Explainer: UAW expands strikes against GM, Stellantis in fight over new contract
22/09/2023 16:14
Sept 22 (Reuters) -
The United Auto Workers (UAW) union on Friday expanded its
coordinated U.S. strike against General Motors Co GM.N and
Stellantis STLAM.MI , but said it had made real progress in
talks with Ford Motor F.N .
The ongoing strike is the first-ever simultaneous labor
action against General Motors GM.N , Ford Motor F.N and
Chrysler parent Stellantis STLAM.MI after the UAW's contracts
expired more than a week ago.
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, UAW
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 initial walkout of 12,700 workers was smaller than some
analysts expected, with only three assembly plants in Michigan,
Ohio and Missouri targeted. Those plants build the Ford Bronco,
Jeep Wrangler and Chevrolet Colorado, along with other popular
models.
The second round of strikes will expand to 38 locations
across 20 states in all nine regions of the UAW, focusing on
parts distribution centers.
WHAT DOES THE UAW HAVE TO SAY ABOUT THE OFFERS?
The union previously rejected the companies' offers. It has
demanded a 40% wage hike, including a 20% immediate increase,
and improvements in benefits.
"If they’ve got money for Wall Street, they sure as hell
have money for the workers making the product," UAW President
Shawn Fain has said.
Fain said on Friday "Stellantis and GM in particular are
going to need some serious pushing." He added they have more
work to do at Ford, but "we do want to recognize that Ford is
showing they're serious about reaching a deal."
WHAT ARE THE CURRENT OFFERS FROM THE DETROIT THREE?
The three automakers currently have proposed 20% raises over
four-and-a-half years. In an opinion piece published in the
Detroit Free Press, GM President Mark Reuss called the UAW's
demands for a 40% pay hike "untenable," signaling the two sides
remain far apart over the key issue.
On Friday, Fain said Ford has improved its offer, which
includes right to strike over plant closures, additional job
security in the event of layoffs and enhanced profit sharing
formula.
WHAT IS AT STAKE?
The industrial action hit the Detroit Three automakers as
they ramp up efforts to maximize gasoline and EV vehicle
production to capitalize on demand for new vehicles.
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. Some
losses could be recouped by boosting production schedules later,
but that possibility fades if a strike extends to weeks or
months.
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 in a
Thursday research note 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.
Fain also is aiming to get agreements that would allow the
UAW to represent hourly workers at joint-venture EV battery
plants opened or planned by the Detroit Three.
The UAW has been wary of the industry shift to EVs and
called on the Biden administration to soften its proposed
vehicle emission cuts that would require 67% of new vehicles to
be electric by 2032. The union has yet to endorse a candidate in
the next U.S. presidential election.
EVs require fewer parts to build, and industry officials
have said that will result in a need for fewer workers. Fain has
said there should be no jobs lost because of the EV shift.
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. workforces to increase efficiency and cut costs as
the industry shifts to EVs.
(Reporting by Nathan Gomes in Bengaluru and Paul Simao in
Washington; Editing by Sriraj Kalluvila, Diane Craft and Anil
D'Silva)
((david.gaffen@thomsonreuters.com; +1-646-223-6064; Reuters
Messaging: david.gaffen.reuters.com@reuters.net))