Why UAW strikes at GM, Ford, Stellantis seem inevitable

DETROIT – United Auto Workers President Shawn Fain looks ready to fire the picket lines.

The union’s new bulldog leader has repeatedly vowed to lead a tough bargain with Detroit’s automakers General Motors, Ford Motor and Stellantis in contract negotiations before it expires at 11:59pm on September 14.

He has insisted that it is a hard deadline that his management team does not intend to extend, as the union has done in the past, and that the roughly 150,000 auto workers are not afraid take it out of factories if necessary.

That — in addition to the announcement late Thursday that Fain and the union filed unfair dismissal charges against GM and Stellantis with the National Labor Relations Board, saying the companies were not bargaining in good faith — a ‘ strike against one, if not all three. car manufacturers, increasingly inevitable.

Unlike previous union leaders, Fain is trying to negotiate with all three automakers at the same time, refusing to pick a “target” company to focus on during his tenure. extending contracts at the others. He has also been far more confrontational with automakers than previous union leaders, sometimes launching personal attacks on executives.

There is a belief among some industry analysts and experts that it may take a strike, or several, to convince UAW members that union leaders have fought as hard as they can to get the demands met. arrive

“I expect there will be a strike,” said Arthur Wheaton, a labor professor at Cornell University’s Labor Institute. “I think there’s a reasonable chance they’ll strike first Stellantis and then they will give Ford and GM another day or two to come up with a better offer.

Wheaton believes that a strike at Stellantis is almost certain with the teams as far apart as they are now. The union could use that work stoppage as a warning to GM and Ford to terminate their contracts, he said.

“I think Stellantis has an almost mandatory strike or they’re never going to get a deal,” Wheaton said. “Stellantis is putting up a fight, saying, ‘Try me if you ask.’

Strikes could take various forms, including a national strike, where all contract workers stop working, or targeted work stoppages at specific establishments over local contract issues.

Protracted strikes against the three automakers would be unprecedented and would quickly affect the auto supply chain, the US economy and domestic production.

The Biden administration has taken a special interest in the negotiations, including the hiring of longtime Democratic adviser Gene Sperling to oversee the White House situation.

Wall Street has warned of a possible work stoppage for several months, and investors have taken heed.

A short survey of 99 investors by Morgan Stanley found that 58% thought a strike was “highly likely”. That’s followed by 24% who said it was “somewhat likely.” Just 16% said a strike was unlikely, and 2% said it was “not at all unlikely.”

Business and labor experts agree, and for good reason.

The looming contract deadline follows controversial rhetoric by Fain and other union leaders; year-long labor movement including work stoppages, including the UAW; and ambitious union demands for pay increases of 40% or more, maintenance of platinum health care and a 32-hour work week.

Such requests are usually not made public or even fully reported until near the end of negotiations, partly as an attempt to negotiate in good faith but also to avoid expectations – too high or too low – for members UAW, that is. the contracts must be ratified after the parties declare an agreement.

“I have always said that the best way to reach agreements is to communicate with each other and not in the newspapers, TV or anywhere else,” said Dennis Devaney, senior counsel at Clark Hill, a former NLRB board member and attorney for GM and Ford. “I don’t think the public negotiation … is going to move things forward.”

to be clear, the call for strikes is not just to Fain. It is under the responsibility of the UAW’s 14-member International Executive Board (IEB), which Fain leads as president. The directors, based on weighted votes, must approve such a work stoppage by a two-thirds majority vote.

Then there is the question of how long a strike would last.

Of the investors surveyed, Morgan Stanley found that the majority of respondents (96%) expected the strike to last more than a week. More than a third (34%) expect the strike to last more than a month.

A strike against GM in 2019 lasted 40 days in the final round of contract negotiations and cost the automaker $3.6 billion in earnings that year, GM said at the time.

The UAW has more than $825 million in its strike fund, which it uses to pay eligible members who are on strike. The strike pay is $500 per week for each member.

Assuming the 150,000 or so UAW members are covered by the contracts, strike pay would cost the union about $75 million a week. A fund of $ 825 million, therefore, would cover about 11 weeks. One caveat: that doesn’t include health care costs that the union would cover, such as temporary COBRA plans, which would likely drain the fund much faster.

For much of the union’s history, it was largely expected that members would ultimately agree to whatever deal was approved and approved by UAW leaders.

However, in recent negotiations, that was not the case and the sides must return to the negotiating table.

That was the situation two rounds of negotiation, in 2015, with Fiat Chrysler, now Stellantis, workers, who voted for an uncertain agreement. That same year, MG’s skilled workers also voted against a tentative agreement with the Detroit automaker, halting consolidation.

Typically, once a tentative agreement is reached between the union and an automaker, members of that automaker then vote with a local group on whether to accept the tentative agreement. sure and make it a contract. The entire verification process can take approximately two weeks for each company.

“The UAW’s affirmative agreement with the automaker is a set of agreements — the main text, plus appendices for various aspects, such as pensions and retirement plans, health care benefits, additional unemployment benefits, profit sharing, personal savings plans, life. and disability benefits, dependent care benefits, and salaried workers (for those also represented by the UAW),” said Kristin Dziczek, auto policy advisor for the Detroit branch of the Federal Reserve Bank of Chicago, in a blog post.

In 2019, it took eight more weeks to negotiate and ratify the three agreements once the first agreement was reached after the GM strike. The negotiations and confirmation vote ended in early December.

Spokesmen for the automakers declined to comment directly for this article, but reiterated that their teams continue to negotiate in good faith with the union in hopes of deals that benefit the two sides.

— CNBC’s Michael Bloom contributed to this report.