September 27, 2023

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Everything you need to know about a potential UAW strike

Everything you need to know about a potential UAW strike

The United Auto Workers union has begun negotiations with the “Big Three” US automakers – General Motors, Ford and Chrysler maker Stellantis – on a new labor contract for about 146,000 workers.

The talks were difficult, some industry observers said Expect a fairly high probability of a strikeWhich could happen as soon as the current contract expires one minute before midnight next Thursday.

Here stands the disagreement between the federation and the so-called Detroit 3 and what may come after that.

How close are the parties to reaching an agreement?

As of Friday evening, GM, Ford and Stellantis had each submitted at least one proposal to the UAW, though the union indicated it was not ready to accept any of them yet. It appears that the talks will continue until next week.

As is common in high-level labor negotiations, the rhetoric has escalated. UAW President Sean Fine earlier He criticized some of the automakers’ offers He stressed that trade unions are ready to head to the picket lines, however he told a crowd in Detroit over Labor Day weekend“Our goal is not to strike. Our goal is to reach a fair agreement.”

Members of the United Auto Workers and others gather to march after march in the Labor Day Parade in Detroit on September 4, 2023.Bill Poliano/Getty Images

The union is negotiating with the three automakers simultaneously, in a break from previous rounds of contract talks. UAW also recently I filed a complaint with the National Labor Relations Board Accusing GM and Stellantis of failing to bargain in good faith and in a timely manner.

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Automakers have said they are willing to negotiate in good faith, and have opposed demands unions say are excessive — and in some cases have warned that large wage increases could reduce the investments needed to transition to electric vehicles.

What will happen if there is no agreement by September 14?

Current UAW contracts expire at 11:59 p.m. next Thursday, regular workers They voted overwhelmingly late last month to authorize a strike if no handshake agreements were in place with any of the companies by then.

A strike could happen at one, two or all three automakers at any time from next Friday onwards, although multiple strikes could be called at different times. This means that up to 146,000 workers could end up on strike at one time, although the total number could be much lower if the strike is limited to just one or two of the companies rather than all three.

What are the most important demands of workers?

Finn promoted the union An “ambitious” push. For more generous wages and benefits. The UAW seeks a 40% wage increase over four years (up to 46% compounded), along with cost-of-living increases; enhancing retirement benefits, including pensions equal to what auto workers previously received; Reducing the number of weekly working hours to 32 hours, down from 40 hours.

UAW President Sean Fine, second left, at the Labor Day Parade in Detroit on Monday. Paul Sancia/AP

The UAW has cited the wages of its top three executives in demanding higher wages for workers. For example, GM CEO Mary Barra’s compensation rose 32.5% from 2018 to 2022. During the same period, the average GM employee’s pay rose 2.8%, public filings show.

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Ford hired a new CEO in 2020, and salary jumped 18% from 2018 to 2022When the average employee wage increased by 16.1%. Data for Stellantis is not available because the company was only founded in 2021 and is now headquartered in Amsterdam, where wage disclosure rules differ from those in the United States.

How much will the strike cost the auto companies and workers?

Even the strike lasts for only 10 days It could cost the Big Three automakers at least $5 billionAccording to a recent estimate by Anderson Economic Group.

The immediate effect will be to stop production. IHS analysts estimate that for every week workers strike, GM’s production will fall by 55,000 vehicles per week and Ford’s by about 65,000 vehicles per week.

Goldman Sachs Equity Research estimates that GM and Ford will lose $2.5 billion and $3 billion, respectively, in revenue for each week that the strike continues. By comparison, agreeing to a 40% pay increase for UAW members would cost GM $4 billion to $5 billion and Ford $5 billion to $6 billion over four years. Goldman did not provide estimates for Stellantis.

The UAW has raised $825 million in a strike fund that will pay eligible members $500 weekly during the work stoppage, an amount that is expected to last up to about 11 weeks but could be exhausted sooner due to health care costs.

If fewer new cars are produced, dealer inventory will dwindle, which could lead to higher prices.

In the wake of the pandemic and a global supply chain crisis in materials and parts, new vehicle inventory levels in the United States this year remain lower than they were during the last round of bargaining, in 2019.

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Cox Automotive estimated that the supply of new cars at the end of July was enough to cover 56 days of sales — below the 60-day mark considered “normal” and the 66-day benchmark Recorded in the lead-up to the 2019 UAW negotiations.

The impact could be more muted for Ford and Stellantis brands like Jeep, Dodge, Chrysler and Ram, which Cox said have higher-than-average supply levels. But GM brands like Cadillac and Chevrolet have slightly lower than average supplies.

When was the last time auto workers went on strike?

In 2019, GM autoworkers went on strike for 40 days, costing the company an estimated $3.6 billion that year. The work stoppage has boosted Michigan’s economy to a quarterly recession.

Why don’t workers from other auto companies threaten to strike?

GM, Ford and Stellantis are the only major automakers whose workers in the United States are unionized.

Foreign automakers such as Toyota, Honda, Volkswagen, Mercedes and Hyundai are among the companies that operate non-union plants in the United States — including outside Michigan. In the electric vehicle space, new entrants such as Tesla, Rivian, and Finfast are building in the United States, likewise without union labor.