It has been about a week since the United Auto Workers (UAW) contract expired, and thousands of members walked off the job, picketing simultaneously at the Big Three manufacturers’ facilities. But with negotiations coming to a standstill, UAW President Shawn Fain is giving Ford, General Motors, and Stellantis a Sept. 22 noon deadline to progress negotiations significantly, or the union will escalate the strike. What does this mean for the auto sector, President Joe Biden’s green energy push, and the broader US economy?
UAW Ultimatum
The UAW leader presented the Detroit Three with an ultimatum in a Sept. 18 video message posted to social media: Advance contract negotiations or risk a bigger strike. “That will mark more than a week since our first members walked out. And that will mark more than a week of the Big Three failing to make progress in negotiations toward reaching a deal that does right by our members,” said Fain. “Autoworkers have waited long enough to make things right at the Big Three. We’re not waiting around, and we’re not messing around.”
So far, the UAW has rejected every counterproposal presented by the automakers. Originally, the union requested a four-year contract that includes a 40% pay hike, a 32-hour work week with 40-hour pay, the restoration of traditional pensions and benefits, and various inflation-related payments. The UAW leadership bent the knee and adjusted its demand to a mid-30% earnings boost for workers. The companies have come to the table with offers that the UAW described as “trash” and “unfair.” For example, Stellantis suggested a 14.5% general wage increase over four years and inflation-protection payments. The other two came back with a 21% pay hike.
As the labor dispute completes its first week, the automakers are responding to the union by idling plants and temporarily laying off workers.
GM confirmed that it would be shuttering a Kansas-based manufacturing plant, furloughing about 2,000 workers. “It is unfortunate that the UAW leadership’s decision to call a strike at Wentzville Assembly has already had a negative ripple effect, with GM’s Fairfax Assembly plant in Kansas being idled today and most of its represented team members leaving the plant as there is no work available,” the carmaker said in a statement. Chrysler maker Stellantis “will immediately temporarily layoff 68 employees at the Toledo Machining Plant” and plans for similar actions at two facilities in Indiana that will impact 300 workers. One day after the strike began, Ford laid off 600 workers at a Michigan assembly plant.
Politics and Economics
Over the past year, the US economy and President Joe Biden have witnessed various strikes, from railroad workers and airline pilots to Hollywood writers and UPS drivers. But while these instances did not or have not impacted the broader economic landscape or the administration’s public policy pursuits, the UAW strike could ruffle some feathers across the United States.
Depending on the size and scope of the auto workers’ protests, the fourth quarter GDP could take a hit of up to three percentage points, based on what forecasts from financial institutions or economists you are reading. With the country on the cusp of a slowdown, the timing of UAW’s strikes could not come at a worse time. Remember, thousands of different components play a role in every automobile produced on an assembly line at a Big Three automaker. As many as 5,000 companies directly affect auto manufacturing, employing roughly 700,000 people. Then, there are the small businesses surrounding these factories in Michigan and elsewhere in the nation.
(Photo by Bill Pugliano/Getty Images)
One of the reasons UAW-represented members are upset is because of the White House’s electric vehicle initiatives. The administration has showered billions of dollars in subsidies to auto and auto-related firms to ensure that they prioritize EVs. The problem with this plan, workers say, is that these types of cars require fewer workers to produce, and battery manufacturing is performed with lower pay and inside non-union facilities. The White House has attempted to curb these fears by noting that the Inflation Reduction Act provides funding for training so workers can adapt to a new environment, which critics say is already unlikely to be successful.
This has allowed former President Donald Trump to court some of these workers, posting frequently to Truth Social about the dangers of EV manufacturing and that Biden and Fain will be responsible for shipping jobs overseas. He has also chosen to skip the second Republican presidential debate to host a rally with hundreds of UAW workers. Nevertheless, President Biden still considers himself the most pro-union president in US history, even though he has done little for union workers.
Only One Winner: Elon Musk
Ultimately, no matter what happens, Elon Musk will be the only victor in this tense fight between the union and corporations. If even half of UAW’s demands are met, the Detroit Three will see their labor costs balloon, diminishing any competitive advantage. If there is a prolonged and intensified strike, production will slow or come to a halt, allowing Tesla Motors to grab some of the EV market share. In the end, Musk and Tesla are the true winners in all of this.
