Welp. It’s down to crunch time – 6:17 a.m. CST as I start writing this morning and the UAW strike deadline is 11:59 p.m. EST tonight.
United Auto Workers President Shawn Fain again rejected contract offers from the 3 targeted automakers – Detroit or D-3 meaning GM, Ford and Stellantis – while outlining the union’s strike strategy. Besides a first time call for walkout action against three manufacturers simultaneously, the union is going to use a form of guerilla warfare: the automakers won’t know what workers will be walking out at what plants until the die is cast.
…”To win, we’re likely going to have to take action,” UAW President Shawn Fain said in a Facebook Live address, adding the UAW was not planning company-wide walkouts if no deal was reached but would escalate if negotiations did not improve.
“We are preparing to strike these companies in a way they have never seen before.”,
…Fain outlined a strategy to “create confusion” with a series of work stoppages targeting individual U.S. plants if no deal is reached but did not disclose which plants it planned to strike. “We’re going to hit where we need to hit,” Fain said.
Coordinated strikes would mark the first-ever simultaneous labor stoppage at all three Detroit automakers and one of the largest U.S. industrial labor actions in recent years.
“We’re making progress … but we’re still very far apart on our key priorities,” Fain said, adding the UAW will disclose which plants it will strike Thursday when the current four-year contracts expire at 11:59 p.m. Eastern time.
It turns out there’s also a pragmatic vice tactical reason for the staggered walkout plan – the UAW strike fund. While it cripples automakers and their suppliers regardless, it keeps union workers “on the job” longer, so they don’t use up the money to keep them paid for striking.
…Targeting strategic plants could quickly force automakers to halt some or all U.S. production and could extend the time before the UAW’s $825 million strike fund is exhausted.
There’s nothing really new on the UAW contract pages for each automaker (Ford’s, for example) as current updates go. The Facebook stream is from 31 August.
But Fain and the union PR department have been working overtime on the airwaves and Twitter with blustering interviews and rallying support.
Detroit Teamsters have announced that, in solidarity with the UAW walkout, they will not be delivering D-3 vehicles for the automakers while a strike action is in progress. Other unions have also signaled support for Fain’s organization, although what that means in terms of other disruptions in diverse industries remains to be seen, if any.
…Truck drivers who haul vehicles plan to stand with UAW members if they strike, which means not delivering vehicles for Ford Motor Co., General Motors or Stellantis-owned Jeep, Ram, Chrysler, Dodge and Fiat.
“We are 100% supportive of UAW workers and Shawn Fain’s positions,” said Kevin Moore, president of the International Brotherhood of Teamsters Local 299, home of James R. Hoffa in Detroit, which represents 5,000 members and most freight car haulers. “Our Teamsters will not cross strike lines.”
…The scope of support for the UAW also includes the United Steelworkers, AFL-CIO, Service Employees International (SEIU), Starbucks Workers United, American Federation of Teachers (AFT), American Federation of State, County and Municipal Employees (AFSCME) and CWA (Communication Workers of America).
During the UAW strike against GM in 2019 that lasted 40 days, teachers and nurses and members of other unions brought food and drinks to the picket line and union halls around the clock. Strike lines operate on scheduled shifts through the night, until a tentative contract is reached.
Cooler heads on the sidelines are telling both parties to be careful what they wish for, and look what brought them to this point. The former CEO of Ford, who’s been through this rodeo before, flat-out said you can’t pay tens of millions for individual executive salaries, rake in billions in profits, and then short-change the help. Conversely, there is writing on the wall that employee unions need to be cognizant of when shooting for the moon. Zealous refusal to acknowledge that often leads them to wind up fatally shooting the company – and themselves – instead.
…Fields, who led Ford between 2014 and 2017, is warning the Big Three (the traditional name for legacy automakers Ford, GM and Stellantis) not to cave to labor demands in a way that leaves them in a precarious financial situation and at a competitive disadvantage, even as the workers who build the cars eye their healthy profits.
“The automakers can’t plead poverty,” Fields told CNN on Wednesday, noting the industry’s recent string of profitable years. “They will need to find a creative way to package a fair contract that rewards workers but do it in a way that doesn’t repeat the mistakes of the past.”
…Fields: UAW could win the battle but lose the warFields, who said he is not advising Ford CEO Jim Farley, told CNN the Big Three will “definitely” need to agree to pay hikes “well north” of previous increases. He pointed to the large-scale pay hikes recently won by unions, including at UPS, American Airlines and by West Coast dockworkers.
However, to avoid being left at a competitive disadvantage in an auto industry where consumers have many other choices, Fields urged the Big Three to push back against most non-wage demands from the UAW.
…Fields, the former Ford CEO, has a warning for the UAW as well: Be careful what you wish for.
…”The automakers are going to be very rational about this. If this is what my cost per unit is here in the US — including labor — and it’s uncompetitive, I’m going to have to move it to where it’s more competitive, like Mexico,” said Fields, who is currently a senior advisor to private equity firm TPG Capital. “You don’t want the UAW to win the battle but lose the war.”
