UAW contract talks grow tense, but no one wins with prolonged strike | Opinion
Tension has mounted in auto bargaining, with labor contracts set to expire on Sept. 14.
UAW President Shawn Fain has touted the union’s "audacious" demands on social media — estimated to cost the automakers an $80 billion over four years — and later trashed Stellantis’ concession-seeking proposals. President Joe Biden has urged the parties "to work together to forge a fair agreement," but the cost for the automakers to accede to the UAW's demands has fueled speculation that negotiations are at an impasse — and that a strike could be looming. Fain’s most recent Facebook Live, on Aug. 15, left the impression that the UAW does not intend to concede.
Why wouldn't the UAW and the automakers settle?
Strikes are expensive. Both sides know they'd benefit by settling.
But the parties won’t settle if they cannot reconcile their competing interests. The UAW wants higher pay and job security as the union faces the transition to electrification, a new model of vehicle production that isn't as reliant on union jobs. At the same time, the companies need massive infusions of capital to modernize and accelerate this transition.
The UAW leaders need a bargaining "win" they can sell to unite a rank-and-file divided by the closely contested race for president, decided just a few months ago. The companies must convince investors they are focusing on operational modernization and product development in the drive to electrical vehicles.
A strike becomes a tool to force both parties to find a reconciliation point. But a strike puts the parties in choppy territory. The UAW and the Detroit Three can only find a path to balance competing interests by negotiating options. Collective bargaining serves this very purpose.
Three elements are key to reaching an agreement:
First, getting more cash into workers’ hands through wage hikes, profit-sharing, and performance-related bonuses
Second, balancing work schedules and temporary, part-time and full-time employment classifications to give the companies flexibility to adapt to shifting product demands
Third, enhancing workers’ economic security in the transition to electrification
A prolonged strike would be disruptive for the Detroit Three — but cheaper than agreeing to the UAW's demands.
Fain won the UAW presidency promising to wrest significant benefits from the automakers. He's not eager to be the one who blinks. And he's facing internal pressures — the election that seated Fain was close, and he doesn't have the full support of every faction within the UAW.
Labor negotiations between UPS and the Teamsters were different. UPS delivers packages every day, and can't afford to take the hit of a strike.
But auto companies can look elsewhere. They can be less inclined to invest in America and more inclined to in Mexico or other places overseas with lower labor costs. And a prolonged strike is going to cause the companies to really think about substituting labor with technology, thanks to advancements that allow replacement of more workers.
The danger for the UAW is backing itself into a corner where to save face, members must strike. A strike would impose a significant amount of cost, and the ones who would get hit hardest are the workers.
Where do things stand in UAW contract negotiations?
In mid-July, the newly elected UAW leaders kicked off the 2023 contract talks by foregoing the traditional "handshake" ceremonies with company officials. After the initial bargaining sessions, Fain publicly enunciated the union’s eyebrow-raising demands in a Facebook Live broadcast on Aug. 1: a wage increase of 46 % over four years, and restoring benefits which had been jettisoned by the parties 15 years ago, like cost-of-living adjustments, retiree healthcare, the jobs bank and defined-pension benefits. To top things off, the UAW wants more paid time off, restrictions on the use of temporary employees, and the right to strike plant closures.
The companies responded they would carefully study the union’s proposals, but stressed that they already value their workers, insisting that they already pay them accordingly.
On Aug. 8, Fain heated up talks in second Facebook Live broadcast, calling Stellantis’ 30-page bargaining package "insulting." He accused the company of not listening to UAW members, and violating its public commitment to avoid "concessionary" bargaining. In a publicly leaked internal email, a Stellantis executive retorted that he was "incredibly disappointed" by the UAW leader’s statements.
Analysts added fuel to the fire by revealing that the UAW’s demands would raise the hourly compensation (including wages and benefits) of their auto workers from about $64 to an estimated $150. Such staggering numbers beg the question: of whether the parties are on the brink of repeating mistakes of the past.
Fain went on Facebook for a third time — he pledged during his campaign to operate transparently — on Aug. 15 to condemn Stellantis for slow-walking negotiations. He emphasized that the UAW had a different view of what constitutes labor’s "fair share" in the realm of business. This hits the nail on its head: The challenge before the parties is to reconcile divergent perspectives on what is fair and just.
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What does history tell us about the likelihood of a UAW strike?
Strikes punctuate the history of labor-management relations between the Detroit Three and the UAW. Their frequency reflects the fortunes of the parties. At its apex of power in the 1960s, the UAW conducted companywide and multi-local strikes in 1961 (Ford and GM), 1964 (GM), 1967 (Ford) and 1970 (GM). The 67-day walkout in 1970 by 400,000 workers at 145 GM plants in North America rwas one of the most expensive strikes in U.S. history. In today’s dollars, it cost GM $ 7.8 billion, and drained $1.2 billion from the UAW's strike fund.
Strikes across the board, but specifically in auto manufacturing, declined sharply in the decades following, as the Detroit Three and the UAW lost market share and membership. In the three decades after the federal government's 1979 bailout of Chrysler, UAW ranks shrank by half from a peak of 1.5 million members.
Despite its continuing membership decline, dropping below 400,000 in 2009, the UAW has conducted 25 major strikes, involving 1,000 or more workers, against at least two of the Detroit Three in the last 30 years: 20 against GM and five against Chrysler — including national stoppages in 2007 and in 2019, both against GM.
In 2019, 46,000 unionized GM workers went on strike for 40 days, costing the company an estimated $3.6 billion.
If past is prologue, then an auto strike looms plausible, and becomes even more likely given the militant posture of the recently elected UAW leadership. These vocal leaders disavow obedience to the throne of corporate competitiveness, believing that labor should claim its rightful share.
The UAW draws inspiration from recent contracts with hefty wage increases at UPS (where the Teamsters won 48% hikes for part timers over five years), United Airlines (the pilots’ union won 40% increases over four years), and John Deere (20% plus cost-of-living increases over six years after a 32-day strike by 10,000 UAW workers in 2021).
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Who is the UAW strike target?
Traditionally, the UAW “targets” one company to set a pattern for the other two. If the contract expires before an agreement, then the union may strike. After resolving this strike, the union repeats the process at the remaining automakers.
Not this year. Shawn Fain has declared that the "target" is all three companies, meaning the UAW could strike more than one automaker, or even all three. A strike across all three would affect 146,000 workers.
The UAW will hold strike-authorization votes among members next week. Such votes are usually pro forma, but provide another opportunity for union leaders to urge members to support the union’s bargaining positions.
What would a United Auto Workers strike cost?
The direct costs of a strike include lost wages for workers, and lost revenues for the companies. The UAW would also be on the hook for striker benefits.
A rough calculation of lost wages, based on an hourly rate of $30 for 40 hours, paid over six weeks to 146,000 workers adds up to slightly more than $1 billion. That's what workers would lose.
Based on the reported cost of the 2019 strike at GM as a percent of the company's North American revenues, the losses for all three companies in a prolonged strike would exceed $11 billion. At $500 per week per striker over six weeks, the UAW’s strike-benefit payments would add up to $438 million. If a strike went on even longer — not unprecedented when the parties are truly at an impasse — the union could deplete its strike fund. The longer a strike goes on, the more related industries, and the economy as a whole, suffers.
A prolonged strike is a high-risk proposition for both sides. The question remains: How willing each is each side to make concessions?
Marick F. Masters is a professor of business at Wayne State University.
This article originally appeared on Detroit Free Press: UAW contract talks tense, but no one wins with prolonged strike
