Automakers and U.A.W. Remain Far Apart as Contract Deadline Nears

Automakers and U.A.W. Remain Far Apart as Contract Deadline Nears

The United Auto Workers union and the three incumbent U.S. automakers remain far apart on wages and other issues as the contracts of 150,000 union workers expire in less than a week.

So far, the companies – General Motors, Ford Motor and Stellantis, Chrysler’s parent company – have offered to raise wages by 14 to 16 percent over four years. Their offers include flat payments to mitigate the impact of inflation and policy changes that would raise wages for new hires and temporary workers, who typically earn about a third less than veteran union members.

But the union’s combative new president, Shawn Fain, has dismissed the offers as “insulting,” pointing out that the three manufacturers have been making near-record profits for nearly a decade and that top executives’ pay packages have risen significantly. He is calling for wage increases of about 40 percent and has repeatedly warned that workers are ready to walk off the assembly lines when current collective bargaining agreements with automakers expire on Thursday.

Mr. Fain said the union was prepared to strike at all three automakers simultaneously, a step it had never taken before. A general shutdown would deal a severe blow to the economies of Michigan and other states.

“We will not stand idly by and let them drag out negotiations as they have done in the past,” Mr. Fain said in a video on Facebook on Friday. “If we get to 11:59 a.m. on Thursday without a deal at any of the big three automakers, there will be a strike – at all three if necessary.”

The talks come amid a major shift from internal combustion engine cars and trucks to electric vehicles, which require fewer parts and less labor to produce. UAW leaders and members increasingly fear the transition will cut jobs and lead to reduced wages and benefits over time.

Automakers are also concerned about the transition. GM, Ford and Stellantis are spending tens of billions of dollars building new factories and mining the world for battery raw materials like lithium. Company executives have argued that big pay raises for UAW members could put them at a significant cost disadvantage compared to Tesla, which dominates the U.S. electric car market and employs non-union workers.

The automotive industry is the largest manufacturing sector in the United States, accounting for approximately 3 percent of the country’s economic output. The three Detroit automakers operate dozens of plants that produce about 500,000 cars a month.

The Anderson Economic Group, a research firm in East Lansing, Michigan, estimated that a 10-day strike against the three companies would reduce the companies’ profits by $1 billion and the wages of UAW members and workers employed by other companies by $900 million US dollar decrease would depend on the automakers.

Aside from wages, the union and the companies remain far apart on several other issues, including measures to preserve jobs and prevent the closure of U.S. plants, increases in pension benefits and cost-of-living adjustments once included in the UAW contracts were standard.

The union has made some progress in its talks with Ford. In response to Mr. Fain’s demands, the automaker offered to increase wages by about 15 percent through a 9 percent increase in base wages and one-time lump sum payments of $11,000 per worker. Although Mr. Fain refused, both sides continued to negotiate. He was expected to inform UAW members of Ford’s latest offer later Friday.

Talks with GM and Stellantis were slower. The UAW filed a complaint with the National Labor Relations Board last week, saying the two manufacturers refused to make proposals in response to the union’s demands and were not negotiating in good faith.

GM responded by offering a combination of base wage increases and lump sum payments that would increase workers’ wages by about 16 percent. “We’ve said before that we want to reward and recognize our employees with pay increases,” Gerald Johnson, GM’s executive vice president of global manufacturing, said this week.

Agreeing to all of the union’s demands would jeopardize GM’s competitiveness, he added.

Mr. Fain said the wage offer did not go far enough to offset the impact of inflation on workers’ take-home pay over the last decade and was too low given the profits GM was making. The automaker reported a first-half profit of $7 billion. Mr. Fain also complained that GM rejected the union’s proposals on job security, retiree pay, cost-of-living adjustments and other issues.

Stellantis presented his proposal to the union on Friday morning, offering a 14.5 percent increase in base wages without lump sum payments.

“This is a responsible and strong offer that positions us to continue to provide good jobs for our employees,” Mark Stewart, chief operating officer of Stellantis’ North American operations, said in a statement. “With this offer we are aiming for a timely solution to our discussions.”

Stellantis, which is based in Amsterdam and formed in 2021 through the merger of Fiat Chrysler and Peugeot, earned 11 billion euros ($12 billion) in the first half of the year, a record.