The three Detroit automakers and the United Auto Workers union have begun negotiating a new labor contract in what could become the most contentious talks between the two sides in perhaps a half century.
The discussions, which officially began Thursday, come as General Motors, Ford Motor and Stellantis posted a long string of solid earnings in North America, and after the UAW was elected president he pledged to restore many of the pay and benefits concessions the union had conceded over the past two decades.
External candidate Sean Fine prevailed in an upset election victory over the incumbent UAW chief this year largely by promising to take a more hawkish approach to contract negotiations than his predecessors of late. Since then, he has expressed his willingness to close factories to meet the goals of the union, which represents the 150,000 hourly workers employed by the three Detroit companies.
“If the Big Three don’t give us our fair share, they choose to strike themselves,” Mr. Fine, 54, said on Wednesday as he greeted workers who had finished their shift at an electric vehicle plant in Detroit. We are not afraid to take action. Our union is united. We can’t be afraid to stand up and fight.”
A day later, Mr. Fine emphasized his point by breaking with tradition and refusing to participate in the usual ceremonial opening of negotiations, with the UAW chief shaking hands with past automakers’ CEOs as a gesture of sympathy to the paparazzi and television cameras before the two sides began to haggle.
“I don’t shake hands with any CEOs until they do it right by our members and we fix the broken status quo,” Mr. Fine said.
Bargaining is taking place at a time when the labor movement is showing renewed strength in the United States. The Hollywood writers’ strike against film and television producers has entered its third month. Hollywood actors went on strike on Friday. Graduate student teachers — some represented by the UAW — have been on strike on campuses across the country since April. Los Angeles hotel workers quit their jobs for three days in June.
In the past few years, more than 300 Starbucks stores have consolidated as well as some Trader Joe’s stores, Chipotle restaurants, and an Amazon warehouse in New York. The Teamsters union threatens to strike against UPS in August if the two can’t agree on a new contract.
“In very diverse workplaces, we’re seeing a new interest in unions and a willingness to strike,” said Harley Schicken, a professor emeritus at the University of California, Berkeley, who has followed the labor movement for more than three decades. “What we don’t know yet is what size this movement will become and how far it will go.”
The negotiations coincide with the start of the 2024 presidential election campaign. The American Labor Union traditionally supports the Democratic candidate, but the union withheld the endorsement of President Biden to push the White House to increase its support for the unions.
In Detroit, contract talks are taking place amid a momentous transition to electric vehicles. General Motors, Ford and Stelantis have invested billions of dollars in new technologies and battery plants, although they have so far introduced only a handful of new electric vehicles. Sales of these vehicles are growing but low and none of the three automakers has made money yet from EVs.
This transition is a concern for the union because electric vehicles have far fewer parts than conventional cars—they have no exhaust system, no transmission, and no fuel system—and require fewer workers to produce. GM, Ford, and Stellantis have begun building battery plants with joint venture partners, which are not automatically covered under a UAW work contract.
The union organized a GM battery factory in Ohio, but the workers there must negotiate their wage rates and terms separately from the main UAW agreement.
“Electrification presents issues. We’re seeing jobs disappear and that needs to be addressed,” said Earl Fuller Jr., chairman of General Motors at Local 160 in Warren, Michigan.
While investing heavily in electric vehicles, automakers are still generating significant profits from sales of pickup trucks and SUVs, aided by near-record prices for new cars. Over the past 10 years, General Motors and Ford have typically generated between $7 billion and $11 billion in pre-tax profits annually in North America. Stellantis, the smallest of the three, usually earned somewhat less, though its pre-tax results in the region were more than $13 billion in 2021 and 2022.
Mr Scheken said the union had a lot of leverage in the negotiations. “The stakes are very high for automakers with this electric vehicle transition happening,” he said. A strike can be very costly for businesses.
In his estimation, a strike is likely but not certain.
Automakers maintain that they are at a disadvantage in labor costs. According to Ford, its hourly cost for UAW labor is $64, which it estimates is $9 more than the labor cost of foreign-owned automakers with nonunion factories in the US, and $14 to $19 more than Tesla, which also employs nonunion workers. .
In the past, General Motors, Ford, and Stellaants often lost money or earned little. Each needed concessions from the union to survive, and the union steadfastly agreed to many of the automakers’ demands in a series of contracts beginning in 2003.
The cost of health care for UAW retirees from automakers was transferred to a union trust fund. The union agreed to allow manufacturers to start new hires at about half the $32 hourly rate that veteran workers earned. New workers get 401(k) accounts for retirement instead of guaranteed annuities. While manufacturers were paying large profit-sharing bonuses—sometimes more than $10,000 per worker—the UAW went without the cost-of-living adjustments that in the past protected workers from inflation.
In contract talks four years ago, the union sought to regain ground on these issues. The automakers agreed to hourly wage increases and profit-sharing, improved terms for temporary workers and adjusted wage levels, but stopped short of rescinding them for a single rate of pay.
Workers at General Motors also demanded that the company back out of a plan to close a plant in Lordstown, Ohio, and went on strike for 40 days, but ended up signing a contract allowing the plant to close.
The 2019 contract included provisions for General Motors to invest $3 billion in its Detroit plant, which is also slated for a possible closure. The money was used to turn the site into a flagship EV plant for General Motors, now called Factory Zero, which produces an electric Cadillac SUV as well as an electric GMC Hummer.
Margaret Hodgins-Washington, 56, a battery worker at the plant, was one of dozens who stopped by to speak to Mr. Fine on Wednesday. She worked there for about a year, making about $16 an hour and wants to see an end to the two-tier pay structure.
“Our workers have fallen behind with inflation,” she said. “So I think we need better salaries.”
She and many others uniformly endorsed Mr. Fine’s tougher approach.
“I think he’s doing the right thing,” said Kevin Winston, an electrician and father of five from Brownstown, Michigan. “Now is the time. I’m ready to strike, 100 percent, and I’ve never heard anyone say we shouldn’t strike.”