Another player in the war, but influencing it from the sidelines, is Tesla. Elon Musk’s operation in non-union, efficient, and, most importantly, profitable. The union sees their negotiations as key to future organizing hopes among Tesla’s employees, who earn significantly less than their UAW counterparts. If they can make a big splash with the D-3, the thinking goes, they will lure disgruntled Tesla employees into the fold. However, if their demands or eventual wins ultimately destroy the industry…well, Fain’s group isn’t thinking that far ahead.
Conversely, the D-3 see Tesla and wonder how to compete, because they cannot, even at today’s contracted wages less mind what the union is demanding going forward. It’s made doubly hard when no one wants their EV product to begin with.
Zoom in: Behind the scenes, automakers say the cost gap between them and Tesla is a big reason why they’re struggling to compete with the EV titan.
o Tesla currently makes vehicles at an estimated labor cost of $45 to $50 per hour, whereas the Detroit Three make vehicles for about $64 to $67 per hour. Both figures include wages, benefits and profit-sharing.
Between the lines: Tesla’s profits per vehicle are higher than any of its global rivals, and CEO Elon Musk is using that advantage as a weapon in a price war that is squeezing industry rivals.
o Aside from paying lower wages and benefits, Tesla has padded its profit margins by winnowing production costs at its factories.
o It uses large castings in place of many small metal parts, for example, and brought many parts of its supply chain, including battery manufacturing, in-house.
o For its next model, a $25,000 global car, it’s building an even more efficient assembly plant in Texas.
As well, the profits the UAW keeps dinging haven’t all been sitting in a cave for executives to run their fingers through. The lurching transition to EVs is eating their lunch. The UAW only wants to see the part about taking 40% less labor to build one, while ignoring the part about not being able to sell any of them so far in spite of billions spent.
…It would be one thing if the shift toward electric vehicles was driven by customers, which would indicate the type of demand that would lead to long-term profitability. Instead, the EV transition is driven mostly by government mandate, free of regular people’s input or wishes. Nine states have embraced bans on gas-powered cars after 2035, led by population giants such as California and New York, with others likely to follow. The Biden administration has proposed a mandate that would require at least 50 percent of U.S. car sales to be non-gas-powered cars by 2030, rising to 67 percent by 2032.
Hence the Big Three’s EV spending spree. General Motors is in the middle of a $35 billion EV build-out, having promised to make only electric passenger vehicles starting within the next twelve years. Ford has pledged $50 billion to the EV transition, while Stellantis is spending at least $35 billion through 2025. These enormous outlays eat up most of the Big Three’s profitability of the past decade, yet more spending is on the way. Despite being invented over a century ago, electric vehicles still face serious technological limitations and production kinks, making economies of scale a distant prospect.
It also makes one wonder if UAW membership will ever wake up and smell the coffee.
Big wins and tough talk is great, but those victories come at a price – there’s less of them working because of it all the time. (Witness the UPS contract and sacrificial Yellow’s demise) Ofttimes, their very dues go towards electing the instruments of their own destruction.
Speaking of which, POTATUS is rumored to be on this as solidly…
…U.S. President Joe Biden has encouraged the parties to stay at the table “to get a win-win agreement that keeps UAW workers at the heart of our auto future,” White House economic adviser Jared Bernstein said Wednesday.
Biden called top executives from all three automakers last week to “encourage them to provide more forward-leaning offers to stay at the table,” Bernstein added.
…as his butt snugs in a beach chair.
The countdown to midnight is on.
As Shawn Fain said last week – tick, tock.
*UPDATE*: 3:43 EST GM tossed another offer on the table at 1 p.m. EST.
General Motors Co. provided another offer to the United Auto Workers in an effort to avoid a strike, the company said Thursday afternoon, less than 12 hours before the potential work stoppage.
GM said in a noon statement: “We remain in continuous, direct, and good faith negotiations with the UAW. We can confirm GM has put another economic offer on the table this morning with the goal of avoiding a work disruption by 11:59 PM tonight. Any disruption would negatively impact our employees and customers, and would have an immediate ripple effect across our communities.”
Fain said they still had a long way to go.
Fain outlined Wednesday where “things stand” on some of the union’s core demands:
o All three automakers proposed reducing the time for in-progression employees to reach top wages to four years from the current eight years. The union wants it to be 90 days.
o All three companies rejected the union’s proposal for reinstating pensions.
o Hourly wages: The union is asking for 40% increase across the life of the contract. Ford proposed 20%, GM 18% and Stellantis 17.5% all over four and a half years, Fain said.
…”We’re fighting like hell to keep good jobs in America and oppose plant closings,” Fain said of the union’s job security demands. The UAW wants the right to strike over plant closures, but he said all three companies have rejected the proposals. Stellantis wants the right to close 18 facilities.
All three have rejected the work-life balance proposals, too, such as a reduced work week, with the exception of adding Juneteenth as a paid holiday. Fain said Ford offered two weeks of paid parental leave.