US carmakers face a union looking for its ‘defining moment’

The three largest US carmakers and the union representing more than 400,000 of their workers are squaring off for negotiations that industry watchers expect to be the most contentious in years. 

Representatives of Ford, General Motors, Stellantis and the United Auto Workers are meeting this week in Detroit to start the next stage of negotiations on a new contract for hourly workers.

Both sides are grappling with how increasing electrification will affect the industry’s workforce. After a historic election at the union swept in a new president determined to restore benefits lost in the wake of the Great Recession of 2007-09, the UAW is calling it “our generation’s defining moment”. 

The talks are also taking place as Joe Biden, who has called himself the “most pro-union president ever”, begins a re-election campaign in which midwestern motor industry hubs such as Michigan and Ohio are expected to be battleground states.

“The structural problems facing the companies [and] the structural problems facing the union make these inevitably tense negotiations,” said Marick Masters, a labour relations professor at Michigan’s Wayne State University.

The electrification of the industry is in the spotlight now in a way it was not even four years ago, when the union last negotiated contracts with Ford, General Motors and Stellantis, which makes brands including Chrysler and Jeep. Since then carmakers have pledged billions to build factories to make electric vehicles and the batteries to power them.

But job losses are possible during the transition to EVs, which require fewer parts than cars and trucks with internal combustion engines. Ford chief executive Jim Farley said last year that “it takes 40 per cent less labour to make an electric car” and the UAW warned in 2018 that the shift could eliminate up to 35,000 union jobs.

Jobs are being added at the battery plants that GM and Ford have launched as joint ventures with Korean battery-makers, but the carmakers opted to exclude those workers from the contracts it has with the UAW, forcing the union to win plant-by-plant votes. In December, a factory in Lordstown, Ohio, which is jointly run by GM and LG Chem became the first battery plant to vote in favour of UAW representation.

When GM operated an assembly plant in Lordstown, workers there could make around $30 per hour, the UAW said. Now, workers at the battery plant start at less than $17 per hour, rising to $20 after seven years. Workers “have also reported serious health and safety problems”, the union said.

A spokeswoman for the joint venture, Ultium Cells, did not return a message seeking comment.

The UAW and the Alliance for Automotive Innovation, a trade group representing car and battery manufacturers, have both lobbied the US Environmental Protection Agency to slow the implementation of emissions standards that would speed the transition to EVs.

“Major auto companies seek to use the transition to cleaner vehicles in order to roll back hard-fought gains, including by shuttering and offshoring manufacturing facilities, cutting wages and fighting attempts to include new facilities under existing collective bargaining agreements,” the UAW said.

The union has been led since March by Shawn Fain, a longtime reformer who ran for the organisation’s presidency in the wake of a corruption scandal. A US Department of Justice investigation led to the convictions of 15 people, including two union presidents and three executives at Fiat Chrysler, now part of Stellantis. A legal settlement opened the door to letting union members directly elect their president, leading to a tight race in which Fain ousted the incumbent.

The UAW is seeking to win back cost-of-living raises, which workers lost when the Great Recession bankrupted GM and Chrysler and have become a priority as inflation eats into workers’ paychecks. It also wants to end a two-tier wage structure that pays less generous wages and benefits to employees in their first eight years.

Fain signalled a different approach to bargaining on Monday, when the union said he would not have the traditional handshake in front of media with the chief executives of the carmakers, instead meeting with members at three plants in Detroit. 

The current contract expires on September 14. Car workers went on strike for six weeks before ratifying a contract in 2019 and industrial action is possible this time too. Fain told Michigan news programme Flashpoint last month that his members were “asking for their fair share” after the industry booked $161bn in net income over the past decade.

“We don’t set out to strike, but at the end of the day, we’re going to do what we have to do,” he said.

In a statement, Stellantis said it would focus “on negotiating a contract that will ensure our future competitiveness” while preserving “good wages and benefits” for its unionised workforce.

While Biden has touted his support for unions, the UAW has so far refrained from endorsing him in his re-election campaign. Last month Fain criticised the president for a planned $9.2bn loan from the US Department of Energy to Ford and joint venture partner SK On.

The Democratic party has taken union support for granted for years, said Jason Kosnoski, a professor who studies politics and labour at the University of Michigan. By withholding its endorsement, the UAW probably hopes to encourage more federal dollars tied to electrification to flow to union-friendly states as well as more progressive economic policies generally. 

The endorsement per se matters less than how much money and manpower the UAW commits to next year’s get-out-the-vote operation during the presidential election, Kosnoski said. In 2020, Michigan broke for Biden with just 50.6 per cent of the vote.

“Turnout goes down when you have an incumbent,” Kosnoski said. “It’s harder to get the base excited . . . and elections are still close in Michigan, especially in presidential elections, so that could mean something.”

“They’re going to make him sweat a little,” he added.