The battle between Detroit carmakers and the United Auto Workers union, which escalated Friday with targeted strikes at three locations, comes amid a once-in-a-century technological upheaval that poses major risks. for both companies and unions.
The strike comes as traditional automakers are investing billions to develop electric vehicles while still making most of their money from gasoline-powered vehicles. The negotiations will determine the balance of power between labor and management, possibly for years to come. As such, the strike is a struggle for the future of the industry as it concerns wages, benefits and working conditions.
The established automakers — General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram — are trying to defend their profits and their market place in the face of stiff competition from Tesla. and foreign automakers. Some executives and analysts have identified what is happening in the industry as the biggest technological change since Henry Ford’s assembly line movement began at the beginning of the 20th century.
Nearly 13,000 UAW workers walked off the job at three plants in Ohio, Michigan and Missouri on Friday after talks between unions and companies in three separate negotiations failed to result in agreements before the deadline of Thursday Pay is one of the biggest sticking points: The union has been asking for a 40 percent pay increase over four years but the automakers have offered about half as much.
But the talks are more than the pay. Workers are trying to defend jobs as manufacturing shifts from internal combustion engines to batteries. Because they have fewer parts, electric cars can be made with fewer workers than gasoline cars. A favorable result for the UAW would also give the union a strong calling card if, as some expect, it later tries to organize employees at Tesla and other non-union carmakers. like Hyundai, which plans to make electric cars in a massive new factory in Georgia. .
“The transition to EVs dominates every part of this discussion,” said John Casesa, senior managing director at investment firm Guggenheim Partners who previously led strategy at Ford Motor.
“It goes without saying,” added Mr. Casesa. “But really, it’s about positioning the union to play a major role in the new electricity industry.”
Under pressure from government officials and changing consumer demand, Ford, GM and Stellantis are investing billions to retool their vast operations to produce electric vehicles, critical to the response to climate change. But they make little if any profit on those vehicles while Tesla, which dominates electric car sales, is profitable and growing fast.
Ford said in July that its electric vehicle business would lose $4.5 billion this year. If the union gets all the wage increases, pensions and other benefits it seeks, the company said, its workers’ total compensation would be double that of Tesla employees.
The union’s demands will force Ford to scrap its investments in electric vehicles, Jim Farley, the company’s chief executive, said in an interview Friday. “We want to actually have a conversation about a sustainable future,” he said, “not one that forces us to choose between going out of business and rewarding our workers.”
For workers, the biggest concern is that electric vehicles have fewer parts than gasoline models and will make many jobs obsolete. Plants that make mufflers, catalytic converters, fuel injectors and other parts that electric cars don’t need will have to be overhauled or closed.
Many new battery and electric vehicle factories are popping up and may employ workers from plants that have closed. But automakers are working most aggressively in the South, where labor laws are tilted against union organizers, rather than in the Midwest, where the UAW has more power. One of the union’s demands is that workers at the new factories be covered by the automakers’ national labor contracts — a demand the automakers said they could not meet because those plants are owned by joint ventures. . The union also wants to take back the right to strike to prevent plant closings.
“We’re at the dawn of another industrial revolution and the path we’re on is the same way we were in the last industrial revolution – lots of profit for the few and misery and bad jobs for the many,” Madeline said. Janis, executive director of Jobs to Move America, an advocacy group that works closely with the UAW and other unions.
“The UAW is really standing up for communities across the country to make sure this transition benefits everyone,” added Ms. Janis.
Automakers have been making record profits for the past decade, but they can’t afford to lose time from layoffs in their careers to compete with Tesla and foreign automakers.
The three companies are already struggling to continue their electric car business. A new GM battery factory in Ohio has been slow to produce batteries, delaying electric versions of the Chevrolet Silverado pickup and other vehicles. Ford this year had to suspend production of its electric F-150 Lightning in February after a battery caught fire in one of the pickups parked near the factory for quality testing. And Stellantis won’t start selling any fully electric vehicles in the United States until next year.
Those problems and Tesla’s growing sales could put the union in a strong position to secure a good deal.
On Thursday, in a sign that automakers are willing to go further than ever, GM offered a 20 percent pay raise over four years. That’s half of what the union is seeking but more than workers have received in recent contracts. President Biden on Friday strongly supported the union in remarks at the White House. The administration is pouring billions into programs to promote electric vehicles and doesn’t want the strike to delay a centerpiece of its climate policy.
Despite all the money automakers have made in recent years, their executives have expressed deep concern about the growth of electric vehicles, which make up 7 percent of the US new car market right now. this year and is on track to surpass sales of one million this year. Managers are well aware that traditional firms like theirs have a poor track record of maintaining dominance after major technological changes. Witness the way Apple sidelined Nokia and Motorola as cellphones became smartphones.
Auto company executives and most industry analysts underestimate how quickly electric cars will catch on and are not confident in predicting how sales, which have been huge recently, will grow in the future. “I don’t think anyone can perfectly predict what the adoption will be,” said Mary T. Barra, the chief executive of General Motors, in an interview with The New York Times last month.
Speaking on “CBS Mornings” on Friday, Ms. Barra argued that excessive wage increases would hurt GM’s ability to continue making cars with internal combustion engines while also making electric cars. “This is a critical moment where investment is very important,” he said.
However, unions and their supporters are unlikely to express much sympathy for auto executives. Ms. Barra, Mr. Ford’s Farley and Stellantis’ chief executive, Carlos Tavares, have earned tens of millions of dollars in compensation packages over the years. The company’s shareholders are rewarded with dividends and share buybacks.
Unions “won’t have a lot of patience for sob stories,” said Karl Brauer, executive analyst at iSeeCars.com, an online marketplace.
Adjusted for inflation, wages for autoworkers in the United States have fallen 19 percent since 2008, according to the Economic Policy Institute, a left-leaning research group.
At the same time, union officials are aware of changes in the industry and say they don’t want to handicap GM, Ford and Stellantis as the companies try to regain ground lost to Tesla, which has aggressively fought attempts to unite them. factories. Detroit’s automakers also face challengers like Rivian, a start-up that makes electric pickup trucks and sport utility vehicles in Illinois, as well as foreign-owned rivals like Mercedes -Benz and Toyota, whose US factories, mostly in the South, are non-union.
“That’s the biggest challenge here,” added Mr. Brauer, “trying to commit to a long-term contract in an industry that is uncertain and unpredictable for the next five years.”
Union supporters say it’s wrong to blame workers if traditional carmakers can’t compete with Tesla and other rivals.
“If you look at the breakdown of what it costs to build an EV, manufacturing is a very small part of the equation. Batteries are the biggest,” said Ms. Janis of Jobs to Move America. “This idea that the UAW will price Ford, GM and Stellantis out of the market is untrue.”
But other analysts said the lengthy work stoppage could help Tesla and foreign automakers gain ground on GM, Ford and Stellantis.
“If something happens to disrupt their business, does that help emerging electric vehicle makers?” said Steve Patton, whose overseas consulting firm EY works with auto companies. “Who will benefit if there is a prolonged strike?”