With one month before the United Auto Workers (UAW) contract expires on Sept. 14, President Joe Biden is asking the union and the Big Three automakers to work together and forge a fair agreement.
Negotiations between UAW and the Big Three — Ford, General Motors and Stellantis — began in early July over pay increases, pensions and career security. Autoworkers are particularly concerned about how the shift to electric vehicles (EVs) could threaten their jobs and compensation.
“The need to transition to a clean energy economy should provide a win‑win opportunity for auto companies and unionized workers,” Biden said in a statement released Monday.
“Companies should use this process to make sure they enlist their workers in the next chapter of the industry by offering them good paying jobs and a say in the future of their workplace.”
A fair contract, Biden added, would mean that Big Three auto workers could support their families, sustain their right to organize and have priority to fill the jobs that the transition to clean energy will create.
“The UAW helped create the American middle class, and as we move forward in this transition to new technologies, the UAW deserves a contract that sustains the middle class,” Biden concluded.
Here’s what you need to know about the ongoing negotiations and impending strike:
What are the UAW’s demands?
UAW President Shawn Fain said last week the Big Three are facing “the most audacious and ambitious list of proposals they’ve seen in decades.”
The union is calling to eliminate tiers on wages and benefits, something that was included in the tentative agreement between UPS and the Teamsters. They are also calling for double-digit pay increases, more paid time off and higher retiree pay.
In addition, the union is demanding the reinstatement of some previous policies, including cost of living adjustments (COLA), defined benefit pensions and medical benefits for retirees.
The union is looking to secure their right to strike over plant closures. If a plant does close or the companies leave their towns, UAW is demanding that the companies pay the workers who are left behind to do community service work.
What is the context behind these demands?
Following the release of the Big Three’s quarterly earnings reports in late July, Fain said that the automakers have made a combined $21 billion in profits in the first six months of 2023.
He argued that the companies are subsequently funneling billions into stock buyback schemes to “artificially inflate” the companies shares rather than support their workers or devote that money to the electric vehicle transition.
“Our message going into bargaining is clear,” Fain said. “Record profits mean record contracts.”
He also provided a chart to compare the union’s 2007 contracts to the present, which he used to demonstrate that starting wages have decreased and the number of years it takes to earn the top rate has increased.
He also pointed out that COLA was suspended during the Great Recession in 2009, and though the companies have bounced back, COLA has not been reinstated to adjust paychecks to compensate for inflation.
Prior to 2007, Fain added, every member of the Big Three received a pension and retiree health care. However, with the two-tiered system, many workers receive either no pension and health care plan or a pension that hasn’t increased since 2003.
“[This] paints a damning picture of what’s happening, not just in our industry, but across the economy,” Fain said. “The rich are getting richer while the rest of us are getting left behind.”
“When I was elected, I said, ‘The UAW is back in the fight,’ and that’s what the Big Three are going to see when we head into bargaining,” Fain added.
How have the Big Three responded?
General Motors (GM) went public right out of the gate with a website dedicated to providing negotiation updates.
They touted the total compensation and benefits package they provide to their team members in a July 18 release by GM Chairwoman and CEO Mary Barra. The package includes a health care plan, a profit-sharing program and career development and training opportunities
“We have a long history of negotiating fair contracts with the UAW that reward our employees and support the long-term success of our business,” Barra said. “Our goal this time will be no different.”
Mike Perez, vice president of GM labor relations, also said they have opportunities for every worker in the transition to all-electric.
GM said in a video that since the signing of its 2011 contract with UAW, they have provided $1,000 in profit sharing for every $1 billion GM earns in the North American market. Following fiscal 2022, GM said hourly union-represented employees received up to a $12,750 profit-sharing check.
The rest of the cash flow, they said, goes to upgrading facilities, retooling plants, engineering vehicles, developing technology and building up supply chains, with a small percentage going to shareholders.
In an Aug. 3 response to Fain, GM said they expect to increase wages but don’t agree with all of the demands.
“The breadth and scope of the Presidential Demands, at face value, would threaten our ability to do what’s right for the long-term benefit of the team,” the statement read. “A fair agreement rewards our employees and also enables GM to maintain our momentum now and into the future.”
Ford has also come out with its own response in the form of an op-ed, written by CEO Jim Farley and published in the Detroit Free Press.
Contrary to Fain’s claims, Farley said that UAW-Ford employees have received wage increases and annual inflation bonuses, which have exceeded what they would have been paid with COLA in place.
He added that 80 percent of those employers make the top wage rate of $32 per hour, in response to the proposal to end the tier system and the claim that it takes 8 years to reach the top wage rate.
In a response to the op-ed, Chuck Browning, vice president of the UAW’s national Ford department, commended Ford for their handing out profit-sharing checks, expanding health care benefits and giving many part-time workers full-time status. However, he pushed back on wages, saying that workers were still not compensated enough to attain a decent standard of living, job security or retirement “with dignity.”
Stellantis senior manager Jodi Tinson said in a statement that the company and UAW have a long history of working together. She added that Stellantis is focused on ensuring its future competitiveness as well as preserving good wages and benefits that recognize workers’ contributions.
In a letter sent to employees and obtained by Reuters, Stellantis North America Chief Operating Officer Mark Stewart said he is committed to reaching an agreement based on “economic realism.” Agreeing to UAW’s current demands, he said, could endanger the company’s ability to make decisions surrounding job security in the future.
“This is a losing proposition for all of us,” he wrote.
Stellantis has made proposals to reduce the fixed cost structure of the business in response to government electric vehicle rules, according to Reuters. Fain said this included cuts to health care coverage and fewer vacation days for new hires, among other proposals.
Fain criticized Stellanis’s “concessions” on a Facebook livestream, throwing them in the trash and calling them a “slap in the face.”
Stewart said that Fain did not fairly represent the negotiations and that “theatrics and personal insults” will not move the two sides any closer to an agreement.
Who will be affected by a strike?
From the start of negotiations, Fain has said that members should be prepared to strike. On the livestream, he reaffirmed that conviction, reminding viewers that the strike fund is healthy and that UAW leadership has a plan for work stoppage.
“Come Sept. 14, if these companies don’t deliver, they’re going to see this plan unfold,” Fain said.
Traditionally, UAW has singled out one automaker to target, but a spokesperson told the AP that the union could choose all three.
Evercore ISI analyst Chris McNally told Axios that the chances of a UAW strike are at least 50 percent, so if all 150,000 UAW workers were to strike with a fund of $825 million dedicated to paying workers $500 per week, the union could strike for about 12 weeks.
The 40-day UAW strike in 2019 cost GM $3.6 billion. However, Stewart said in his letter that it’s too soon to determine whether there will be a strike.
“At this very early stage, no one should jump to any conclusions about the outcome of the process,” he said.
What are the political risks for Biden?
While Biden has pledged to be a staunch ally of unions, he has yet to secure UAW’s endorsement for his reelection campaign. The union backed Biden against then-President Trump in 2020, but it announced in May it would withhold its endorsement.
Fain insisted the union must see a “just transition” to EVs as the Biden administration pushes to shift automaking to a greener future.