Explainer: UAW chief ratchets up pressure on Detroit Three as deal talks drag on
13/10/2023 16:57
(Recasts with latest developments)
Oct 13 (Reuters) - The United Auto Workers (UAW) union
on Friday refrained from expanding its coordinated strike
against the Detroit Three automakers but warned it may now call
for more strikes at anytime and not wait for a Friday.
It is a change in strategy to force General Motors GM.N ,
Ford Motor F.N and Stellantis STLAM.MI to improve their
offers, as the first-ever simultaneous labor action against the
companies enters its 29th day.
The automakers, like their global counterparts, have been
focused on cost reductions, which in some cases include job
cuts, to help accelerate a shift to electric vehicles (EVs) from
gasoline-powered vehicles.
WHO IS THE UNION NEGOTIATING WITH?
The UAW, which represents 46,000 GM workers, 57,000 Ford
employees and 43,000 Stellantis workers, kicked off negotiations
with the companies in July.
The union historically has picked one of the Detroit Three
to negotiate with first as the so-called target that sets the
pattern on which subsequent deals are based. This time, union
President Shawn Fain targeted all three companies
simultaneously.
Contract talks between the UAW and the Detroit automakers in
past years had gone on until the strike deadline and beyond. A
Reuters/Ipsos poll found significant support by Americans for
the striking auto workers.
HOW WIDESPREAD IS THE STRIKE?
The strike has now spread to over 34,000 workers, or just
over one-sixth of the workers employed by the Big Three. It
initially targeted three assembly plants in Michigan, Ohio and
Missouri that build the Ford Bronco, Jeep Wrangler and Chevrolet
Colorado, along with other popular models.
The second round of strikes expanded to 38 locations across
20 states in all nine regions of the UAW, focusing on parts
distribution centers.
On Wednesday, Fain changed tactics by ordering a sudden
walkout at Ford's Kentucky Truck heavy-duty pickup and large SUV
factory, the automaker's largest, most lucrative single
operation globally.
Prior to that, he had used a livestream video on social
media to announce strike expansions on Fridays.
WHAT ARE THE CURRENT OFFERS AND WHAT DOES THE UAW HAVE TO
SAY?
Ford has offered a 23% wage hike through 2028, where as
Stellantis has offered 21.4% hike. GM has offered an about 20%
raise. But the union has demanded a 40% wage hike, including a
20% immediate increase, and improvements in benefits.
Fain also wants workers at EV battery plants to be covered
by union contracts. The union is in discussions with GM about
the parameters of a deal to include battery plant workers under
a master labor agreement.
Ford is also working with the UAW on a way to bring workers
at joint venture EV battery plants into the UAW-Ford agreement.
WHAT IS AT STAKE?
A full strike would hit earnings at each affected automaker
by about $400 million to $500 million per week assuming all
production was lost, Deutsche Bank previously estimated.
In fiscal 2019, GM's fourth-quarter profit took a $3.6
billion hit from a 40-day UAW strike.
Morgan Stanley analyst Adam Jonas estimated on Sept. 21 that
a full month of lost production would cost the three automakers
$7 billion to $8 billion in lost profits.
WHAT ARE THE UNION'S DEMANDS?
The UAW is pushing automakers to eliminate the two-tier wage
system under which new hires can earn far less than veterans.
Fain has said repeatedly that the union will push to restore
pay improvements tied to the cost of living and retiree benefits
cut during the 2008-2009 economic crisis.
The UAW wants strong salary increases, given the financial
success of the automakers, citing generous executive payouts and
large U.S. federal subsidies for EV sales.
The union also wants defined benefit pensions for all
workers restored, 32-hour work weeks, job security guarantees
and an end to the use of temporary workers.
WHAT DO AUTOMAKERS WANT?
The Detroit Three want to close the cost gap they have with
foreign automakers with non-unionized U.S. factories.
Ford sources estimate that their U.S. labor costs are $64 an
hour, compared with an estimated $55 for foreign automakers and
$45 to $50 for EV leader Tesla TSLA.O .
The companies also want greater flexibility in how they use
their U.S. workforce to increase efficiency and cut costs as the
industry shifts to EVs.
(Reporting By Nathan Gomes, Abhijith G, Joseph White, Ben
Klayman and David Shepardson; Editing by Sriraj Kalluvila)
((david.gaffen@thomsonreuters.com; +1-646-223-6064; Reuters
Messaging: david.gaffen.reuters.com@reuters.net))