The United Auto Workers just launched contract negotiations with the Big Three North American automakers, and few will be surprised if the result is a strike.
It almost doesn’t matter if Stellantis, Ford and General Motors make a generous offer, as they did during the 2019 negotiations that ended with a six-week walkout against GM.
For starters, union members are still reeling from a bribery and kickback scandal that resulted in convictions of UAW bosses caught selling out their rank and file for personal gain. The current UAW leadership remains untested, and forcing a strike may be the only way to prove to its membership that it is getting the best possible bargain.
On top of that, the union has made a string of inflexible demands, such as bringing back regular cost-of-living adjustments and ending wage tiers that favor members with the most seniority. Those are very expensive asks.
And even if the automakers agree to shell out considerably more pay, that still leaves the biggest threat to the union unresolved. In fact, the most far-reaching item on the UAW wish list probably will be impossible for the automakers to grant in full, at least without ruining their business prospects.
Union autoworkers are concerned, with good reason, about the global transition to electric vehicles. As of now, EVs are a relatively small part of the North American marketplace. But they’re clearly the future, and everything from the way they’re made to the politics behind them stands to weaken the UAW in the years ahead.
At a nuts-and-bolts level, it takes a lot more work to make a gasoline-powered vehicle, with a carefully engineered piston, fuel-injection system, and complex transmission. EVs, on the other hand, have no pistons or liquid fuel, no radiators, no exhaust, and simple gear boxes power the wheels.
By rough estimates, about 30% less labor is needed to make an electric vehicle than its gas-guzzling counterpart. Advanced robotics and artificial intelligence could cut even more into labor requirements, as new EV factories multiply.
Some of those factories are being set up by upstarts like Tesla, run by the anti-union Elon Musk, and located outside the Midwest in states traditionally hostile to organized labor, like Kentucky, Texas, Tennessee, Mississippi and South Carolina.
Already, low-cost manufacturers in China and elsewhere are putting out high-quality EVs that, in effect, limit how much the Big Three can pay to workers without making their products unaffordable. At the same time, joint ventures among carmakers and South Korean battery companies give the union less leverage over those making an increasingly vital auto part.
The current Big Three collective bargaining agreement covers more than 150,000 employees. And while the companies have said they’re committed to creating thousands of new, good-paying union jobs, the reality is that not every current worker will survive the transition into EVs. Fewer workers will be needed for each vehicle produced, and the companies must control their fixed costs to secure their futures.
The UAW’s new president, Shawn Fain, already has made it obvious he doesn’t want to hear those inconvenient facts. Earlier this year, Fain narrowly won election against incumbent Ray Curry, partly by promising that he wouldn’t make concessions in this latest round of bargaining. He’s promised to be more militant in politics as well.
President Joe Biden’s push for electric vehicles to reduce carbon emissions has put the pro-union Democrat at odds with entrenched UAW interests.
Fain so far has decided to withhold the union’s endorsement of Biden’s reelection campaign, complaining the federal government “is pouring billions into the electric vehicle transition with no strings attached and no commitment to workers,” and pledging to back “whoever stands with our members.”
Seems like the UAW is seeing mortal enemies everywhere it looks these days. Fain also decided not to shake hands with the Big Three’s chief executives, ditching a ceremony traditionally held when contract talks kick off.
Typically, the bargaining ends in a nail-biter, and final offers usually arrive just as the current agreement expires, which this year is in mid-September. At least one prominent Wall Street analyst has put the probability of a UAW strike at 50/50.
A strike would be rough for all concerned, and we doubt it would end any better than the last strike. Workers at GM plants and suppliers lost an estimated $1 billion in wages during the protracted 2019 walkout, while achieving no big structural changes in pay or benefits and having to accept factory closures. GM said the strike cost it $3.6 billion in 2019, plus lingering damage to its brands.
No one should wish for a repeat of that harmful affair.
There’s no way to turn back the clock to the days of large industrial assembly lines where workers spend their careers doing the same job, the same way. Hard though it is, the UAW needs to fight for a good deal for its members, but also embrace changes that will mean a smaller role for itself in an electrified automotive industry.
