for better wages and benefits are not met.

A strike against a company, especially a prolonged one, could send an economic jolt through many Midwestern states and hit the profits of General Motors, Ford Motor or Stellantis. GM workers walked out for 40 days in 2019 before reaching an agreement.

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A strike against all three — a step the union never took, but which Mr Finn said he is prepared to call this year — could have a significant impact on the broader US economy.

“If that happens, even a short strike will affect economies across Michigan and across the country,” said Patrick Anderson, CEO of Anderson Economic Group in East Lansing, Michigan.

The talks are taking place as automakers spend 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 auto workers and companies perform in an industry centered around electric vehicles.

At the same time, big gains in wages and benefits could provide a tailwind to the union movement, which is gaining strength in many industries.

There are political risks, too. President Joe Biden declared that “the United Workers Union deserves a contract that preserves the middle class” and appointed a White House liaison to the union and automakers. But the UAW has refrained from endorsing his re-election bid so far, in part because of concern about the union’s share of electric vehicle-related jobs created through federal subsidies.

An agreement could still be reached before the contracts expire on September 14, and talks could continue beyond that date without withdrawal. But Fine has said repeatedly that he considers Sept. 14 as a deadline – the day the strike could begin. He was elected to the UAW presidency last year as a rebel, ousting the incumbent after pledging to take a more combative and confrontational approach to talks than his recent predecessors.

“Chief Fine has declared war, and that usually means there’s going to be a fight, and this fight is going to be a blow,” 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 prove to their members that they are fighting for them, so it is very unlikely that there will not be a strike.”

The auto industry as a whole, including foreign-owned companies operating in the United States, makes up about 3% of the country’s GDP. A 10-day strike against the three Detroit automakers would result in total wage losses of $859 million and losses for manufacturers of $989 million, Anderson estimates.

In August, Fine sent each company a list of demands, including higher wages, better benefits, the resumption of regular cost-of-living wage increases to stave off the impact of inflation, and an end to a pay structure that leaves new hires forced to work. One-third less than veteran workers. Fine suggested a pay increase of up to 40%, noting that the CEOs of each of the companies had had their salaries rise dramatically in the past four years.

He also called for contractual provisions requiring automakers to pay workers for doing community service if they close their factories, describing it as a way to deter companies from closing factories and to protect local cities and economies from being destroyed by the loss of a factory. The main employer.

“Manufacturers can certainly afford some of these demands, but the more they get, the less competitive they are,” Fiorani said.

However, in a video message posted to Facebook on Thursday, Finn said the union and the automakers remain far apart. He said Ford offered pay increases and other provisions that were “humiliating” to the UAW.

Ford said in a statement that it was offering a 9% wage increase and one-time lump sum payments that, combined, would increase a worker’s income by 15% over the four-year contract. Fine said the block payments helped but did not improve a worker’s income over a long period.

There is also disagreement between the UAW and Ford over profit-sharing bonuses, the use of temporary workers, cost-of-living wage increases, health care for retirees and many other matters.

Fine said that GM and Stellantis did not make counteroffers to union proposals and that the UAW filed a complaint with the National Labor Relations Board alleging that the two companies are not negotiating in good faith.

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

GM said it was “surprised and strongly refuted” the accusations in the NLRB complaint. “We’ve been very focused on negotiating directly and in good faith with the UAW and making progress,” Gerald Johnson, GM’s vice president of global manufacturing, said in a statement.

The company said in a statement that Stellantis was “disappointed to learn that Mr. Fine is focused more on filing frivolous legal charges than on actual plea bargaining.” We will vigorously defend this accusation when the time comes, but for now, we are more focused on continuing to bargain in good faith in order to reach a new agreement.”

In recent weeks, workers have organized dozens of marches and other rallies in preparation for the sit-in. “I think the membership has been activated,” said Kristin Bostick, a battery tester at a General Motors electric vehicle plant in Detroit. “The facts are on our side. If it comes to a blow, I’m ready for it.”

To mitigate the impact of the strike, the union raised a strike fund of $825 million. It plans to pay striking workers $500 per week and cover their health insurance premiums while they are out of work.

And in recent days, Fine has joined the union’s negotiating teams in talks with both automakers, an unusual move. Normally, the UAW president does not take a direct role until the final days or hours of negotiations.

On Wednesday he took part in the discussions with Stellantis, as tensions were high between the two sides. When Stellantis acceded to Vine’s demands for a list of cost concessions she wanted from the union, Vine took to Facebook to denounce her, and tossed the document into the trash.

Decades ago, when the United Workers Union had more than a million members and the Big Three—General Motors, Ford, and Chrysler, now part of Stellantis—had virtually no foreign competition, a union strike would have led to shutting down a large portion of the US economy.

Today, the federation is much smaller. General Motors, Ford and Stelantis employ approximately 150,000 workers in the UAW, and these companies produce just over 40% of the cars and trucks sold in the US market.

But the EU entered this year’s talks in a much stronger negotiating position than it has in years. In the past, Detroit companies fought hard against foreign competitors running non-union factories in the South, such as Toyota and Honda, and enjoyed a significant cost advantage. For most of the last several decades, General Motors, Ford and the Stilants have had to take wage and benefits concessions to survive.

However, over the past 10 years, the three companies have posted record profits, thanks in part to concessions from the union, as well as a shift in consumer preferences toward higher-margin trucks and large SUVs.

In the first half of this year, Ford made $3.7 billion and General Motors $5 billion. Stellantis reported profits of €11 billion (about $11.9 billion).

In the past, the UAW chose one company — General Motors four years ago — as the “target” on which to focus the talks. Fine said the consortium could target all three companies this time, but many analysts believe the consortium will ultimately choose Stellantis. In addition to tensions between the company and the union, their talks involve a plant in Belvedere, Illinois that Stellantis has put out of business, and that the union wants to reopen the company.

Convincing Stellantis to reopen the factory is a crucial task for Fain. Four years ago, General Motors closed a plant in Ohio, and the UAW failed in its efforts to get the company to reopen it. In his campaign for the presidency, Fine promised members that his tougher approach would prove successful this time around.

The union could get a hand in this fight from the federal government. On Thursday, the Energy Department said it had provided $2 billion in grants and $10 billion in loans to auto companies to convert existing plants that make gasoline-powered cars and trucks into plants that produce hybrid and electric vehicles.

Stellantis, like General Motors and Ford, aims to offer more electric models over the next few years and will likely have to retool some factories to make them. It is already building a battery plant in Indiana to drive its electric cars.

Fiorani suggested that Stellantis might decide to overhaul its Belvidere plant to produce electric models. “Stellantis can find a product to go there,” he said. “For the UAW to really win something, it has to be electric cars that Stellantis has been planning to build for several years.”

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